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Scots entrepreneur joins the crowd with new funding firm

Bill Dobbie 4 Scottish entrepreneur Bill Dobbie and business partner Stuart Lunn today took the wraps off their new online financing project aimed at small firms.

The LendingCrowd will give SMEs access to loan finance, a variation on the crowdfunding model which is mainly based around equity investment or gifted donations. It says it offers an alternative to bank lending and because it is online it will provide decisions quickly.

The company has already helped businesses raise approximately £250,000 since it entered the crowdlending market last month.

LendingCrowd operates an order-driven exchange where the most competitive bids fund the loan application, providing the borrower with the lowest interest rate on their loan.

Investors retain complete control over their investment, setting the terms and rates they are prepared to offer businesses. Investments on LendingCrowd’s platform start from as little as £20 and an independent risk assessment, carried out by an expert team of credit risk specialists with more than 100 years’ experience, alongside the bespoke assessment tool, ExpertLender, evaluates each loan request on its merits.

The first business to secure a loan via the LendingCrowd platform was Vision Events (Manchester), an event production agency.  Its clients include Excel Publishing and The VEKA UK Group. The business successfully raised a sizeable fund to purchase essential technical equipment this month. 

Some 7,000 SMEs have used crowdlending platforms to access loan finance in the UK which is expected to top £1 billion by the end of 2014.

Mr Lunn, chief executive, said:  “Our aim is to offer a convenient and flexible alternative for SMEs to secure credit and grow their business.

“Technology is changing financial services, making it easier for the 4.9 million SME’s in the UK to access growth finance from investors. The industry is gaining traction and has gained the support from banks, government-backed British Business Bank and local councils enabling businesses to grow at a fair price via crowdlending platforms like LendingCrowd.”

Mr Dobbie, said: “Our vision for LendingCrowd is simple, we want to become a leading crowdlending business in the UK by offering investors access to different types of borrowers and providing them with the opportunity to make attractive returns.

“My involvement in start-ups and SMEs made me realise the difficulties for small businesses to secure loans.  We recognised that the traditional model of lending doesn’t work for all borrowers all of the time and wanted to develop a credible alternative. What better way to do that than to allow real people to directly invest through an online platform.”

At a media launch this morning, Mr Lunn, a former equities analyst, explained that the minimum turnover for borrowers is £100,000.

He said credit risk was a key factor in the business to ensure investors and borrowers were protected. There is also strict monitoring of money laundering.

Mr Lunn said the crowdlending market was in its infancy and the LendingCrowd has ambitions to be among the UK’s top companies.

Investors are also becoming more attracted to the crowdfunding and lending models as a new way of attracting good returns. The latest figures show the 110,000 loans were made through this model while 14 million ISAs were sold.

“We are only hitting the tip of the iceberg as top how this market will grow,” said Mr Lunn.

A consultation exercise by the UK government into offering a peer-to-peer ISA will close on 13 December and a report is due in March. One issue concerns savers’ ability to withdraw funds on demand.

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