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FAQs

  • General

  • Borrowing

  • Investing

  • How it works

  • How risk is calculated

  • Case studies

What is Formax Credit?

Formax Credit UK Limited is a regulated Peer-to-Peer platform where qualified individuals and organisations can lend money to small and medium sized UK businesses. There are no great overheads like with banks, this allows for a fairer deal for the borrower and potentially a higher return for the lender.

After fully assessing a borrower's financials and credit history with third party credit reference agencies, we assign the prospective borrower to a band (ranging from A+ to E). These bands represent the level of risk associated with that borrower's case.

Investors on the Formax Credit platform have a choice of three products to invest in: Emerald, Ruby, and Sapphire; over 12, 36, or 60 months respectively. All investment products will be spread across all lending products and risk bands for a varied and comprehensively diversified portfolio.

What makes Formax Credit different?

As one of the UK's only P2P platform with a truly global perspective on investing and borrowing, Formax is able to apply a unique understanding of worldwide market dynamics to its British business.

We are committed to building long-term relationships with our clients - not short transactions - so it is fully transparent and doesn't move the goalposts after an agreement is made.

The platform has been designed to balance risk and return to ensure that both businesses and investors get the best possible deal, no matter how big or small.

- We offer a simple and hassle-fee lending experience on our platform with healthy returns to our investors.

- We also offer some of the lowest overall rates available to our borrowers for unsecured loans.

- Our completion fee is also among the lowest in the UK as well as fully transparent.

Is Formax Credit Regulated?

Yes - Formax Credit UK Limited (Company number: 09044698) is fully authorised and regulated by the Financial Conduct Authority (Licence number: 628890).

What happens if Formax Credit goes out of Business?

Lending through Formax Credit UK Limited is not covered by the Financial Services Compensation Scheme (FSCS). In compliance with the Financial Conduct Authority (FCA) regulation, investment firms, including Formax Credit UK Limited, are required to segregate client funds from their own resources.
Client funds will under no circumstances be used by us for any purposes other than its main function - to be contractually lent out as an investment to UK businesses. In fact, our investor funds are kept in segregated accounts, their funds are not held or owned by Formax Credit. Moreover, client funds are isolated so that in the unlikely event we become insolvent, funds can easily be returned to investors.

Full arrangements have been made by Formax Credit UK Limited to ensure that clients continue to receive payments from their investments and any funds that have not been lent will be protected.

Where does Formax Credit UK operate?

Formax Credit UK Limited only provides loans to UK based businesses and entities, excluding the Channel Islands and the Isle of Man.

How do I make a complaint?

Please email our complaints department at complaints@formaxcredit.co.uk and we will aim to respond within two working days.

Our Procedures

Any complaint verbal or written will be referred to our Compliance Manager at the earliest opportunity or to a member of the senior management if the Compliance Manager is unavailable. We will also:

  • Acknowledge the complaint in writing promptly
  • Give details in our acknowledgement letter of the Financial Ombudsman Service
  • Make contact to seek clarification on any points where necessary
  • Fully investigate the complaint
  • Keep you informed of our progress
  • Discuss with you our findings and proposed response

You will receive contact from us advising on progress if we cannot respond immediately. We will let you have our final response as soon as possible and not later than eight weeks.

Investigation

The Compliance Manager will establish the nature and scope of your complaint having due regards to the Financial Conduct Authority's direction:

  • Deal with complaints promptly and fairly
  • Give complainants clear replies and, where appropriate, fair redress


Eligible Complainants

It is the firm's policy to treat all complainants the same, however, eligible complainants are legally defined and have additional rights in law that we must acknowledge and adhere to.

The Financial Conduct Authority complaints rules apply to complaints:

  • Made by, or on behalf of an eligible complainant;
  • Relating to regulated activity;
  • Involving an allegation that the complainant has suffered, or may suffer, financial loss, material distress or material inconvenience;


Final response

This will set out clearly the firm's decision and the reasons for it. If any compensation is offered a clear method of calculation will be shown.

