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Company says Scots still lack awareness

Exclusive: LendingCrowd ‘turned away deals through lack of funds’

Stuart LunnAlternative finance company LendingCrowd turned away 20 deals over the past year because it did not have the funds from investors to back them, its chief executive revealed last night.

The Edinburgh based company, the only crowdlender in Scotland, completed 35 deals but could have provided support to far more.

Stuart Lunn, chief executive, at times over its first year he “worried about whether we were going to make it” but he said the demand from borrowers proved there was a demand for its services.

At an event to mark the company’s first anniversary, he told Daily Business that borrowers outnumbered investors, although more investors put money on the platform in September than over the previous three months.

“It’s partly because we are still new and people are learning about us,” he said. “There is an understanding and a trust building as people learn what we are doing.”

However, he admitted: “There were moments when I have been worried about whether we were going to make it. But I am pretty determined, and so is Bill [Bill Dobbie, chairman]. Neither of us will not let this succeed. If you look at our backgrounds you will see we have a strong track record in building companies.

“There is more we have to do. We need more investors as we are turning away borrowers. There is no doubt we have to ramp up the number of new investors. More money means more deals and we could facilitate more loans. The most frustrating thing is turning away good deals.”

He said five had been turned away in June alone totalling £1 million, three of them Scottish. “These are ones we do,” he said. It was important to have a good spread of companies on the platform to attract investors.

The company, being the only one in its sector north of the border, is having to educate the investment community.

“The Scottish market is just not as aware of crowdlending as it is down south. The advisory community is not yet clued up on this and we are asking the wealth managers and other advisers to step out of their normal range

“The easy bit of the equation is finding the borrowers. So we have to convince investors we are worth investing in as an asset class.”

A new innovative finance ISA being introduced to the retail market next April is likely to be a big spur to awareness and growth, he says.

Equity crowdfunders will not qualify, which leaves crowdlending as the target market for those attracted to this form of asset class.

 

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