This is a marketplace where investors are matched with borrowers and the industry has boomed since trust in the banking system collapsed during the financial crisis, lenders cut back lending and the Bank of England cut interest rates to 0.5%. Savers fed up with paltry returns on the High Street have turned to alternatives for a better rate of return – typically around 6% after fees and losses. The average saver is around 50 and has around £5,000 invested – although many start with rather less than that, for example splitting £2,000 between 100 borrowers, lending each one £20. These investor monies are then borrowed by businesses requiring funding. Up to £100k is available on an unsecured basis with a facility of up to £1m with security.

The funding can be used to complement existing banking facilities and if under £100,000 is unsecured. Typical interest rates paid by borrowers are between 6–12% pa with no early repayment penalties. Arrangement fees are between 2%–4%. 2XL view this as a really welcome alternative for business borrowers and would be delighted to discuss with you in more detail.

Specialist commercial property peer to peer lender Recently a specialist peer to peer lender has launched who arrange term interest only facilities which are secured against income producing commercial investment property. The benefit to the investor is that their investment is secured by the income producing property where due diligence is undertaken on both the borrower and the investment property income streams. This further funding option will be attractive to commercial property investment borrowers who either require new funding or to refinance existing interest-only facilities which have come to the end of their committed term. Interest rates are between 6–11% pa, dependent on both the covenant of the borrower and the rental income streams.

Another new source of unsecured working capital

We are also pleased to advise borrowers who receive income by way of electronic card payments of another new funding source. The funding is unsecured and can be anywhere between £5000 & £150,000 (higher in exceptional circumstances) and is an advance against the borrower’s future card payment receipts.

Funding can be used for:

• Purchase of stock
• Improvements to business premises
• Expansion of retail space
• Furniture, fittings and equipment
• Marketing
• Additional premises
• Opportunity/Emergency funds
• Bridging of insurance claims
• Seasonal cash flow needs
• Rent arrears/VAT bills
• ‘Gap’ finance to support traditional funding shortfall when undertaking acquisitions and developments.

The following is an example of how this works in practice:

A hotel operator has a requirement for £60k to undertake capital expenditure. Annual turnover is £500k of which £400k is by way of card payments. An agreed repayment term is agreed along with the borrowing cost. The advance is then repaid by the provider collecting and retaining an agreed percentage of future card payment receipts to see repayment over agreed short term timescale. As this is unsecured funding it can also complement existing banking and asset finance facilities. Typically funds arranged can be taken within a couple of weeks.