Before a loan is listed, we work hard to ensure the business is legitimate and creditworthy. Notwithstanding this, lenders should carry out their own assessment before lending to a business.
What is the process, from application through to repayment?
Step 1: Application Received
A small or medium-sized business applies for a loan. All businesses must be established UK-based businesses, not start-ups. Applicant companies are from a wide range of sectors, with a diverse range of funding requirements. Read more about the criteria for business loan applications here.
At rebuildingsociety.com, we receive around 40 business loan applications a month; we only allow the strongest applications with appropriate security on the platform. Read more about loan rejection rates here.
After entering the basic details, including:
- company name
- applicant name
- loan amount
- profit
- turnover
- reason(s) funding is required
a loan quotation is created to give the applicant an idea of the likely rate, cost and monthly repayments.
By selecting additional security which can be offered in support of the loan, the estimated interest rate will fall by up to 5%.
Once the application has been submitted, a profile of the business is created on the rebuildingsociety system, where the expected risk rating appears. A member of our team will get in touch with a detailed list of the information we need for our review, but really keen businesses can get started right away by emailing us the information listed in the "Next Step" box displayed on the profile page.
Step 2: Fact Finding and Review
We gather information to help us assess the business by completing three reviews:
- Financial Review - enables us to provide a quote and a starting rate for the loan;
- Security Review - allows us to assess eligibility of the security and confirm any discount that will be due; and
- Risk Review - provides us with approval to list the loan on our platform.
Step 3: Loan Listed
Once we've completed our reviews, the loan is listed on the Primary Marketplace. During the auction, if lenders decide to invest, they can place bids at or below the starting interest rate. Once the loan completes, each lender earns interest on the capital pledged at the rate they lend, and the borrower makes one single monthly repayment at the average rate across the loan.
Step 4: Loan Funded
Once the loan is funded and the auction closes, our team will send the borrower the loan agreement and completion documents to sign and return. There is a quick online check-out process for the borrower to complete, and once our team has received everything they need, the funds are sent from our segregated client account to the borrower.
Step 5: Repayment
The business begins repaying the loan, with the first repayment being scheduled for a month after the auction closes. The borrower makes one monthly repayment into our segregated client account, and this is distributed as capital and interest to the lenders rebuildingsociety.com accounts. Lenders can reinvest or withdraw available funds at any time, with no fee.
The borrower can continue to pay the loan each month, or can choose to redeem the loan early with no additional fees.
When we refer to 'loans', we are talking about the loan to a business. The 'loan' is in fact made up of many loan parts, or 'microloans', which have been loaned by individual lenders to the borrower.
