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Non-Bank Funding For Young Businesses

Non-Bank Funding For Young Businesses
Friday, November 09, 2018

Ever since the credit crunch in 2008, lending to businesses has changed. It still seems to many that the banks have clammed up and that they are as precious with their money as a 5 year old who has just opened their Christmas presents haul to find the toy s/he has been nagging their parents about for the last year.

The Government stepped in first to try to fix the system. They created the British Business Bank whose aim is to grant loans of up to £100,000 to new businesses which have been trading for less than 2 years.

Secondly, crowdfunding and peer to peer (P2P) lending saw a large surge in popularity during that time. This is, at least in part, thanks to the internet. These platforms allow business owners to showcase their ideas to the public with the hope of gaining many smaller investments to achieve their financial goals.

Last, there has been a slower growth but growth nonetheless in algorithmic business lending. In this article, we take a look at these businesses, their rates, and what you have to do in order to successfully apply for a loan.

The four main companies

The 4 main companies are called Fleximize, Iwoca, EzBob, and Boost Capital.

Fleximize offers companies who have been trading for a minimum of 6 months the opportunity to borrow up to £200,000. However, they generally only lend up to twice the level of your company’s monthly revenue. Their repayment terms vary between 1 month and 2 years long.

Iwoca requires your company to have at least 12 months of trading behind it before they will consider your company for a loan. They can lend you up to £100,000 for up to 12 months.

EzBob is willing to lend up to £120,000 to companies that have an annual turnover of at least £30,000 and at least 12 months of trading behind them.

Boost Capital has the strictest lending criteria. Your company must have been trading for 2 years (and have all of your accounts available for that time period) for them to consider your application. However, the trade-off is that they can lend up to £500,000 for a period between 4 and 18 months.

How do these companies work?

These loan providers are a part of the “FinTech” wave that has been rising for the last decade. They use algorithms to help their decision making process when it comes to the viability of loans.

These algorithms take into account how much cash moves into and out of your business, your VAT bills, your management accounts, your credit history, and your Companies’ House filings. This data leads to the assignment of a score by the algorithm to your business.  

This score will determine which “risk category” you will be placed in (or whether they will give you a loan at all).

What are their rates like?

Each company has their own rates, typically ranging from 1.5% per month to 8% per month. Previously, we mentioned “Risk Categories”, they will determine how much interest you will have to pay on the loan.

If your company is placed in the lowest risk category then you can expect to pay the 1.5% interest rate. This means that, if you take out a loan for £50,000 for 12 months, you will pay back £55,008 in total.

Higher-risk businesses are charged at 8% meaning that you would pay back £76,000 on a £50,000 12-month loan.

Where does your accountant fit in?

Your accountant has two main roles in helping you to apply for a loan. Firstly, you need their help in gathering all of the information that the loan provider will need. Items like your VAT accounts and all of your profit and loss documentation will need to be presented for consideration.

Secondly, if you are taking out a loan to expand your business (the most common reason that business owners take out loans), then your accountant will be vital in making sure that your new, expanded business will still be viable with increased monthly fixed costs and, of course, the monthly loan repayment.

Secure funding with the help of Panthera

If you are looking for alternative ways to source finance for your business, get in touch with our team of accountants. We can help you set up your business for the best chance of having your application approved.

For more information, call us on 01235 768 561 or drop us an email to – we’ll be back in touch with you shortly.

What our clients say

For us, there is nothing better than a happy customer. Here are just a few that let us know how much we mean to them.

Pete Dungey

Simple, efficient and most importantly, hassle-free.

We found Panthera via our search for a Xero expert. We knew the software we wanted to use, and needed a forward-thinking accountancy partner who could get us up and running, and teach us the ropes moving forward. Tory and her team have always been on hand to answer our questions, and help us to grow as a business, particularly during periods of big change, such as becoming VAT registered. They are always on hand to alleviate any concerns and help to keep our records in order, which makes our year-end accounts an absolute breeze! Being based in Bristol, our relationship is entirely email based, alongside one consolidation meeting at year end - this keeps things simple, efficient and most importantly, hassle-free.

Pete Dungey Kaleido Grafik Limited
Anita van Eijndhoven

Talk Our Language

The support and service we receive from Panthera Accounting is very good. Everything from regular meetings, a prompt e mail response and the transition of our Xero software (which we find very pro active indeed) has and is all remarkably efficient. We find Panthera talk our language and make any process as painless and easy as possible.

Anita van Eijndhoven Quidne-IT
Ash & Tim Lane

Panthera brush aside the stereotype of the typical accountant

We got in touch with Panthera Accounting by way of a recommendation; we haven't looked anywhere else since. They are an extremely professional yet relaxed group of people. We were slightly daunted by the idea of accountants but Panthera brushed aside y the stereotypes. They are very understanding when answering any questions we may have. They are completely efficient, offer sound business advice, and are fantastically priced. We will continue to recommend them.

Ash & Tim Lane Starveacre Fencing
Jayne Johnson

An Asset to my Business!

The whole team at Panthera are great! Working with them has been a huge support to my growing business. They help me to understand the numbers I need to know. They give me technology solutions like Xero so that I can process things quickly and have access to my own figures. They are quick to reply, highly knowledgeable, nothing is too much trouble and as well as making sure that everything is compliant and on time, they are enthusiastic, professional and fun to work with.

Jayne Johnson Better People
John Baker

Absolute joy - they provide a first class service on every level

Working with Tory and the team at Panthera is an absolute joy - they provide a first class service on every level; from simple Xero issues through to more complicated tax enquiries, they’re always on-hand to help me get it right. I’m certainly not their biggest customer, but I’m always made to feel like their most important one.

John Baker BKR Solutions
John Castle

Professional and Friendly

I would like to say that Panthera Accounting have helped me with my business accounts for more than 4 years now. They have consistently offered an excellent competitively priced service that works both professionally and in such a friendly way that I would highly recommend them to everyone considering using their services.

John Castle Ilexanna Limited & Birch Castle Homes Limited
Jonathan Morrison

They are always there to answer queries and sort out issues

I had been with Mr Dunn for 20 years when upon his death Panthera took over the business. They now play a bigger part in the running of my business, they do all the stuff that has to be done but I don't like doing ie book keeping, VAT, wages, and returns. They are always there to answer queries and sort out issues and make sure all Tax deadlines are met. Their costs are fair, service is great and I have and would highly recommend them.

Jonathan Morrison Wallingford Builders
Pippa Scott

Professional, friendly and personal service.

Panthera Accounting have gone above and beyond the call of duty to guide and support our Company. They offer a professional, friendly and personal service that can take the stressful and sometimes frightening feelings out of running a business. They have guided us through the working of Xero and have offered “teaching sessions” on the day to day running of the accountancy package. Our only regret is that we didn’t join their team earlier.

Pippa Scott Scott's Commercial Services Limited
Sara Southey

Panthera puts the personal back in to accountancy!

Tory and her team have provided a friendly, approachable and helpful service from the start. They have delivered a quality service, above and beyond anything I could have expected. Panthera, with the help of the Xero package, have taken the stress, strain and confusion out of managing my company and personal accounts. I look forward to working with them for many years to come.

Sara Southey Bluestones Garden Design
Tracey Miller

Panthera are fantastic.

Panthera are fantastic. Always professional, going the extra mile for their clients and delivering superb service. I recommend them all the time to my clients.

Tracey Miller Bigger, Brighter, Bolder BBB

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