We must include details of the Financial Ombudsman Service in the final response if dealing with an eligible complainant and a regulated activity, we will:

  • Explain that the complainant must refer the matter to the ombudsman within six months of the date of this letter or the right to use this service is lost
  • Indicate whether or not we consent to waive the relevant time limits.


Complaints Settled within 3 business days

Complaints that can be settled to your satisfaction within 3 business days can be recorded and communicated differently.

Where we consider a complaint to be resolved to your satisfaction under this section, we will promptly send you a Summary Resolution Communication', being a written communication from us which:

  1. refers to the fact that you have made a complaint and informs you that we now consider the complaint to have been resolved to your satisfaction;
  2. We will tell you that if you subsequently decide that you are dissatisfied with the resolution of the complaint you may be able to refer the complaint back to us for further consideration or alternatively refer the complaint to the Financial Ombudsman Service;
  3. Indicates whether or not the we consent to waive the relevant time limits, (where we have discretion in such matters)
  4. Provide the website address of the Financial Ombudsman Service; and
  5. Refer to the availability of further information on the website of the Financial Ombudsman Service.


In addition to sending you a Summary Resolution Communication, we may also use other methods to communicate the information where:

  1. We consider that doing so may better meet your needs; or
  2. We have already been using another method to communicate about the complaint.


Closing a complaint

We will consider a complaint closed when we have made our final response to you. This does not prevent you from exercising any rights you may have to refer the matter to the Financial Ombudsman Service.

Financial Ombudsman Service

We will co-operate fully with the Ombudsman in resolving any Compliance Manager made against us and agree to be bound by any awards made by the Ombudsman. The firm undertakes to pay promptly any fees levied by the Ombudsman. 

Contact:

 The Financial Ombudsman Service, Exchange Tower, London E14 9SR

 Tel:  0800 023 4567 (free for most people ringing from a fixed line) or 0300 123 9123 (cheaper for those calling using a mobile) or 020 7964 0500 (if calling from abroad)

 Email:  complaint.info@financial-ombudsman.org.uk

 Website:  www.financial-ombudsman.org.uk

How can I contact you?

Please contact us with any general queries at info@formaxcredit.co.uk

If you have queries regarding your account, please contact us at loans@formaxcredit.co.uk

Visit our Contact Us page to send us a message. 

Please see our Partners page if you wish to work with us. 

Who can apply for a loan?

Any established business which meets the following criteria can apply for a loan with Formax Credit:

  • - Limited Company
  • - Partnership
  • - Limited Liability Partnership

The following is required of the business:

  • - Business must be trading for at least 1 years
  • - Business must be trading in the UK
  • - Annual turnover of at least £60,000 per annum
  • - No Active CCJs (unless under £250)
  • - UK business bank account

The following is required of the business owner/director:

  • - Minimum age 21
  • - No Active CCJs (unless under £250)
  • - Address in UK for at least 3 years
  • - Personal Guarantee (we may also accept Personal Guarantee(s) from non-owners)

You will have to upload a clear picture of your passport or identity card, and a clear picture or scan of a proof of address document which may include a utility bill, a council tax bill, tenancy agreement, or bank/building society/credit union statement.

How much can I borrow?

Your business can borrow between £25,000 to £100,000 as an unsecured loan, provided your business meets the minimum requirements.

What kind of loans can I get at Formax Credit?

You can get an Unsecured Business Loan with a personal guarantee of between £25,000 to £100,000 across a term of 6 to 60 months.

In the near future we will be providing additional means of obtaining credit for your business, including secured loans, and cash advances.

What happens if my loan does not become fully funded?

We aim to fully fund your loan request within 24 hours after evaulating and approving your case, however, in the unlikely event that this process takes longer, we will keep your case open until such time as your request is fully funded, at which point you may draw-down on the loan.

What fees apply to a loan?

Formax Credit's fee structure is transparent and straight-forward. The completion fee is a one off charge that can either be added to the loan or paid upfront before you draw-down. The choice is yours.

