Money&Co, started operations in March 2014 with Nicola Horlick as joint CEO.
Who do Money&Co lend to?
Loans are available to existing UK small and medium-sized companies with LLP status or limited company status. They must have a turnover of at least £100,000 per year, have filed accounts for three years and have been profitable for the last full financial year, providing a good flow of cash.
How much are you able to borrow?
The minimum loan is 50,000 pounds and the maximum loan is 3 million pounds. The loan is repayable over a period of 1 to 5 years on the basis of capital and interest payments.
As a security measure, a duty on the assets of the business may be needed and personal assurances may be required. Furthermore, if the loan is for more than GBP 2 million, protection over property is also required, although you can provide security for any loan amount to improve your claim.
Purpose of the Loans
Loans are made available to help the business grow so that they can be used for such items as the purchase of buildings, fixtures and fittings, plant and machinery, stock and working capital.
Interest Rate and Fees
The fixed interest rate is likely to be between 6% and 10% per year depending on the risk level, with an average rate of around 8% per year.
An payment fee of £50 is charged when an application is submitted, and is deducted from the contract charge if the loan is taken out.
There is a listing fee of £100 payable when the loan is sold at the auction, which is deducted from the transaction charge if the loan is taken out.
Arrangement fee is between 1.5% and 5% of the amount of the loan, depending on factors such as the amount and length of the advance.
Protection and appraisal costs are also payable to the creditor.
There is no provision for early redemption.
The borrower completes a loan application form for Money&Co whose credit analysts review the financial status of the applicant and give it a credit rating impacting the interest rate they will pay on the loan. If effective, the loan will be auctioned for a period of 14 days. Potential borrowers give the amount they are prepared to invest and the interest rate they want. The borrower pays the average rate provided by the various lenders. If the loan is completely funded, further tenders at a lower rate will remove any lenders that want a higher interest rate, thereby reducing the average rate payable. When the borrower accepts the bid at the end of the auction period, the money will be transferred to the borrower's bank account within 2/3 days of the completion of the security formalities. The borrower then starts to make recurring payments.
The overall look and feel of the site is impressive, but it is the content that really counts with any financial institution. Money&Co has extensive information on the site in the FAQ section for both lenders and borrowers. As far as costs are concerned, borrowers are charged a flat 1% fee, such as Zopa and Funding Circle. Borrowers are charged a $150 application fee and a completion fee of between 1.5 percent and 5 percent, while Funding Circle charges a completion fee of between 2 percent and 4 percent, so these fees can be compared.
Loans are classified by risk rating, using categories A+, A, B+, B and C+. The A+ category is the lowest risk with an estimated bad debt of 0.5% and the C+ category is the highest risk with an estimated bad debt of 1.5%. While the FAQ does not specify whether these are annual or lifetime projections, we have stated that these are annual figures. With a C+ type loan having an average bad debt rate of only 1.5 percent, this would be equal to a category A loan on Funding Circle.
Funding Circle is actually performing better than their bad debt predictions, but with an inexperienced and rising loan book, their bad debt will increase over time. Of the three peer-to-peer firms that have surpassed their bad debt figures, only one is still in service!
The distinction here with the Funding Circle is a little interesting, but as Chris Lake, Chief Lending Officer at Money&Co, explained, they are targeting prime borrowers who are currently in a position to access financing from banks.
There are currently four Money&Co loans, ranging from £100,000 to £1 million, with auctions closing in just under three weeks. Chris Lake clarified that Money&Co would be able to fill these loans with high net worth individuals and the "crowd" through their comprehensive connections. Some of these loans have already been tendered for £10,000, along with bids down to £10.
The summary screen of the account is very straightforward and well illustrated as the rest of the site. The bidding system is a bit more difficult to use, with borrowers having to click up and down arrows to adjust the lending rate by 0.1%. While there appears to be no upper limit on the lending rate, the lower limit is set at 1% above the projected bad debt.
Money&Co has joined the UK Crowd Funding Association (UKCFA) rather than the wider P2P Finance Association. The term crowdfunding is commonly used on the web, while there is no use of the term peer-to-peer. This may be confusing for existing lenders who understand peer-to-peer lending. There have been several debates on correct terminology, and while crowdfunding has been used as a generic term for both equity and debt crowdfunding, peer-to-peer lending or crowd-lending is the generally accepted term for debt crowd lending.
Money&Co. main features and highlights
- P2P Lending Company
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