Ok here's the thing: I mentioned this on another thread and Pete1950 suggested it might be worth starting a new thread with a bit more detail,so here you go. If you have a business looking for funding,or if you are a small investor tired of the meagre returns offered by the Banks and other Financial institutions,it might be worth looking at Crowd Funding. Be aware that I am not offering investment or financial advice,nor am I recommending any particular company.Use this information at your own risk,do your own research before committing yourself to anything.Anything I state on here is based upon my own understanding and personal experience,you may have different opinions or experiences.Don't blame me if it all goes horrible for you.... "Crowd Funding",is a way for small investors to lend to companies directly,and offers borrowers another method of raising finance without involving the big institutions and their high borrowing fees. I wanted to raise finance to buy some new vehicles,and although my bank and our usual finance company was quite willing to fund them.I saw a TV ad for a company called,"Funding Circle",and decided to give it a try.There are plenty of other companies out there,so don't be shy doing a Google search for them. (I had spoken to Funding Circle a few years back,but it sounded a bit of a faff at the time,so took the easy route and used our usual lenders). Anyway,did a search/found the website/filled out the application,less than two hours later a manager on the phone explaining what documentation they wanted,(couple of years audited accounts/bank statements etc/easy stuff). Next day he's on the phone,the Underwriters have decided our credit rating,how much we should be allowed to borrow and what the range of interest will be.In our case this was between 6% and 15% Then with my agreement they started an online auction to allow small investors to offer to lend my company whatever amount,(I think the minimum was £20), at their choice of interest.There is a description of my company on the site,with the credit rating/how long we've been going/and what we want the money for.Investors can mail the borrower directly with questions,(several did!). The Auction last for a week.When the loan is 90% funded by offers from small Investors the Government steps in and guarantees the rest. The borrower can see the amount offered/average interest rate/estimated monthly repayment The interest rate changes every now and again,as new lenders step in at a lower interest rate,or potential lenders revise their offer rate downwards End of the week loan was fully funded,reasonable interest rate,and Funding Circle was chasing me to complete the acceptance forms to seal the deal and pay me out the cash. There was quite a hefty commission to pay to Funding Circle but I managed to argue this down quite considerably. Quick,relatively easy,and the loan is in cash so I can beat Mr Mercedes/Mrs Iveco/all the DAF salesman over the head for a good deal,'cos I've got the moolah in my pocket... If you want to lend money,it's a quick and easy registration process,and you are in. You will see all the auctions running,whether it be a builder looking for funds,a hairdressers/accountants/people looking for cash to start new businesses. Even if the firm has a bad credit rating,you get the chance to lend to them,but needless to say the interest rate will be hefty. And you can limit your exposure to a tiny amount,if you think they are still worth a punt. As I said in another thread,my firm owes to 2600+ small investors,who decided my firm was worth lending to.(I feel quite proud of that actually-when a total stranger looks at your business profile and has faith in you,it's humbling,especially when you see the 101 pages of names) My monthly repayment is taken out five days before the due date so those 2600+ investors get their bit on the correct day. To be honest I've registered as an Investor but not gone through the whole process yet,but I imagine you can probably automate the process somehow,i.e,state your maximum loan amount to any one company,minimum credit rating etc,as not everyone has the time to trawl through all the auctions,especially if you set your lending limit at £20. But if you're retired and really want to look at every investment opportunity,that might be your method. I like it because,(apart from the Underwriters),the money shufflers in the City don't get their grubby mitts on what I'm paying to the kind souls who are funding my vehicles And by the way,my loan interest was just over I'm-not-saying% flat:in my case I would imagine Funding Circle take a bit off that,so it may be you'd get 5/6/maybe 7%,but remember you are lending to businesses that may or may not succeed or stay in business,so your dosh is not 100% secure. If this is of interest to you,look into it:if not,I hope it hasn't bored you to sleep. Heres the link to Funding Circle but remember I'm not recommending them,(although they worked well for me),and there are plenty of others.. Funding Circle - The Peer to Peer lending marketplace for small business loans
I have been lending for two years now, not funding circle as I don't like the risk but through Zopa and Ratesetter who lend to individuals rather than companies and give a guaranty against any possible losses, both offer various rates of interest, some of mine is earning 6.5% lent over five years, if I need to withdraw the money in an emergency before the end of the contract it costs me 1%. Steve
OK...I'm in....easier to understand than the Stock market, so I'll start with some of saved Ducati dollars; sorry Steve, the Carbon is going to have to wait. Looking at all three options discussed.
P2P lending companies are currently in advanced talks with the treasury to alow them to operate as ISA,s which should make them even more attractive investments. Steve