Sunday 29 May 2016

The rise of peer-to-peer lending

Published 23/03/2016 | 15:16

Peer-to-peer lending is a relatively new concept in Ireland but in just a few years it’s expanding to provide finance to thousands of Irish SMEs worth millions in the process.

While it might not be a direct threat to banks (yet), the fact that, internationally, Goldman Sachs are due to launch their own peer-to-peer lending operation points to how seriously traditional banking operations now consider the model.

On this week’s Ready Business podcast, Brian Purcell was joined by Tom O’Reilly from Ireland’s largest peer-to-peer lending company, Linked Finance, and Lolly Strahan, of the rapidly expanding Dublin café chain, Lolly & Cooks.

So what exactly is peer-to-peer lending?

Lolly Strahan, Brian Purcell and Tom O'Reilly
Lolly Strahan, Brian Purcell and Tom O'Reilly

“We sit between the investors with money to lend and businesses who are looking to raise finance,” explained O’Reilly.  “We currently have 11,00 lenders who can lend as little as €50, up to a maximum investment of €2,000, with the lenders able to set their own terms and rates.”

When Lolly & Cooks were looking for funding to open their third café in Dublin three years ago, they decided to go with the peer-to-peer finance route and raised €25,000 in the process.,

“We found it briliant,” said the co-founder Lolly Strahan,  “It was so easy to do and we were able to open our café in Grand Canal Dock with the loan.  We soon had customers coming in telling us they had invested in us. “

Looking to expand again with their fourth café, Lolly & Cooks returned to Linked Finance and are now seeking to raise €50,000.  They’ve grown quickly in such a short space of time, all the more so since they opened in the middle of the recession in 2009.

“Food is my passion,” said Strahan.  “I’ve done everything working in food and then was in London from 2006 to 2008 when I got to learn the business side of it. Then I was joined by my sister who focused on the front of house while I concentrated on food production.”

In this week’s Twitter poll, we asked listeners if they thought peer-to-peer lending was a viable option for their business with 45% actually saying they didn’t know what it is.

“It’s a concept that’s simple enough but is still very much in its infancy,” admits O’Reilly.  “But we’ve currently lent to four hundred businesses and by the end of next year that figure will be over 2,500 Irish businesses.”

The average loan size is €30,000 so if you’ve been trading for at least two years and want to explore all your options to raise more finance, then peer-to-peer lending might be the answer to your business needs.

We’ll be running our Twitter poll every Friday on @independent_ie using the hashtag #readybusinessadvice so don’t forget to let us know the key business issues that you would like us to address.

The Ready Business show, in association with Vodafone, is available every Thursday via iTunes, SoundCloud, Stitcher and Independent.ie. Or subscribe to the RSS feed of the Ready Business Podcast using your favourite podcatcher.

You can check out the full Ready Business Podcast series here.

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