Borrowing Terms 6 12 24 36 48 60
A+ Completion Fee 1.25% 1.75% 2.35% 2.75% 3.25% 4.25%
A, B, C Completion Fee 2.00% 2.75% 3.50% 4.00% 4.50% 5.00%
D Completion Fee 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
E Completion Fee 5.00% 5.00% 5.00% 5.00% - -

The table above displays our fee structure for unsecured Business Loans for our A+ rated applicants. Our maximum completion fee is 5.00%. There are no fees for repaying your total loan amount early. You will only pay interest for the time that you borrow.

We do not typically offer loans in the E Risk Band for longer than 36 months (3 years). 

Adding the completion fee to your load means that you can draw down the full amount you have requested. This payment method will slightly increase the cost of borrowing as the completion fee will be added to the total lent.

If you choose to pay the completion fee upfront, you will only have to pay a fixed interest rate for the duration of your term. However, the completion fee will be deducted from your total before you draw down.

 

Are there any extra charges that could apply to my loan?

If payments are made on time, the only charges that apply to your loan are the interest and completion fee.

In the event of a late payment, an additional 12.5% charge will be applied to your account on a monthly basis until the overdue amount is settled.

However, we will always work with borrowers to avoid this and bring them back on track. Please click here to read our terms and conditions for more information.

What interest rate will my business pay?

The interest rate your business will pay is dependent on your credit profile, your company's financials, and the term of the loan.

The higher your credit score is, the healthier your business is - and the lower your term request is, the lower the interest rate will be.

Your loan application will be graded from A+ to E in what we refer to as our 'risk bands'.

 

Risk Band

 

 

A+

 

 

A

 

 

B

 

 

C

 

 

D

 

 

E

 

 

Interest Rate

 

 

5.50% -
6.75%

 

 

6.25% -
7.85%

 

 

9.10% -
10.45%

 

 

11.00% -
13.50%

 

 

12.50%-
18.00%

 

 

18.50%-
21.50%

 

How long will I have to pay the loan back?

When you make your application for an unsecured business loan, you will have the option to choose one of the following terms:

6, 12, 24, 36, 48, 60 months

The shorter-term periods mean your monthly repayment amount will be higher but your interest rate and completion fee will be lower.

How will I repay the loan?

You will have a choice of paying your completion fee upfront or adding it to your loan, that will determine the consistent interest rate that you will pay throughout the lifetime of your loan.

The monthly repayment amount will remain the same. Your first payment will begin 1 month after you draw-down on your loan via Direct Debit or in some cases a Staning Order.

EARLY REPAYMENT

You may choose to repay your loan in full early. You will have to place a request after which you will receive a final settlement figure.

When will I receive the loan?

Once your application is submitted our underwriting team will need to evaluate your business and conduct an identity and credit check.

We do not hold auctions for your loan application, this means that your loan will be ready as soon as the appropriate funds are available. Therefore, once approved, your loan could be in your business account within three working days.

However, our underwriting process may take longer if we require further information from you to complete our underwriting assessment.

How are funds matched and will my business remain anonymous?

Yes, we do not put your loan application up for public auction. Basic information regarding your case will be available only to those lenders which have funded your loan.

How funds are matched:

You as a borrower will have a choice of six terms (6, 12, 24, 36, 48, 60 months), Lenders on the platform have a choice of three terms (12, 36, 60 month). Each set of two borrower terms are typically matched with one lender term as illustrated in the table below.

We will match funds to your case based on your risk band in accordance with the Lenders' term and available funds.

Risk Band A+, A, B, C, D, E
Investment term  12 36 60
Borrowing term  6  12 24  36 48  60

On occasion shorter term investments may be used to fund longer term loans.

 

Does my business require assets in order to qualify for a loan?

No- Formax Credit UK offers unsecured business loans. This means that as long as you and your business meet the eligibility criteria, you will be able to apply for a loan. The only thing required is a personal guarantee from the director(s) of the company or in some cases, any willing third party associated with the business owner(s).

If your business is a partnership, any partner who owns more than 20% of the business may also be required to give a personal guarantee.

What will happen if I cannot repay my loan?

