Before any loan auction is approved, our experienced lending team carry out a significant amount of due diligence. As well as asking for financial and management information upfront, they run external checks and conduct a detailed telephone interview.
We use historic and traditional credit scoring. However, while the past is important in allowing us to form an opinion about the management’s strengths and abilities, it is the future cash that will see the loan repayments made. That is why we equally consider the ‘direction of travel’ of the business – where it is now and where it is going. The core consideration with any loan opportunity is our assessment of the people. The financial performance of a company is only ever the by-product of the decisions made by the people.
Getting ‘buy-in’
One of the results we aim to achieve as a result of our interview is to get the borrower’s emotional “buy-in” to the crowdlending concept. They are not borrowing from an anonymous institution. Instead, a number of individuals are entrusting part of their savings to them. They have to respect this relationship of trust. We find this approach often has a significant impact on the borrower’s determination to respect his obligations under the loan.
Once a case is ready for consideration, we operate a credit committee comprising senior FundingKnight executives and external appointees from a financial or lending background to agree the loan is suitable for us to offer to investors.
Continual communication
While the specific lending criteria vary between Business, Property Bridging and Green Energy Loans, our guiding principle has always remained the same: we only approve loans that we would be prepared to invest in ourselves. Indeed, our management team has personally invested in every single loan auction, alongside other investors, since FundingKnight was founded.
We also don’t stop working once a loan has been arranged. Our borrower team closely monitors and communicates with borrowers throughout the lifetime of the loan. This includes requesting periodic updated financial and management information. In addition, we continue to monitor companies through external credit agencies for any changes to credit scores or other potentially relevant information.
For more more detailed information, see our borrower requirement pages: