The speed and access outside of working hours are seen as the overriding advantages of peer-to-peer lending for business clients looking to access finance. But there are plenty of direct benefits to mortgage advisers making peer-to-peer referrals too.
The finance that alternative providers offer to small businesses is complementary to the services that banks provide. Typically peer-to-peer lenders will offer a specific product such as an unsecured loan, a loan secured against an asset or a property finance loan, as opposed to offering a full range of finance options like a bank does.
Peer-to-peer lenders do not therefore compete for the full banking relationship and loans can be used alongside an existing current account or mortgage arrangement.
Many of the introducers who work closely with us are mortgage brokers. Where a traditional lender is only willing to offer £150,000 on a £200,000 requirement, for example, we can help introducers to earn revenue that otherwise wouldn’t have been earnt.
So long as the business client is creditworthy and meets our lending criteria, we would be able to list the remaining £50,000 on our marketplace on an unsecured basis. Our 28,000 strong active investor base would then bid to take a small part of the loan each with interest rates ranging between an average of 6 and 15% depending on the risk band.
Although we have recently extended the types of loan we offer to include property development and property investment loans (which includes commercial mortgages), we are also able to work with brokers where there is an existing commercial mortgage arrangement in place.
One of our introducers who specialises in property finance had a requirement for property funding from one of their clients who was based in Leeds.
This client specialised in buying properties all over the country offering a fast, chain-free way for property owners to sell their property. The nature of the business meant property already formed a large part of their portfolio so they were looking to borrow against their existing security.
They borrowed £300,000 from 4,536 investors, which they used for refurbishment of properties they had bought before then selling, and as leverage to buy further properties, enhancing their position in the market.
In a recent introducer survey over half of the introducers we surveyed work in property, therefore requiring flexibility and a complementary service where existing mortgage arrangements or development finance is already in place. Often a property broker works with a trading business but they are not aware of the ability to get additional unsecured funds that can be used for almost any purpose.
We are fast filling the gap the banks have left and introducers continue to play a major role in that, as they remain instrumental to our growth. Introducers provided over £20m of loans through the marketplace in the last quarter of this year, and we continue to work with a large number of property introducers alongside their clients’ existing financial arrangements.