If at any time, you believe you will be unable to make a repayment, you must contact us as soon as possible. Email us at loans@formaxcredit.co.uk.

We can then work together to make appropriate arrangements to ensure repayments get back on track.

If you fail to inform us and miss a repayment, our late repayment process will begin.

If your repayment is three days overdue, you will be contacted to ascertain why you have missed your scheduled payment and we will attempt to bring you back on track. If repayments do not commence within seven days, your account will be charged a late payment fee of up to 12.5% of the amount due. You will be contacted periodically to arrange payment.

This will be a monthly additional charge until the account is restored. If you miss your second consecutive scheduled repayment, your account will be declared in default, in which case the full amount owed will be sought by a debt collections agency and your credit profile may be tarnished. If your account defaults, you may be charged for any third party fees we incur in the collections process as well as any administrative costs.

Can I become an investor?

Yes - the minimum lending requirement is £100.

You simply register online to become a lender on our platform. We then run a few simple identity and AML checks, once these are complete you will be able to deposit your investment into your lending account. This usually takes 1 to 2 working days.

You will have to upload a clear picture of your passport or identity card, and a clear picture of a proof of address document. We accept a utility bill, a council tax bill, tenancy agreement, or bank/building society/credit union statement.

Please note that you cannot use the same document for proof of identity and proof of address.

Can a company or a trust invest with Formax Credit?

Yes - Provided that you are not a lending company, you can create an investment account with Formax Credit.

What products can I invest in?

We have three investment products for you to choose from. Your choice of product depends on your commitment of term.

 

Short Term EMERALD 12 Months
Medium Term RUBY 36 Months
Long Term SAPPHIRE 60 Months

 

A+ is our lowest risk band
E is our highest risk band

Please note that lending to higher risk businesses increases the overall risk exposure of your investment. Your capital is at risk and is not protected under the Financial Services Compensation Scheme (FSCS).

Are there any fees or charges to lend on Formax Credit?

No - there are no fees for investing with Formax Credit. Many firms charge an annual fee, however, there are absolutely zero charges or fees to invest your funds with us. You will only incur a 0.75% charge if you choose to withdraw your funds early before the end of your investment commitment.

The 0.75% early withdrawal fee applies to the amount being withdrawn. You may withdraw interest earned on your account quarterly (every three months) with no charge.

Do I have to choose who I invest in?

No - all you need to do is choose how long you want to invest for and the amount you are willing to invest. Formax Credit will do the rest. We will assign your funds to eligible businesses and retrieve monthly repayments on your behalf.

How long do I have to commit my investment for?

You will have a choice of three commitment terms:
 

Short Term EMERALD 12 months
Medium Term RUBY 36 months
Long Term SAPPHIRE 60 months

 

 

The longer you commit to the investment, the higher your rate of return will be. Your funds may be reinvested throughout the lifetime of your commitment term, therefore in order to fully maximise the potential of your investment, the longer you commit, the more your investment will grow.

How long does it take for my funds to be lent out?

The utilisation of your funds is subject to availability - you will only start to earn interest on your funds once it has been lent out to borrowers. The process of allocating your funds could be as fast as a few minutes, and typically ranges from 1 to 3 working days. In the event it takes 14 days, Formax Credit will find suitable borrowers which most closely reflect your return rate so that your investment may start to accrue interest.

Who will I be lending to?

You will be lending to qualifying small to medium sized businesses (SMEs) around the United Kingdom (excluding the Channel Islands and the Isle of Man). Your investment may also be allocated to provide funding for secured property bridging and development loans as well as Merchant Advances once these products are made available by Formax Credit UK. All borrowers undergo the same stringent assessment criteria.

Can I withdraw my interest?

You can withdraw the interest you earn on your account every three months (quarterly) for free. You can see a full overview of your funds and returns through your lender dashboard.

However, to maximise the growth of your investment we recommend you keep your interest within your account to be reinvested.

Can I withdraw before the end of my commitment?

Yes - however this is subject to availability and you will incur a charge of 0.75% of the total being withdrawn.

Yes - however this is subject to availability and you will incur a charge of 0.75% of the total being withdrawn.

