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IRISH BANKS GET a lot of grief – much of it deserved – for not lending enough money to cash-strapped startups and small businesses.
But for all the bank bashing, many small and medium enterprises (SMEs) are unaware that there is another, viable option for firms looking to grow.
That alternative is peer-to-peer finance, a billion-euro global industry which pairs potential investors with businesses in need of capital.
And according to Derek Butler, who heads Grid Finance, one of Ireland’s two crowd-lending platforms, the lack of recognition remains the major obstacle to getting more people to join the marketplace.
“We know that our model works and it works very well, so it’s about making more businesses aware of that,” he told TheJournal.ie. ”Frankly, not enough of them know about our system.”
In the US, the biggest platform, the Lending Club, has processed over $9 billion in loans to date, while in the UK the largest player, Zopa, has lent nearly £900 million.
If you benchmark Ireland internationally, we are a little bit behind the curve,” Butler said. “But even in the most-developed markets, it still is not mass-market.”
How it works
The concept behind peer-to-peer lending is straightforward. Businesses apply for loans through a platform like Grid Finance, which went live last September, or its rival Linked Finance, launched in 2013.
Lenders propose the sums and interest rates they’re prepared to put on the table during an auction period. First preference goes to the cheapest bids, while the borrower ends up paying the average of all successful offers.
The lure for lenders is the interest return: an average of 7.5% through Grid Finance, compared to about 1% from a savings account.
Risks and rewards
But, like any investment, there are risks. Both Grid Finance and Linked Finance say they have strict screening processes for businesses, although there remained the danger that lenders could lose their money on deal.
However Butler said none of its borrowers had defaulted so far. ”The majority of our customers could access finance from a bank and I think that’s an important message to get across,” he said.
For borrowers, the big attraction is the ease of access to finance, as well as the opportunity to tap into their own customer networks.
Projects successfully funded so far through both platforms include well-known businesses like KC Peaches, Leo Burdock and Viking Splash Tours.
Grid Finance promises a response to loan applications within 48 hours – after which a successful project can go live for bids from lenders.
That compares to an average wait of eight weeks from application to draw-down from the banks, according to the latest Irish SME survey.
The catch
The trade-off is the amount of money the financing platforms keep in loan fees – and those sums can be hefty.
Linked Finance deducts 2.5% from the loan before delivering the money to borrowers, while Grid Finance’s fees are even higher at 5% of the loan total for a three-year agreement.
For now the industry remains unregulated, although both local operators have been calling for the Central Bank to include them in its oversight.
Nevertheless, the appetite for peer-to-peer finance appears strong. Linked Finance has set a target of €250 million in lending over the next three years, while Grid Finance is aiming for €100 million within the same period or less.
There’s a huge opportunity for us to disrupt a very traditional way of financing small businesses and there’s a great opportunity for us to do that in Ireland,” Butler said.
For businesses
For individuals
This month, as part of TheJournal.ie’s ongoing startup and small and medium enterprise (SME) focus, we are looking at peer-to-peer services and the sharing economy.
To view other stories from our collection, click here.
Show up at your local protest against the Household Tax. Most protests at 12 noon. Show this government that we are not willing to be bled anymore to pay Troika Taxes. Save your blood for the Irish Blood Transfusion Board.
There are over 40 protest actions organised around the country on Saturday. We call on people to connect with their nearest one, which are advertised on nohouseholdtax.org or through our 1890-98 98 00 helpine.”
CAHWT protests Sat Feb 25th:
DUBLIN:
City Centre – meet GPO at 12 noon. Mass leafleting of shopping areas.
Cabra/Stoneybatter – Meet at 12 at Phibsborough Church for protest at clinic of Joe Costello/ Paschal O’Donoghue TDs.
Coolock – Northside shopping centre 12.30
Finglas – protest & leafleting at shopping centre 12 noon
Blanchardstown – 1pm at Council offices, Blanch Town Centre. Bin your govt booklet.
Swords – Fingal Council offices, Swords Main St 12 noon – Bin the Booklet back to Phil.
Balbriggan – Town Hall 12 noon – Bin the Booklet back to Phil.
