£60 million available (and no banks involved!)
Uphill struggle. In recent years, it’s been difficult for small and medium-sized companies to secure funding via the mainstream banks. This has led to the government coming up with various business loan schemes. The main trouble here, of course, is that these have usually been run in conjunction with - rather than in isolation from - the banks. Hence, they’ve invariably stalled.
New scheme. However, the government recently announced the first successful bidders for the “Small Business Tranche” of its Business Finance Partnership (BFP). This scheme was first announced back in Autumn 2011. Interestingly, two of the “winners” are well-known peer-to-peer lenders: Funding Circle, which is set to receive a £20 million slice of the government’s overall £55 million fund; and Zopa, which is going to get £10 million. It’s anticipated that the same amount will be generated by each peer-to-peer lender from private investors.
How to access funding? We should point out that this BFP tranche is still subject to parliamentary approval but that’s unlikely to be withheld. Once given, these two bodies will announce their individual terms and lending criteria. In the meantime, the government has advised interested parties to contact the companies directly (see The next step). Tip. This option is definitely worth investigating if your company needs finance. Peer-to-peer lending may also be able to offer your business funding at a much lower interest rate, but do bear in mind that the directors will probably have to pitch online for any loan requested - after all, 50% of it will be coming from private investment. You can see how this process works on Funding Circle’s and Zopa’s websites.
For further information on how to access funding via the Business Finance Partnership, visit http://tipsandadvice-companydirector.co.uk/download (CD 14.08.01).
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