Early withdrawal will also result in an earned interest rate reflective of the duration the funds were in use, rounded down to the nearest whole investment term.

For example, if you have signed up to a 60-month investment commitment and you withdraw, or close, one or more of your positions in an active loan before your term is finished e.g after 36 months; you will only be entitled to receive the annual return rate assigned to the 36-month investment product. The same applies in this scenario if you withdraw, or close your position(s) between 1 to 35 months. In which case you would only be entitled to receive the 12-month annual return rate. For more information please refer to our Lender Terms and Conditions.

Do I need previous lending experience?

No - once you have been approved and have chosen a product and commitment term to invest in you can relax and monitor the performance of your portfolio - we will take care of the rest. We spread your investment across eligible borrowers and recover their monthly repayments, which will be redistributed back to you.

However, as with all investment products, you must understand the risk involved to your capital. Your investment is not protected by the Financial Services Compensation Scheme (FSCS).

 You must seek independent financial advice if you are uncertain.

How does Formax Credit calculate risk bands?

We analyse the financial statements provided to us by each borrower. These documents include:

  • - Management accounts
  • - Profit and loss statements
  • - Formally filed/audited accounts

We also look at the applicant's credit rating and history. Some of the information we assess is the following:

  • - Business payment history
  • - Business trading history
  • - CCJs/insolvency/winding up petitions
  • - Business profitability
  • - Debt Service Cover (DSC)
  • - Director(s) associated businesses
  • - Director(s) credit rating
  • - Net asset value and strength og Personal Guarantee(s)

Our underwriting team will assess all data collected and use our internal score-carding system to calculate an amalgamated score which will represent the risk band each borrower will be placed in.

Our risk bands are graded A+, A, B, C, D, E

A+ is our lowest risk band, and E the highest risk.

What are the risks of lending?

Your capital is at risk and not protected under the Financial Services Compensation Scheme (FSCS) when lending through Peer-to-Peer firms.

A small portion of your investment may encounter late payments or even defaulted accounts from borrowers. We cannot guarantee that all borrowers whom you have lent to will be able to repay their debt throughout the lifetime of their loan. However, we have comprehensive measures in place to recover funds from borrowers in such cases. The Personal Guarantee(s) that we put in place with each business loan also acts as a safeguard against loan defaults. In addition to this, we have a Provision Fund which may recover any capital that is at risk in your portfolio.

Will my return be taxed?

Yes - the returns on your investment will be considered as income. It is your responsibility to declare any earnings and pay the appropriate tax. All information and figures presented to you on the Formax Credit platform will be pre-tax. We will provide you with a Statement of Earnings which you can retrieve from your dashboard. You can use that information to work out exactly what you have earned for tax-purposes.

Example

Information based on 2017/18 tax year.

Your tax free savings allowance:

Income Tax Band Tax-free savings income
Basic rate £1,000
Higher rate £500
Additional rate £0

You'll pay tax on any interest over your allowance at your usual rate of Income Tax:

          Band Taxable income Tax rate
Personal Allowance Up to £11,500 0%
Basic rate £11,501 to £45,000 20%
Higher rate £45,001 to £150,000 40%
Additional rate over £150,000 45%

For instance, if you pay income tax at the Basic rate of 20% over your £11,500 allowance and you earn £2,200 in interest within the tax year, you would have to declare and pay 20% income tax on the £1,200 that you earned over your annual allowance of £1,000. This is on the assumption that £2,200 is the only interest you have earned within the tax year.

If uncertain, you should seek independent advice.

For tax-free returns consider registering your interest for the Formax IFISA which allows you to invest in our P2P products with a tax-free wrapper of up to £20,000 for the 2017/18 tax year.

You can do so by creating a new account or transferring any of your existing ISA accounts.

How is my investment diversified?

Diversification is another important way of protecting your investment. Your investment in any product (Emerald, Ruby, Sapphire) will be invested in a range of products and risk bands. Further to this your funds are lent out in portions as micro-loans, meaning that only a small amount of your total funds on offer with Formax is lent to any one borrower at any one time. This is in the interest of further minimising your risk exposure.As a rule, we will generally not invest more than 25% of your total investment in any one loan.

