Are you an SME business owner? In need of a business loan? Do you need help understanding the loan process? The loan process at rebuildingsociety.com is incredibly straightforward. Let's break it down into 5 clear steps.
The 5-step loan process:
1. APPLICATION
A small or medium-sized business applies for a loan. Each business needs to fill out an application form.
What's considered a small or medium enterprise?
- Medium-sized business: fewer than 250 employees
- Small-sized business: fewer than 50 employees
- Micro business: fewer than 10 employees
The UK definition of SME does vary slightly from other countries and organisations. The current EU definition categories SMEs based on turnover and the balance sheet total instead of employee numbers.
‘SMEs make up around 99.9 per cent of all businesses in the UK’
Simply Business
Once received, our team will consider if the business’s loan request is eligible for listing on the platform.
Before completing a full loan application, a business fills in a quick loan eligibility check, which asks for information such as:
- Loan syndication - public or private
- Company name or number
- Loan amount
- Approximate profit after tax
- Approximate turnover
- Reason for funding
- Who you are - director, external broker/advisor, or someone else
2. FACT FINDING & REVIEW
Our credit risk team review all applications submitted. In addition, our team also takes into consideration if the business is suitable for the loan.
Specifically, three types of review are carried out: financial, security and risk.
Only those applications which meet our eligibility requirements and which are considered suitable following these three reviews are listed on the platform.
A default interest rate is based on the risk and security provided.
3. LOAN LISTED
Once approved, the loan appears on the Primary Marketplace. Our Primary Marketplace is easy to navigate, and links to it can be found on the main page of the rebuildingsociety.com website. The loan also features on the homepage.
Lenders can visit the Primary Marketplace and see all the loans which are available to bid on.
Here, lenders have access to all the business information, including:
- Company name
- Business type
- Business location
- Company number
- Years trading
- Descriptions of the business’ activity
- What the loan is for
- Why lenders should consider in this particular loan
Lenders can read through all the business details and decide whether or not to bid.
Over £18m loaned to growing businesses!
4. LOAN FUNDED
Lenders can place bids at or below the starting interest rate. They can place bids on the loan until the deadline and can even invest if the loan is 100% filled. Lenders earn the interest rate on their bid, and the borrower pays the average rate across the loan.
The loan opportunity is normally listed on the Primary Marketplace for two weeks. If the loan is fully funded before the auction end date, the borrower can choose to end the loan auction early. Allowing the loan to remain live for the full two weeks generally does tend to reduce the interest rate, however.
Funds can be added to a lender account at any time and are held in a segregated client account with Barclays until transferred to the borrower. There is also a quick online check-out process for the borrower to complete.
The average time for the funds to appear in a borrower’s account after the auction closes is within a few working days. However, where there is a charge over property, the completion time will be extended to 2-4 weeks. This is to account for the time taken for the solicitors to get the property charge registered before we release the funds. As a result, the whole process is fast and efficient.
5. REPAYMENT
The business then begins repaying the loan. Capital and interest are repaid to lenders' rebuildingsociety.com accounts. The first repayment is scheduled for a month after the auction closes.
It is worth noting that lenders can reinvest or withdraw available funds at any time, with no fee, however bids are final once placed.
It is important to understand the risks of peer-to-peer-business lending. Read more about the risks here: https://www.rebuildingsociety.com/risks/
Read more in our new Lender Guide!
The rebuildingsociety.com Lender Guide is a useful PDF available from our website. It explains the loan process and also gives more information about:
- Fees
- Understanding P2P lending
- Automated tools: BidPal and & BuyPal
- BuyBack Guarantee
- All about your dashboard
- Your money: deposit, withdrawal, and returns
- Calculating net returns
- Our underwriting process
- The risks
- Appropriateness tests
