INFORMATION FOR LENDERS
Seriously Interesting Investment Opportunities
With interest rates at historically low levels the chances are that you are getting far less from your savings than you would like. If you have money set aside that can be tied up for a few years the best way to grow it should be to invest it. Yet in these uncertain times most alternatives like the stock market, property, commodities and even government bonds can be very volatile and appear rather risky. The Business Loan Network ("ThinCats") is a new type of investment that is not subject to the same financial market fluctuations, providing direct access to a market (business loans) previously monopolised by the clearing banks.
The fixed monthly repayments of the loan can provide a regular income and, depending on the interest rate, a return of all of the initial capital by about halfway through the term of the loan.
The present reluctance by banks to lend and the high margins they charge, provided us with an exceptional opportunity to enter this market but this is not just a short term opportunity; the way banks have abandoned traditional 'relationship banking' and individual managers credit limits in favour of 'credit scoring' has provided a long-term business opportunity for ThinCats. We take the trouble to get to know the borrower and understand their business and the opportunities and challenges they face; Banks are now much less interested in "business development" loans where an established business is seeking a loan to allow it to expand its capacity or move into other markets.
Most lenders now base their lending decisions on the past performance of a business as reflected in a credit score. Whilst we research past performance in detail we look behind the numbers and are more concerned to ensure that future trading will allow the borrower to repay the loan. We need to understand the way the business is evolving, its ability to generate cash and the security available. Most importantly we also take into account the capabilities of the management team.
These are the types of deal where ThinCats Lenders should have a competitive edge whatever the market conditions. The ongoing need for banks to strengthen their balance sheets and cover the costs associated with compliance, taxation and their infrastructure means that we are likely to be able to provide an attractive alternative for businesses seeking secured loan funding. Our emphasis is on quality rather than quantity.
Key Membership Benefits
- A good supply of pre-vetted and well documented lending opportunities to select from;
- ThinCats always seeks security, providing lower risks than other loan auction websites;
- Opportunities to get part (or all) of substanntial loans made to established businesses;
- No Membership fees or other costs;
- Attractive rates of interest - set by the Lender;
- Ability to spread loans across a broad portfolio by joining syndicates;
- Because the loan is normally repaid with interest in fixed monthly installments you get predictable monthly income and automatic repayment of capital;
- Back office service including monthly collections and statements.
- Monitoring and support from the Loan Sponsor, whose reputation is ‘on the line’
- We arrange the legal documents and manage the completion process.
- If there are problems we co-ordinate the syndicate members to agree on actions to
take.
Membership
We are seeking Members who understand why this type of lending can help to diversify a balanced investment portfolio. Lender Membership is available to individuals, businesses, pension funds, SIPPS and small investment clubs. It is intended for experienced investors who understand the nature of the risks involved and probably already manage a portfolio of investments. ThinCats is NOT regulated by the FSA and we therefore do not require Lending Members to prove that they are experienced investors, they must make their own decision. Because we are not regulated there is no compensation scheme available. If you are not sure what to do you should seek independent expert advice before making any type of investment.
Early in 2012 we are launching a managed retail fund in conjunction with FSA regulated fund managers Innvotec. ThinCats Bonds are aimed at investors who do not have the time or the experience to make their own investment decisions for more information about ThinCats Bonds by visiting the Innvotec website or by reading the 2 page summary document..
- Lending Membership is free of charge.
- There is no requirement to bid or even to make any loans at all.
- There is also no upper limit on the amount that can be loaned but all bids must be in round thousands of pounds.
- The minimum bid on any particular deal is £1,000.
- Members pick the interest rate they would be happy to receive and if their bid is successful they get the rate they have chosen.
- Members can make multiple bids at different rates of interest and for different amounts in the same auction. If more than one of their bids is successful they will end up with two or more different interest rates in the same loan syndicate.
- Lender Members are expected to keep at least £1,000 in their Barclays client account to demonstrate their commitment and bids can only be made if there are sufficient uncommitted funds available in that client account.
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Members always keep any interest earned on their client account deposits.
Typical Deals Available:
- Established businesses with security and a track record can borrow between £50,000 and £1m, subject to the capacity of the market to fund larger deals.
- The Sponsor prepares a detailed report, typically about 20 pages long including information about the business, the directors, the market, past accounts and financial projections. It will also include credit reports and details of the security on offer.
- Our 'Risk Committee will have defined our security requirements and decided if the opportunity is good enough to maintain the high standards ThinCats is seeking to maintain.
- Sucessful bidding interest rates over the first 7 deals have ranged from 7% to 15% depending on the risks involved.
- We expect interest rates to settle at between 8% and 11% as the market grows and matures.
- Loans are normally repayable in fixed monthly instalments of capital and interest over periods from a few months to 5 years.
- Security depends on the risks involved but is likely to include debentures and/or personal guarantees
Secondary Market
- The lack of liquidity in ThinCats loans could be a disadvantage when compared to an instant access bank deposit. We are planning to introduce a software driven full secondary market in 2012 which will provide liquidity for existing investors and enable new lenders to create an 'instant portfolio'.
How to Apply
You will need to Register and provide some basic information to enable us to manage the transactions when you make a loan. During registration you will be required to agree to the Terms and Conditions, we know that most people when faced with such choice just click on the "accept" button in these circumstances but we encourage you to download and read ours because they also explain in detail how the Business Loan Network operates click here to download a PDF version. Before you can bid you will also need to transfer at least £1,000 into your Barclays client account. We will send you details of how to do that when you create your log in.
Click here to Download our brochure
TELEPHONE HELPLINE: 01827 425 827
