P2P (Peer-to-Peer) lending platform Linked Finance has introduced a new fixed rate loan offering for SMEs that has raised over €600,000 for 21 businesses in its first 14 days in operation. As part of its strategy to accelerate growth, Linked Finance has moved from a model where lenders “bid” the interest rate they would offer to a company seeking funds, to one where a fixed-rate is set at the beginning of the process.
The new approach reduces uncertainty for borrowers about the rate they will pay on loans, and makes the process much quicker, with the average loan closing in less than 30 hours. A €40,000 loan for Tipperary stove suppliers, Ryan Stoves, was fully funded in just under 8 hours.
Companies who apply to borrow loans are given a credit rating based on Linked Finance’s proprietary system which looks at a business’s credit history, stability and ability to repay, and then approves a loan at an interest rate appropriate to the company’s rating.
The evolution to a fixed rate lending system is In line with the international development of P2P lending. The changes to the platform mean that Linked Finance can appeal to a wider array of business borrowers as well as a more diverse mix of individual and institutional lenders. Linked Finance is targeting to have lent over €350m by the end of 2019, with the ultimate goal of becoming the country’s biggest source of non-bank SME finance.
Commenting on the news, Niall Dorrian Chief Executive Officer of Linked Finance, said:
“The fixed rate loan launch has been a huge success, with both lenders and borrowers engaging enthusiastically with the new approach. Borrowers now have certainty on the interest rate they will pay and can raise money quicker than before. Lenders can also now be certain of participating in a loan when committing funds. With our ambitious plans to grow lending to over €350m by the end of 2019, we are now looking at the involvement of strategic partners on to the platform. Possible partnerships include international and domestic institutions lending to the platform, and government entities looking to drive the growth of Ireland’s SME sector”
One of the companies to take early advantage of the fixed rate loan offering, was Dublin-based catering firm the Artisan Gourmet Food Company, who recently borrowed €40,000 through the platform. This is their third time raising funding through Linked Finance.
Noel Caulfield, Managing Director of the Artisan Gourmet Food Company, said:
“This is the third loan we have raised through Linked Finance and we found the new fixed rate system extremely user friendly for a fast growing business like ours. We were able to borrow €40,000 in the time it might normally take to get an appointment to see your bank manager. The money raised will help us to scale up our business and deal with new contract wins. This would not have been possible without the fast and affordable funding that the Linked Finance platform provides.”
Companies who were in the first wave of borrowers using the new fixed rate loans include:
– Ryan Stoves, €40,000 loaned in 7 hours and 50 minutes – Tipperary based stove suppliers
– The Be Sweet Company, €20,000 loaned in 2 hours and 8 minutes – Dublin luxury confectionary business
– Le Fournil Sligo, €30,000 loaned in 24 hours – Sligo Town based French bakery
– Fanfare Sports, €20,000 loaned in under 4 hours – Dublin 1 based sports travel agency
– Phoenix Recycle, €35,000 loaned in under 48 hours – Kildare based IT and data management company
– Carana Kitchen Design, €30,000 loaned in under 36 hours – Kilkenny City based kitchen designer