Ringsend – meet at Library 11.30am
South west inner city – 12 noon at constituency office Catherine Murray TD, Tyrconnell Rd.
Ballyfermot – White line picket (and bin the leaflet. Assemble shops, Ballyfermot Road 2pm.
Lucan – mass leafleting. Meet at Superquinn 12 noon.
Tallaght – mass leafleting at The Square 1pm. Picket Pat Rabbitte Clinic Tallaght village 2pm.
Dun Laoghaire – meet 2pm at the Church Wall
Dundrum town centre – 12 noon.
MUNSTER:
Cork:
City centre – rally at Daunt Square 2pm “bin the booklet”.
Mallow – march assembling 2.30pm at Killarney Rd to march to Town Hall.
Limerick:
Assemble 12pm Pery’s Square, marching to City Hall:
Clare:
Ennis – protest march at 2pm from the O’Connell Monument.
Waterford:
Protest rally 3pm in John Roberts Square.
LEINSTER:
Kildare:
Newbridge – assemble St Conleths Church 12 noon-protest to Martin Heydon TD’s office.
Maynooth/Kilcock – protest 12 noon at The Square, Maynooth Village.
Wicklow :
All Wicklow protest Sat 25th @ 12 noon from Bray town hall march to clinic of Anne Ferris TD
Wexford:
Wexford town -1pm White line protest on bridge.
Gorey – 2pm Protest on Main Street. Assemble outside Pettits supermarket.
Enniscorthy – march and rally at office of Government chief Whip, Paul Kehoe TD starting 10 a.m. Fairgreen (opp.Pettits supermarket).
Carlow:
Assemble 12 noon at Croppies Grave, ’98 Street, Graiguecullen and from there march through Carlow town, finishing at the Liberty Tree.
Kilkenny:
2pm at the Courthouse, Parliament St
Westmeath:
Mullingar – meet at The Square 12 noon.
CONNACHT:
Galway:
Assemble at the Browne Doorway, Eyre Square 2pm for mass binning of leaflet and march to TD clinics.
ULSTER:
Donegal:
Donegal town, Dungloe, Ballybofey, Buncrana, Ramelton, Letterkenny – Information stands in all towns.
Gweedore/Gaoth Dobhair – meet 12 noon Páirc Gnó Ghaoth Dobhair (outside Dinny McGinley’s ministerial office) and marching to his TD’s office in Machaire Chlochair.
Fál Carrach – meet 12 midday at the crossroads for speeches and then a protest march through the town.
Monaghan:
Car cavalcade throughout county towns to hand out leaflets.Leaving from Monaghan town @ 10am from Peter’s Lake carpark via Clones; Ballybay; Carrickmacross and on to Castleblaney and then back to Monaghan. Supporters from each town will be giving out leaflets just before cavalcade arrives.
LOUTH
Dundalk & Mid / North Louth
Ardee will be carrying banners down the main street and leafleting as they go. Meeting @ 12 and going until 2
For the rest of the area, everyone is meeting in ‘the square’ Dundalk where there will be stalls from 1-4 from which the leaflet will be distributed.
Drogheda activity: West Street Drogheda stall from 1.30pm onwards. Members of the group will be distributing leaflets across the town on the day and from early morning on the market.
Please check the website http://www.nohouseholdtax.org for late notifications of other protests
THE JOURNAL, KEEP ME AWARE OF ALL THE NEWS, BRILLIANT!!!!!!!!!!
Can anyone name all of the movies from the Lego clip.
Indiana Jones and The Raiders of the Lost Ark
Ghost
Grease
Dr No
Titanic
The Sound of Music
Singing in The Rain
The Seven Year Itch
ET
Everybody in the country must partake in the protest, as it is important that we let the government know that we are totally against the charges they are imposing on us, and they are punitive, which is what they are. I am very sad that I am not taking part in the protest, and the reason that I am not is as a result of the economic crisis, is that I had an argument with my long term unemployed 44 year old husband, and had to leave home, but I had planned to go to Kilkenny today but life has become too unbearable at home, as I am on the dole too, but I am hoping that there will be another one, and I will make sure that I attend in the near future.
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