Terry Fisher at Huddle Capital explains why, when it comes to business lending, old-school principles are paramount
“While the front end of fintech is the tech, the back of it must be solid financial principles,” asserts Terry Fisher, founder at peer-to-peer business lender Huddle Capital.
“No matter how fancy you make the front end and how slick you make it for the investors, old-school, tried-and-trusted principles must remain when it comes to looking at borrowers.”
This ethos is at the heart of Huddle Capital, which launched in April this year, by its parent company Access Commercial Finance, a balance sheet lender that was established four years ago.
“Our management team is built up of business people, as opposed to the stereotypical bankers and lenders,” Fisher explains.
“So we very much know what it’s like to be a borrower and our challenges that can face a business. We have first-hand experience of running struggling businesses and turning them around so we really can relate to and communicate with our customers and potential borrowers.”
Huddle Capital offers loans to growing businesses, including ones that may have been rejected by high street banks. Just because a company is somehow ineligible for a loan from a traditional lender does not mean that they are a poor-quality borrower, Fisher argues.
“It may be that they need greater speed and certainty than they would get at a high street bank, or they may have fallen into financial difficulty in the past but those days are behind them,” he says.
“We look at the positives of a growing business, not the negatives.”
Huddle Capital’s investors typically enjoy enviably high annual returns ranging between 12 and 14 per cent.
“With any high yield there’s always a concern that it must be high risk, but the level of security and the quality of the underlying borrowers on our platform are the same or potentially better than other deals in the market that are paying a lot less,” Fisher affirms.
“We don’t treat the deal any differently than we would if we were lending our own money. All borrowers go through a very rigorous credit and underwriting process and all of that information is made completely public to our investors.”
Furthermore, parent company Access funds any shortfall on the deals on Huddle’s platform, meaning that borrowers can be assured they will get the money and investors can feel confident that the deals they invest in will complete.
Going forward, it’s a case of “more of the same” at Huddle Capital, as the team grows its investor base to keep up with a strong pipeline of deals. The platform is set to launch its Innovative Finance ISA in this tax year, which will give customers the added incentive of tax-free earnings on their investments.
An auto-bid function is also on the horizon, which should attract the more passive investor, although Fisher is quick to highlight that the emphasis will remain on a select range of high-quality deals, rather than shifting to “an instant access account where you don’t know where your money goes”.
Indeed, it is this discerning approach that Fisher says sets Huddle Capital apart from the rest.
“We understand our borrowers better than most other lenders do and therefore are able to structure deals in a way that other lenders probably wouldn’t,” he comments. “Our default rates are absolutely minimal because we’ve got that real-world experience of how to collect – which is just as important as knowing how to lend!”
For more information, go to www.huddlecapital.com.