The crowdfunding and peer-to-peer lending site tells Growing Business how its alternative finance platform could help your small business grow
Company: Funding Tree
Who are you?
Funding Tree is the UK’s first fully regulated loan and equity crowdfunding platform. Our simple-to-use online platform is designed specifically to connect businesses requiring finance with a comprehensive network of investors.
What do you do?
Our platform gives businesses an alternative to banks, letting the investors who use our site decide whether a business’ funding requirements are worthwhile or not. Since the credit crunch, banks have been notoriously reluctant to provide small businesses with financial support. We’re part of a new wave of people-powered business finance which has shifted the balance from banks and given businesses and investors a bigger voice in an area that banks had previously dominated.
We offer loan and equity funding options to our network of investors; meaning, like a bank, we can stay with companies from the ground up by offering financial support and advice, and have the ability to provide business funding to companies at different stages of growth.
For instance, a start-up company can use our platform to generate equity investment to help get an idea off the ground. If that same company then requires a loan further down the line to fund expansion plans, then we’d be in the perfect position to provide a crowdfunded loan.
In essence we offer companies two ways to fund their business and believe this is what helps set us apart from the competition.
What does that mean in practice?
We assess dozens of business applications each week and, after various vetting and checking procedures have been passed, put approved businesses in the spotlight for investment from our network.
We’re proactive when it comes to the businesses that we list on our platform and work closely with companies to understand their functions and how they intend on growing. We also like to get a good idea of the people behind the companies by having face-to-face meetings about their project.
When projects are successfully funded we release the money to the business and stay in contact to monitor their progression. We also like to make a song and dance about these wins over our network and through various other channels.
Our investor base comprises all types of people, from seasoned angel investors to ordinary people. We keep them up-to-date with new businesses coming in via newsletters and emails which also detail how funding is progressing for other projects. Every so often we’ll hold ‘Investor Evenings’ and businesses can volunteer to pitch to investors live so that they have the chance to really drive home their message.
As well as helping businesses access funds that banks might be declining, our platform is perfectly positioned to help boost the UK economy and create wealth in the wider economy so that banks aren’t the only ones profiting from financing businesses – instead ordinary people can be rewarded as well.
The essence of Funding Tree is to help businesses grow by raising the funds they need. We’re FCA-regulated to ensure our practices are of the highest standard.
What size company suits you?
Any size business that requires financial support either through loan investment or equity investment. Small businesses and start-ups are typically associated with crowdfunding platforms but we’re here for all types of businesses.
Why should I care?
Businesses can by refused finance by banks but then go on to be funded by crowdfunding investors and become successes. It’s that simple. Companies are even beginning to travel straight to the source, dismissing banks from their financing considerations entirely.
Having a crowd of investors support a crowdfunding project is not only beneficial because it allows a business to grow by having financial support, it also validates an idea. For start-ups, crowdfunded projects can be a powerful marketing tool given that the accumulated crowd of investors could eventually form the core customer base for the company.
What can you do for me that I can’t do for myself?
Funding Tree puts businesses in touch with masses of investors, providing a platform to generate loan and equity funding. We handle the legal work, enabling family, friends and existing customers of businesses to lend a little, or a much as they can afford on a simple-to-use online platform. Investors use our network to find investment opportunities from a diverse range of businesses.
Can you give me an example of the work you’ve done?
One of our most recent successes came in the shape of a farm in North Yorkshire (testament to our all-encompassing investment options). The project met its full £10,000 target within 10 days and went on to reach 152.5% funding.
Why should I trust you?
The Financial Conduct Authority regulates our platform.
What will it cost me?
Businesses can sign up to our platform for free and nothing is taken unless a project meets 90% or more of its target. For equity investments a success fee of 4.5% is applied to the total amount raised. For loan investments fees range between 2% of the amount for a 1-12-month loan to 3.75% for a 37-60-month loan. Loans taken out for large asset purchases carry fees of 4.5% for a 12-36-month loan and 3.75% for a 37-60 month loan.