Peer to Peer lending is creating new investment opportunities for individuals, but is also plugging a gap in the market for funding small and medium enterprises with a new source of debt funding.
Lead by Stuart Law and chaired by Paul Moore, they today (Mon 17th March 2014) have managed to raise funding for enterprises to a tune of over £20 million since its inception in early 2013.
The principle is very simple, they raise funds for an enterprise by creating a loan from a pool of external investors (a peer group) who bid in an auction to be the contributors for the loan.
To give security to the external investors who join to create the loan, Assetz Capital gets security on the loan from physical assets such as deeds on a property that the borrower may own or personal guarantees from the company directors asking for the loans, and other collateral that secures the loan.
As the loans to businesses are commercial opportunities, it is quite common to get a return of over 10%. When main stream banks are shrinking their balance sheets, SME’s are struggling to get access to capital, it is absolutely fantastic, that Assetz Capital is helping businesses to finance their operations, grow and create employment, and at the same time in these low interest rate times, able offer investment opportunities to individuals looking for a safe and stable place to invest their money.
This is the future of small and medium enterprise lending, and long may it continue.