Well, for once I’m going to write about something to do with Serviceteam. Something that might be quite useful to someone for a change! Let’s put a little background out there about our company for framing purposes. We’ve been trading since November 2009 and have 3 years of accounts. We are a profitable company. We employ 15 people or so in the office, 1 outside London and have anywhere between 50 and 100 contractors on our database.
And we’re ready to expand. 25% of our business is coming from other businesses, 25% and climbing comes from existing customers which leaves 50% coming from new enquiries. And we now want to focus on expanding our B2B side and offering more and better services to our existing clients.
So, with this in mind we’ve been looking for some funding and I guess this is the start of our journey. First off we have written a business plan (I would publish it but it’s confidential! and it’s probably not that interesting) and we are confident that with the right funding we can double the turnover of the company inside 2 years, employ another 10 people in the office and take on 10 permanent tradespeople. Last month after 3 years of trading we managed to get an overdraft from HSBC, which is no mean feat, so we were feeling very confident. But not confident enough to go to them for a loan, however!
So, we thought we might try Funding Circle, a peer-to-business lender and one of these new companies that has already lent out £10Million so far, so small beer but we thought they maybe more sympathetic than a bank. Well, we were wrong there!
Without going into the long and short of it, they asked us for some information and we provided everything that they required (which was surprisngly not very much), we never had a conversation with anyone there, everything was done on email. No-one came to see us, no-one asked us to come and see them and they didn’t ask for our business plan- and this on a loan that’s likely to cost you 10% in interest. After several weeks we got a rejection email from a template!
This was pretty disappointing. No-one took the time to really investigate our business and no-one took the time to even write a personal email. And with their vetting process I wouldn’t be investing any money in a Funding Circle company anytime soon! And these guys are getting Government funding. It is not hard to see why there is a funding problem in the UK.
Here is a copy of the rejection email.
Thank you for your application to Funding Circle.
Unfortunately your company does not meet the current credit criteria required to allow your loan to be listed on the Funding Circle platform.
Due to the minimal profitability, lack of serviceability, no land and or buildings on the balance sheet, minimal net tangible worth and new stewardship.
At Funding Circle, we are committed to helping small businesses and in the future we will expand our criterion for businesses that we can accept. In the meantime, we work with a broker who helps businesses access non-bank finance including grants and loans secured on invoices or assets. We also work with a pension led funder who may be able to help you secure the funding you seek by facilitating an investment into your business from any pension assets that you have. If you and/or any business partners have pension funds collectively worth more than £50,000 this is an option that could work for you. Please do let us know if you would like to be introduced.
We wish you all the best with your business.
So basically, they said that they don’t lend money to businesses without land, property, assets or a pension pot to act as collateral. But they can brokerage a loan if you have a high value invoice. Great, well that’s useful then. The invoice leveraging is called factoring and even a high street bank will lend you money on that. And we haven’t been in charge for long enough at three years so we are under ‘new stewardship’. ‘Lack of Serviceability’, well I’m not sure what that means to be honest but it’s a template email I suppose. Well I’m glad we didn’t have to pay any money for this ringing endorsement of our business!
So, for the moment it seems we are stuck for investment like a lot of other companies in the UK. Ready to grow with a good business case but only likely to get some money lent if we don’t need the money. I’ll keep you posted on what happens next…