Sponsors Frequently Asked Questions

Q.  What about the danger of giving 'Investment Advice' and the need to be FSA Regulated?

A.  We have taken detailed legal advice from leading experts on regulatory matters Eversheds and we are confident that there are several reasons why the Business Loan Network and its Sponsors do NOT need to be regulated. Not least because arranging loans is not a regulated activity. We will be happy to share this advice with you if you are seriously interested in acting as a Sponsor.

Q.  Can we have an exclusive territory and what competition will we face from other Sponsors?

A.   The system of competition to moderate fees and the importance of a Sponsor's reputation depend upon there being a degree of competition between sponsors. Borrowers will be able to choose between sponsors on the basis of their track record, reputation amongst lenders and the proposed fees. However, there will be several months, possibly years, before the whole of the UK is covered adequately and we will not want to appoint too many Sponsors so that they only get a small number of deals each. This means that in the early months there will be opportunities to establish a track record before there is much competition and later entrants will only be able to compete with such a track record by offering lower fees.

Q.  Will there be any ‘come-back’ from Lenders if a Loan is defaulted?

A.  Lenders will have no legal or financial claim on the Sponsor but they will form their own view on how the Sponsor behaved; did the Sponsor miss an important risk factor? did the sponsor do a good job of monitoring the progress of the business after the loan was in place? and could the Sponsor have done a better job?  You can be sure that syndicate members will ask these questions using the internal messaging system (and the Sponsor will be able to post reports on the progress of companies and respond to questions and comments made by Lenders). All Lenders and Sponsors will have access to these discussions and the comments they make will have an impact on the Sponsors ability to place future deals.  If the Lenders are impressed with the way the Sponsor tried to handle the situation it will increase their confidence in future deals from that Sponsor.