We talk to Daniel Rajkumar, founder and Managing Director of the peer to business online platform rebuildingsociety.com which connects creditworthy businesses with investors.
Crowdfunding is a buzzword in alternative finance at the moment but many small businesses are reluctant to consider it - even if they’ve been turned down by banks. So, if you don’t fancy organising a Kickstarter campaign, what are the most suitable ways of raising money for your new and growing company?
We talk to Daniel Rajkumar, founder and Managing Director of the peer to business online platform rebuildingsociety.com which connects creditworthy businesses with investors. A serial entrepreneur, he’s experienced first hand many of the problems small businesses face when raising funds. He told us how business can apply for a loan through his platform and the best ways they can maximise their success.
What’s the typical profile of a business which seeks finance from you?
An established UK business. Our minimum criteria is two years of trading history, Ltd. status, profitable, with turnover over £200,000. The funds people raise from us go to all sorts of uses in the business, like refinancing bank debt, working capital, asset purchases, expanding headcount, marketing and acquisitions.
What are the steps a business needs to take to seek finance?
It’s really simple – upload their application to our website – www.rebuildingsociety.com/borrow. We’ll review the application and come back to the borrower with our answer and any further questions.
What’s your advice for a small business seeking funding?
Make sure your accounts are well-presented! Sometimes we’re contacted by great businesses, but without a legible set of accounts, it’s impossible for us and our crowd to assess affordability. After that, they need to work the campaign – encourage friends, family and business contacts to support the auction.
The more interest there is in the loan, the lower the rate and the more stakeholders gained.
What measures could the government introduce to make life easier for new and growing companies?
There are tax incentives that the government could commit to long-term, like National Insurance waivers for new employees, and more subsidies for training.
If you were stuck in a room with George Osbourne, what would you tell him?
Despite what the banks are telling you, cash still isn’t reaching SMEs effectively. There’s an education gap on what business owners can do to persuade funders to look at them and the channels used by the government, with the exception of alternative finance, are inefficient. Liberum, the investment bank, estimates peer to peer lending to be ten times more efficient than institutional lending – it gets to businesses faster and cheaper through rebuildingsociety and our fellow alternative finance platforms.
What do you see as the most important trends in peer to business lending?
There is a re-calibration of what we perceive to be risk in society. The man on the street is tired of dire savings rates and is increasingly looking for a manageable level of risk in return for higher returns. Peer to peer certainly allows that.
On the other side, we really want the businesses that borrow from us to feel like they’ve got value from the transaction, like gaining a crowd of people interested in their product / service or simply referring others to it.
Success stories in our market really resonate because people are bored of the traditional way of doing things – they are beginning to trust online providers and that could precipitate a major shift in the way people lend and borrow money in future.
