Feedback On Funding Circle Please

[DSLiverpool]

Well we’ve bootstrapped so far and the upward spikes are higher but the distance between them is longer as projects get ever more complex, we need a pool to pull off and I am loath (at my age) to offer security.

FC and the bank will offer cash based on trading history but obviously it’s expensive.

FC are cheaper but I always thought they tainted the business as a sub prime lender, not sure where I got that from but it was in my head.

Any thoughts on this or ways to plug our cash flow issue.

[akirk]

To whom would it taint the business?
- clients - why would they know?
- future investors/ purchasers? If you were still reliant on funding circle then perhaps but that wouldn’t be the ideal position for investment / sale anyway - and there might be more of an issue with your not being prepared to fund / offer security in those circumstances...

Depends where you are trying to go with the business...

[DSLiverpool]

I just felt it was tainted,, the bank is about 20% more but in real terms it’s not a huge amount.

We’ve had to change our charging model for new much larger clients and our bootstrapping is creaking nothing dramatic.

[anonymous-user]

My advice is do not touch FC, even with the longest bargepole you could borrow from someone else

Can you factor a few invoices? Sometimes that works out relatively cheap if set up properly.

[DSLiverpool]

JPJPJP said:

My advice is do not touch FC, even with the longest bargepole you could borrow from someone else

Can you factor a few invoices? Sometimes that works out relatively cheap if set up properly.

My friendly bank manager said we didn’t need to factor and once in its hard to get out.
Interested in why FC is best avoided as I’ve heard it a lot.
My thinking is to arrange a overdraft with the bank so a more informal solution.

[anonymous-user]

You don’t have to factor through your bank

Overdraft is easy but can be easy to get used to

FC is expensive money usually - they usually want a pretty strong PG as well

[Deesee]

Finance broker here!

Been working with FC for over 5 years, have access to preferential rates and same day underwriting.

Done anything from 5k to 350k as unsecured, lent money for growth, expansion, even Vat/Corp tax facilities, to anything from a building company to a firm of solicitors.

Pm me if you want to know the pros and cons, (and of course if a loan or other facility would be suitable for you & your business).

[48k]

I've not used them but once you open a discussion with them they are bloomin difficult to get rid of.

[hepy]

JPJPJP said:

My advice is do not touch FC, even with the longest bargepole you could borrow from someone else

Can you factor a few invoices? Sometimes that works out relatively cheap if set up properly.

In terms of factoring, it would depend what industry they are in. It sounds like the work is relatively complex which isn’t the easiest to factor.

[wheelerc]

I got a quote from them once as their headline rates looked good...

Offer details:

Amount you'll receive: £25,000
Loan term: 36 months
Fixed monthly repayments: £948.76
Interest rate: 1.44% per month
Loan amount: £26,500 (incl. one-off completion fee of £1,500)
Your equivalent annual rate is 17.30%.
This offer requires a personal guarantee.

I said no!

[PistonBroker]

We borrowed £5k from Funding Circle about 4 or so years ago. Then borrowed £15k which was conditional on clearing the initial loan. I guess we’ve got a couple of years left on that loan.

I agree they might be expensive - we baulked at their offer of £60k to buy a leasehold shop when we realise we’d be paying back the best part of £90k - but the fact that they were even willing to entertain that larger loan spoke volumes in our case. Our bank has never been interested.

Can’t say it’s affected us in any way.

[stub101]

Before selling your soul to FC, have a talk to the Northern Powerhouse Investment Fund (NPIF) manager for your area. If you’re Liverpool I think it’s MSIF.

I know Yorkshire, Manchester, North East better but this link will outline the debt (and equity) options available.

https://www.npif.co.uk/funds-available/microfinanc...

[jammy-git]

How do you bill projects at the moment Dave? I assume milestone or stage payments?

Have a look at switching to agile billing to help smooth your cashflow: https://www.smashingmagazine.com/2013/01/guarantee...

[DSLiverpool]

MSIF is a good shout, they are based 5 mins away away.
Openmedia went with them recently. (Check out their huge tv billboards)

[fellatthefirst]

Have you considered an EFG loan with your bank? 75% of it is backed by the government so banks seem a lot happier to lend. I've had 2 now over the the last 9 years, both at £200k and just finished paying the last one off in August. I'm now about to do another one for a business we set up in Feb this year.

Speak to your bank manager about an EFG (Enterprise Finance Guarantee).

[DSLiverpool]

fellatthefirst said:

Have you considered an EFG loan with your bank? 75% of it is backed by the government so banks seem a lot happier to lend. I've had 2 now over the the last 9 years, both at £200k and just finished paying the last one off in August. I'm now about to do another one for a business we set up in Feb this year.

Speak to your bank manager about an EFG (Enterprise Finance Guarantee).

Thanks for that - another option. Can you pay it back in bigger chunks (I suspect it’s bank dependent)

[DSLiverpool]

We dont qualify for EFG sadly, persuing less sexy avenues.

[williaa68]

DSLiverpool said:

We dont qualify for EFG sadly, persuing less sexy avenues.

Apologies if this sounds patronising, it isn't meant to, but are you sure? I was surprised my business, which is basically just me selling my own knowledge and experience with a small team - so def "services" not "goods" was but Barclays were pretty clear that it was. In the end I put the finance in as a directors loan but the EFG option was there.

[DSLiverpool]

From how they explained it you have to not have assets to use excluding your house.

I can put the £ in but choose not to as I want the business to support the expansion itself.

Possibly they were wrong?

[jonamv8]

jammy-git said:

How do you bill projects at the moment Dave? I assume milestone or stage payments?

Have a look at switching to agile billing to help smooth your cashflow: https://www.smashingmagazine.com/2013/01/guarantee...

Do you find clients are happy with that? Think our clients would get a bit annoyed with 11 different invoices across a project just to help our cashflow.... do you use it, would you share a normal scenario where you’ve used it?