Formax Credit UK is a Peer-to-Peer platform

We link individual lenders with appropriate borrowers directly. Our lenders can include individuals as well as organisations and institutions. We evaluate and risk assess borrowers and administer loans until maturity. Formax Credit offers a strong alternative to conventional lenders such as banks which increasingly overlook Small and Medium sized Enterprises (SMEs) or charge large sums and extra charges to cover overheads.

If you are a borrower, all you need to do is meet the required criteria and you will be eligible to receive your loan shortly thereafter. Our Business loans are unsecured and only require a personal guarantee. You will be charged an administration fee of between 1.25-5.00% depending on our risk assessment and length of your chosen term.

If you are an investor, Formax Credit is an excellent choice for the growth of your portfolio. What makes us stand out is that we do all of the work. You simply invest your funds and Formax takes care of the rest. We are fully transparently regarding our fees and charges. There are no fees for our investors to lend money on our platform.

Diversification

Diversification is another important way of protecting your money. Each one of our three core investment products is spread across all products and risk bands to vary the spread of your investment.

Your funds are lent out in portions as micro-loans meaning that only a small amount of your total funds on offer with Formax Credit is lent to any one borrower at any one time.

This decreases the overall risk exposure of your funds, as if one borrower goes into arrears on their repayments, only a small portion of your portfolio would be affected.

Formax Credit has such confidence in its underwriting that we will co-fund loans with you.

Our Borrowers

Our model requires that the business seeking a loan from the Formax Credit platform can afford the monthly repayments for their requested loan amount and borrowing term at a Debt Service Cover (DSC) of at least 1.5x the annual loan repayment against the business’ annual net profit. Affordability is of paramount importance for us therefore all businesses whom we grant loans to must be profitable.

This requirement runs across all of our risk bands. This assurance of affordability decreases the likelihood of late or missed payments in accordance with treating customers fairly and ensuring proper affordability at the point of drawdown and, where possible, into the foreseeable future. In addition to this, we typically allow, as a minimum requirement, loan requests equating to a maximum amount of 5/12 of any given business' gross annual revenue, however, this limit acts as a guideline for the borrowers on our lowest end of permissible annual revenue. For example, a business can apply for a minimum loan of £25,000 with a business revenue of at least £60,000 provided that they are profitable enough to have a Debt Service Cover (DSC) of 1.5x their annual net profit against the annual repayments of the loan – provided other eligibility requirements are also met.  

The maximum loan request for any given business is established based on how they perform against our affordability criteria. We consider each loan application by its merits, one aspect of this is the reason for borrowing'. This plays a significant deciding factor in the assessment. Reasons that contribute to the growth of the business are especially championed by us as this further ensures the likelihood of repayment affordability until the loan fully matures and points towards prosperity for all parties involved, whilst stimulating the British economy.

The business must adhere to the following conditions to be eligible for a loan with Formax Credit:

  • Revenue exceeding £60,000 per annum
  • Trading for over 12 months
  • Applicant's minimum age: 21 years
  • Must have no unsettled CCJs over £250
  • Must provide a personal guarantee
  • Must fall within our affordability criteria
  • Must be able to provide 3+ years of UK residence address
  • Must be trading in the UK (excluding the Channel Islands and The Isle of Man)

Our Investors

Invest in UK SME businesses through Formax Credit.

You can invest as little as £100 on the Formax Credit Platform

The following can invest through Formax Credit:

  • Individuals
  • High Net Worth individuals
  • Organisations
  • Institutions

To lend on Formax Credit you will be asked for:

  • Source of income
  • Identity documentation to perform standard AML checks

All that is required from our investors is to:

  • Choose duration of the investment commitment
  • Choose the amount you wish to invest

Security

We require a personal guarantee from all borrowers on their loans (ideally from the business director(s)), meaning that the personal guarantee provider is responsible for upholding the loan repayments in lieu of the business should the need arise. All applications are individually assessed in accordance with our eligibility criteria and affordability gauge. We have strict policy against late repayments, however, we treat our customers fairly and always try to help borrowers where we can. We are vigilant in getting our borrowers back on track and have procedures to safeguard against bad debt.

