Social lending P2P platform Flender hits £500k target
SOCIAL lending peer-to-peer platform Flender has successfully raised half a million pounds through crowdfunding site Seedrs and is now preparing for a launch this quarter.
Oli Cavanagh (pictured), founder of Flender, said the money, raised in return for a 10 per cent stake in the firm, would be used to build up the team and finalise apps to create an easier user experience.
The target was reached five days before the end of the campaign on 17 January.
Speaking to Peer-to-Peer Finance News, Cavanagh said Flender would take the anonymity away from P2P, allowing borrowers to share campaigns directly with their social circle either by sending an email or connecting through their contacts book or Facebook account.
Cavanagh estimates the market in lending among friends and family is worth almost £3bn.
“Most people lending in social circles have had issues getting money back,” he said. “Everything is structured and formalised through Flender. We help with the legal documents and set up automatic repayments.
“If a lender does go into arrears that is a process we handle. It is no different to borrowing from a bank but both sides benefit from a better rate.”
Read more: UK P2P lending hits £6.5bn
Friends can read about a business and why it wants to borrow money and the borrower then gets charged a blended rate based on the maximum they were willing to pay. Business borrowers also pay a success fee linked to the size of the loan.
“Businesses can target their existing user base and generate customer loyalty,” said Cavanagh. “Research also shows that arrears reduce by 50 per cent if both parties know each other.”
Flender draws up a legal contract for all loans and conducts credit checks and affordability assessments using Equifax.
He said here are more than £2m of loan agreements in the pipeline. The firm, which is currently operating with interim permissions from the Financial Conduct Authority, plans to join the Peer-to-Peer Finance Association.