Tag: Lenders

PROSPECT BUSINESS CENTRES TURNS TO ARCHOVER TO SUPPORT NEXT STAGE OF GROWTH

Author
Ashlee Dutton
Date

ArchOver, the peer-to-peer (P2P) business lending platform, has announced that Prospect Business Centres Ltd, the provider of serviced office accommodation, has selected ArchOver to raise additional working capital and replace its existing credit facilities.

Prospect Business Centres has provided specialist high-quality serviced office accommodation since opening its first centre in Leeds in 1980. The profitable business currently has seven centres in prime business locations, with five in London and two in Leeds. With a focus on quality of service and flexibility, Prospect Business Centres has an average occupancy rate of 87% in London and 82% nationwide. Its clients range from regional-based businesses like Health Management and West Yorks Mediation Services occupying one desk space in Leeds, to multinationals including GE Capital, AXA, NHS, Accenture and Kier Construction filling over 120 desks in the City. The company is now planning to open a further three sites in London over the next 18 months to meet the demand for serviced office space and support future growth.

“Just a few years ago, alternative finance providers weren’t as available in the mainstream. Without the likes of ArchOver, the best options available came with high interest rates and requirements for personal guarantees,” explained Charlie Cudworth, managing director at Prospect Business Centres. “When we started to consider the next stage of financing to help us achieve our projected growth figures, we were introduced to ArchOver by CreditSquare. It was their commitment to working closely with our business to understand our requirements coupled with its ability to package a series of loans together made it an ideal choice.”

Using its Secured & Assigned service, ArchOver has already raised £692,000 and is currently funding an additional £400,000 as part of a series of loans that will allow it to facilitate £3.1 million over the next 6 months. Against future contracted revenues of £12.3 million, the new loans will repay existing borrowing, reduce the cost of funding and give Prospect Business Centres the certainty that it needs to continue expanding and open new sites.

“We aim to help British businesses and have worked hard to raise awareness about alternatives to traditional lending which also maximise returns for investors,” concluded Angus Dent, CEO at ArchOver. “Originally founded in Leeds in 1980, Prospect Business Centres has continued to expand as demand for serviced office space has grown. Prospect Business Centres is an excellent example of how we are supporting the growth of companies that have long been ahead of their time by making access to funding as easy and simple as possible.

Conflicting Information

Author
Angus Dent
Date

It is sometimes difficult to know who to believe when there is conflicting information emanating from two supposedly reputable sources – the pre-Brexit propaganda war immediately springs to mind. In this case, we have the NACFB proclaiming that there is a ‘plethora of lenders’ in the market, while Small Business recently reported that 1,093 small companies are expected to cease trading in January through lack of finance. This sits alongside other, equally alarming statistics such as the fact that 3,633 business failed in Q3 of 2016 and that only 41.4% of UK businesses started in 2010 survived to their fifth birthday.

Of course, some of the companies heading for the drop will not have been up to standard in the first place, but it beggars belief that they should all be in this category. Is it that the owners of these businesses simply don’t know what sources of finance are available and don’t know where to turn? Or is the NACFB mistaken? Either way, there is clearly some kind of information gap.

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We know from other sources that, partly due to the uncertainty surrounding Brexit, SMEs are currently of a mind to borrow less and to hold on to more of their cash; according to the British Bankers Association (BBA), SME lending in Q3 2016 dropped 13% against the same period in 2015. The BBA also revealed that SME deposits have risen by 5% to over £170bn.

The trends suggest fear of what the future may hold. Many SMEs are trapped in a cash flow squeeze brought about by staff who expect to be paid monthly and suppliers who routinely pay on 60 or even 90 day terms. What do you do – turn away business that might give you a 30% profit margin or borrow the working capital which may cost the equivalent of 10%? The logical answer may not be immediately apparent to everyone.

Invoice finance undoubtedly has its place in the market, but it is no panacea. Because of the high costs involved in terms of fees and maintenance, at worst it can be an expensive fix that suits the provider far more than it suits the SME.

Subject to appropriate due diligence processes and appropriate security, P2P loans are available to help with a wide variety of problems, including short term cash flow. They are also available to companies that want to borrow to invest and grow. There is no stigma attached to borrowing money for the right reason and at the right price. There has never been a better time.

 

The FCA’s tailored regulation of P2P Lenders is for the benefit of everybody

Author
Angus Dent
Date

A theme that has begun to emerge in alternative finance article headlines at the moment is that there is a perceived love-in between the FCA and peer-to-peer lending, with George Osborne an enthusiastic Cupid-like figure matching the two. The regulatory body has come in for criticism from the old guard that believe the old scourge of the banks has gone soft on the new “tech” whizz kids on the block. This isn’t helped by the frequently-cited, well-intentioned-but-slightly-undermining quote by economic secretary to the treasury Harriet Baldwin that government and fintech share a “beautiful friendship”.

George Osborne

 

Yet there are incongruities between news article headlines and article content. Take John Thornhill’s article, published in the Financial Times last week, which began with the suggestion that “a watchdog with the ‘right touch’ sounds ominously like one with a ‘light touch’ “, before proceeding to make some very reasonable points on why the FCA applies slightly different regulatory procedures to start-ups and small cap businesses than it does to centuries-old banking institutions. Throwing the same rule book would crush every start-up under a mountain of excessive regulation and process, and would negate much of the innovation sorely needed to replace the antiquated banking practices. The FCA’s “approach” should be commended as forward-thinking- let’s remember that it really is just an approach at the moment as the majority of the platforms are still in the midst of the lengthy and detailed regulatory process that certainly doesn’t feel light touch.

The revelations coming from the States regarding Lending Club have done nothing to dampen criticisms of the FCA/peer-to-peer perceived cosiness either. Yet it is the willingness for the FCA to work directly with peer-to-peer lending platforms that has, and will, prevent the blatantly reprehensible behaviour that wasn’t detected initially in the States; there, the industry has been regulated under a blend of existing consumer and banking regulation that has proven to be unsuitable. Working to tailor the regulation to the peer-to-peer sector will prevent swathes of old-fashioned banking malpractice carrying over to modern finance. Renaud Laplanche, by acting in his own self-interest, assumed a guise firmly rooted in the past, not endemic to the burgeoning P2P sector that prides itself on transparency and openness.

Every platform will now be keen to highlight the differences between themselves and Lending Club, although there will have been many who, this time last year, would have been perfectly happy to seek comparison with one of the biggest players in the global sector. However, if all must be tarred with the ubiquitous “Fintech” brush then there is one obvious point to make from a UK peer-to-peer lending view. We are very much the “fin” side of the portmanteau as true providers of alternative finance – the “tech” only applies to the platforms used to facilitate loans. Unlike Lending Club- which initially positioned itself as a social networking service and developed an algorithm called LendingMatch to identifying common relationship factors such as geographic location, educational and professional background, and connectedness within a given social network to match lenders with borrowers- UK platforms are not primarily algorithm-driven and rely on due diligence processes at least as thorough as those of the banks to vet borrowers. But the Lending Club debate shouldn’t necessitate these explanations- this is (possible) criminal activity from a senior management team undoubtedly out to furnish their own pockets. The FCA will continue their stringent, tailored regulation of the industry to prevent this happening over here, regardless of the baseless accusations that they’re cutting corners to appease the government.