Provision Fund

Our provision fund, also known as a compensation fund, has been put in place to help minimise any potential losses that might befall our lenders portfolio due to bad debt. Formax Credit will allocate a portion of the fees gathered from our borrowers for the provision fund which will be apportioned to any lenders who might have made losses at the end of every 12-month period to proportionally cover parts of their capital losses.

Our risk bands are associated with the credit history/scoring of the borrowing business. This information is gathered via third party credit reference agencies, who also carry out AML/KYC checks.
 

However, this is not the only consideration that dictates the risk band that a case is associated with.
 

he applicant's business will also be evaluated on their:
 

  • - Financial documents
  • - Business performance history
  • - Business profitability, and
  • - Reason for borrowing

Formax Credit has an internal scoring system that alters the applicants total numeric score depending on if the analysis presents a result that falls within certain margins. For example, our gradation of a given business's annual net profit margins:
 

  • - Good (23%+)
  • - Average (19-22%)
  • - Below average (11-18%)
  • - Cause for caution: (1%-10%)

These gradations, along with others, have predefined points associated with them which may alter the final score of the borrower's application.
 

Our scores correlate with the alphabetical grading structure i.e. A+, A, B, C, D, E.
 


Our lowest risk cases are graded A+.
 

These businesses will have:
 

  • - The best credit history and score, as well as
  • - A good profit to revenue ratio
  • - A strong Personal Guarantee Cover
  • - A strong Debt Service Cover
  • - The minimum preferred revenue surplus or better

A good reason for borrowing which will lead to business growth For these reasons, these cases will receive the best rates we offer, meaning more modest returns for our investors in exchange for the low risk investment.
 


Our highest risk cases are graded E.
 

These businesses will have:
 

  • - A below average credit history and score (based on credit reference agency's database), but
  • - will have been assessed for affordability by adhering to our Debt Service Cover requirements to ensure that they can satisfy monthly repayments
  • - The Minimum Personal Guarantee cover
  • - The Minimum profitability requirement

All loans are backed up by a personal guarantee from the business owner (or an associated party,) meaning that if the repayments are cannot be met by the business, the personal guarantee provider will be personally liable to meet repayment commitments.

We will not accept any borrowers who:

  • have a history of more than 3 CCJs in the past 2 years regardless of the CCJ value, either as a business or the owner.
  • cannot provide residential address covering a period of more than 3 years.
  • have been operating for less than 12 months.
  • operate or reside outside of the UK (including the Channel Islands and the Isle of Man).
  • Whose annual revenue falls short of £60,000.

Case 1

Applicant Borrower 1
Business Type Limited Company
Business sector Retail
Loan Purpose Renovation
Annual Revenue £300,000
Annual Operating Cost 85%
Monthly Business Profit £3,750
Loan Request £25,000
Term 60 Months
Monthly Repayment Amount £623
Debt Service Cover 6x
  Numeric value which equals risk band
Initial Credit Score A+
Score after internal assessments A

 

(Final score has slightly reduced due to the business's level of net profit. The risk band is altered to A from A+)
 

This applicant has an annual turnover in excess of required minimum of £60,000. They have requested a sum of £25,000 to undertake a renovation. Their financial records show that their total annual outgoing costs are 85% of their annual revenue. This leaves 15% in net profit annually for the borrower to securely make repayments with and with which to cover any unforeseen costs.
 

Our internal criteria policy contains stages and point penalties for certain ranges of the final surplus, or net profit percentages (as well as other criteria).
 

This application falls within the lower end of operating profit and is therefore deducted a designated number of points which places them on a new risk band, namely downgraded from A+ to A.
 

They are however fully capable of affording the repayments on the requested loan amount within the rates of their assigned risk band. Their repayment to profit margin ratio is 1:6, also refferred to as a Debt Service Cover of 6x. This is well within the permissible range of affordability.

