This is the second in a series of articles about innovative new sources of alternative funding. Look out for the next one in a couple of weeks time.
I have just started to work with a funder that is offering overdraft type loans of up to £10,000 for periods of 1 to 10 weeks. As you pay these off you can take out another loan and so on and so forth. The loan is available for sole traders, Limited Companies and Partnerships. 4500 companies have taken out 12,000 loans so far.
This does not replace your normal overdraft, if you are lucky enough to have one, it is just a top up for when you need a bit extra and the bank will not help. People use this type of loan when they need additional seasonal stock, or to pay the VAT or corporation tax, or when large clients are paying late and causing cash flow problems.
Repayments are paid weekly and are taken from your debit card.
They use a 5 star rating, 1 star is the most expensive and 5 star is the least expensive. Depending on your credit risk you will be rated from 1 to 5 but the important thing is that as you work with this funder and pay back on time you can progress up the star ratings.
If you borrow £1000 and pay it back over 10 weeks you will pay back £1144 which equals 14.4% which is expensive, but if you are a 5 star client the same £1000 over 10 weeks you would pay back £1027 or just 2.7%. Naturally you only pay when you have borrowed money. You may borrow for just 2 weeks, pay it back and not need to borrow again for a month or 2. Flexible money on tap.
You pay a one off set up fee of between £150 and £350 and you can then borrow if and when you need it.
60 % of all applicants get approved and another 15% are just asked for more information.
The application form is a simple A4 sheet.
Minimum application criteria:
Minimum 12 months Trading
You and your company must be searchable on line
You must have a current home address
No CCJs for 12 months.
If this is of interest to you or your clients please give me a call on 01932 244810 or email me at email@example.com or firstname.lastname@example.org