SmallBusiness.co.uk talks to managing director Tom Coomber.
What does your company’s funding history look like?
We’re with a high street bank and we do have a loan and overdraft in place with them. When they took us on they told us that we’re a good business to be lending to, but every year our business is growing and we need more cash for stock. We were in a position where our company directors had securities on the loans in the form of property and there was nowhere else to go in terms of security, so we had to look elsewhere.
How did you find Funding Circle?
They found us really! They had contacted us by mail and I actually had a letter from them on my desk for a year or so before I investigated it. It was one of those things that seemed too good to be true in terms of the method and ease of borrowing. But I bit the bullet, went online, looked through the small print and it seemed pretty feasible so we slowly put the deal together and it did turn out to be straightforward.
What were the terms of the loan and how do you apply?
It’s a three-year repayment plan and the interest rate is bid for by their lenders. Let’s just say the interest rate turned out to be around 2 per cent better than what my bank was offering. They ask you to fill in a profile and you put your details into the website; it’s really a platform to sell our business to lenders and demonstrate why we’re a safe bet. The process is simple and the underwriting procedure painless.
What are the ramifications regarding security?
It’s not secured, it’s under director’s guarantee which is a liability for us but we have faith that we would be able to sell our stock and support the repayment of any loan if we had to close the business, whereas a bank will want security on a property.
Further case studies and more information on raising money through crowdfunding:
Visit the Funding Circle website.
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