Case 2

Applicant Borrower 2
Business Type Limited Company
Business sector Hospitality
Loan Purpose Expansion
Annual Revenue £700,000
Annual Operating Cost 75%
Monthly Business Profit £14,580
Loan Request £100,000
Term 36 Months
Monthly Repayment Amount £3,600
Debt Service Cover 4x
  Numeric value which equals risk band
Initial Credit Score B
Score after internal assessments B

 

This applicant has an annual turnover in excess of required minimum of £60,000. They have requested a sum of £100,000 to expand their business. Their financial records show that their total annual outgoing costs are 75% of their annual revenue. This leaves 25% in net profit annually for the borrower to securely make repayments with and with which to cover any unforeseen costs.
 

Our internal criteria policy contains stages and point penalties for certain ranges of the final surplus, or net profit percentages (as well as other criteria).
 

This application adheres to most of our assessment requirements and therefore not deducted any points in way of adjusting the risk of their application.
 

This application is within the permitted affordability ratio. This shows that they are capable of affording the repayments on the requested loan amount within the rates of their assigned risk band. Their repayment to profit margin ratio is 1:4. This is just within the permissible range of affordability.

Case 3

Applicant Borrower 3
Business Type Limited Company
Business sector Taxi Services
Loan Purpose Asset purchase
Annual Revenue £600,000
Annual Operating Cost 82%
Monthly Business Profit £9,000
Loan Request £70,000
Term 60 Months
Monthly Repayment Amount £1,744
Debt Service Cover 5x
  Numeric value which equals risk band
Initial Credit Score C
Score after internal assessments C

 

(Final score has slightly reduced due to the business's level of net profit however the score remains within the parameters of the risk band)
 

This applicant has an annual turnover in excess of required minimum of £60,000. They have requested a sum of £70,000 to purchase assets. Their financial records show that their total annual outgoing costs are 80% of their annual revenue. This leaves 20% in net profit annually for the borrower to securely make repayments with and with which to cover any unforeseen costs.
 

Our internal criteria policy contains stages and point penalties for certain ranges of the final surplus, or net profit percentages (as well as other criteria).
 

This application falls within the lower end of operating profit and is therefore deducted a designated number of points, however, their final score is still within the parameters of the C risk band.
 

This application is within the permitted affordability ratio. Their repayment to profit margin ratio is 1:5. This Debt Service Cover shows that they are capable of affording the repayments on the requested loan amount within the rates of their assigned risk band.

Case 4

Applicant Borrower 4
Business Type Limited Company
Business sector Dry cleaning/Laundry
Loan Purpose Tax payment
Annual Revenue £140,000
Annual Operating Cost 70%
Monthly Business Profit £8,166
Loan Request £80,000
Term 24 Months
Monthly Repayment Amount £4,014
Affordability Ratio 1:2
  Numeric value which equals risk band
Initial Credit Score B
Score after internal assessments OUT OF BOUNDS

 

(Final score has slightly reduced due to the business's level of net profit however the score remains within the parameters of the risk band)
 

This applicant has an annual turnover in excess of required minimum of £60,000. They have requested a sum of £80,000 for tax payment. Their financial records show that their total annual outgoing costs are 70% of their annual revenue. This leaves 30% in net profit annually for the borrower to securely make repayments with and with which to cover any unforeseen costs.
 

Our internal criteria policy contains stages and point penalties for certain ranges of the final surplus, or net profit percentages (as well as other criteria).
 

This application falls within the lower end of operating profit and is therefore deducted a designated number of points, however, their final score is still within the parameters of the C risk band.
 

This application falls within the higher end of operating profit, however their loan and term request mean that the repayments will equate to half of their monthly operational profit margin, with a ratio of 1:2, leaving very little margin for additional or unforeseen cost, meaning that the affordability of their repayments are easily jeopardised.
 

Moreover, their reason for borrowing does not contribute towards the growth of the business, what it connotes also does not inspire confidence in the operational management of the business.
 

For these reasons, this business will not be accepted onto the platform.
 

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