When the pandemic lockdown kicked in back in March, Niall Dorrian, chief executive of Linked Finance, says the peer-to-peer lender quickly sprang into action to support some of its worst-affected customers.
"At the start of the lockdown, we took some very aggressive, proactive steps, particularly with the shutdown of the hospitality and tourism industry."
"We just put them on three-month, interest-free, payment holidays straight in, without really asking them," says Dorrian, originally from Bangor, Co Down. "It was just the logical right thing to do."
At the time, three months might have felt a long enough break for most businesses but Covid-19 has and will continue to cast a shadow over very many Irish companies. Some will need more than loan holidays to stay afloat.
Dorrian, however, is seeing some promising signs. "Some 70pc of those businesses have confirmed they do not need any additional support, as in any further holiday, and that they expect to recommence payments at the next payment date, so that is very encouraging. For the balance, we are engaging and looking at what their needs are."
Given that SMEs will need access to finance to get them through the coming months and beyond, Dorrian is naturally very keen that Linked Finance be covered by the Government's €2bn credit guarantee scheme.
"It's been somewhat misrepresented as a pillar bank solution. But I think clearly we have seen that the pillar banks are not the only solution here," he said. "The devil will be in the detail of the legislation but our expectation is, the message we've been getting so far from Government and the SBCI is that the non-bank sector will have an opportunity to partake in that.
"I think common sense will tell you that having companies in the fintech space that, let's be honest, can operate quicker and more efficiently and more effectively, makes sense."
One of Linked Finance's main selling points is that it takes a very different loan approval approach from the pillar banks. "There is no bureaucracy, there is no paperwork, there is no business plans, there is no security it is a very straightforward process. Our mission is to transform how SMEs secure finance in Ireland," he said.
This does not mean easy money, however, as Dorrian says more than 50pc of applicants are turned down.
"We've developed our own risk-assessment model, which continues to evolve, but it is based on statistical analysis of around 6,000 or 7,000 SMEs in Ireland. It's up-to-date information. We don't put a lot of credence in forecasting or business models, and, let's be honest, you can make a model or forecast say whatever you want."
He says companies are scored on multiple different risk factors and the default rate is 1.3pc, having deployed €135m since it was founded in 2011. Companies which have raised funding through the platform include some of Ireland's most innovative small firms, including Viking Splash Tours, The Rolling Donut and the Irish Fairy Door Company.During the lockdown, around €7m was deployed by Linked Finance, while last year €43m was lent, which suggests the run-rate has, unsurprisingly, slowed this year owing to Covid-19.
But lending did continue, with pharmacies investing in health and safety measures and companies such as Schoolbooks.ie enjoying increased demand.
"What we've seen as the lockdown has eased is the demand going up again, so that's very encouraging."
Dorrian admits he was fascinated by finance from a young age. "When I was very young I had an uncle who was a senior guy in banking and he said to me if you ever want to work in business then you have got to understand business. And the best way to do that is to become an accountant.
"As sad as it sounds, from nine years of age, that was always the plan."
After studying accounting and finance in Heriot-Watt University in Edinburgh, he worked in various industries in Northern Ireland, ranging from electronics to ship outfitting. "It allowed me to gain varied and wide experience in different industries," he says. "I still say to people that just having all those different experiences adds to your ability to work in different environments."
He then joined Guinness owner Diageo as finance manager in Belfast in 2001. "That was a fantastic learning experience because of what was going on. If you recall there was an amalgamation of Guinness plants and packaging."
But the big attraction in Diageo was the doors it could open internationally. Dorrian pounced on the opportunity to work in Jamaica, heading to the Caribbean with his then girlfriend, Caroline, to take the role of finance and strategy director with Diageo's beer Red Stripe.
"The Jamaicans have a very laid-back attitude, a great way of life," he says. "There was plenty of hard work, but there was a great play ethic as well.
"The socialising was fantastic, the weather was a big bonus. We were living in Kingston but you're only an hour and half away from the best beaches in the world."
At the same time, an "upstart" Irish telecoms company, Digicel, was building up its presence in Jamaica. Dorrian naturally got to know a lot of the Irish people working for the telco and, in time, took up a job with the company as chief operating officer. It was an exciting time to work in telecoms which was in high growth mode. He later became CEO of Digicel in Trinidad and Tobago and then worked with the company in Panama.
Originally, the couple planned to work abroad for two years but time went by quickly.
"I always said if you're away more than 10 years you're probably never coming back so we decided that coming up on the 10th year it was time to move back."
Dorrian joined Eircom on his return to Ireland as it was transitioning to Eir, taking over as director of mobile, but he soon missed the start-up vibe of entering new territories at Digicel.
"While it was interesting, it did lack that entrepreneurial speed of execution that I would have been used to and was frustrating at times."
A scheduled IPO of Eir was pulled in 2015 and Dorrian began looking for a new role focusing on areas which offered high growth potential, in the way telcos had in the previous decade. He settled on Linked Finance. "I decided that there was a real opportunity here, to really transform financial services and particularly focus on SME funding."
The business has grown since Dorrian joined but he says that awareness and understanding of the role played by it and other non-traditional lenders is still lacking: "Irish businesses in some ways are still quite traditional and you either head to you banker or your credit union."
Dorrian says that while there is plenty of criticism of the banks, there is little support for alternative lenders. For example, the statistics on lending from the Central Bank don't include non-bank lending. "It's ignored because they think it's statistically not relevant. We have been engaging with them over the last 12 months, so the non-bank sector is coming together through the Independent Finance Providers of Ireland." The organisation estimates that alternative lenders deployed €2bn last year.
While some individual lenders to Linked Finance will back a particular company - such as a friend's business - the average retail investor puts in €11,000.
"What we've done is created an asset class in Ireland which allows people to make returns on their savings. It's not correlated to equities and it's not correlated to bonds or property prices."
Loans are graded so investors can back companies according to their own risk appetite. Over the last six years, diversified portfolios have been getting returns of 8.5/9pc. The average investor has invested in "at least 55 loans" and so is diversified, which should in theory reduce the risk.
"We're confident that even in a downturn our asset returns will still be in the positive space. While that may not be where they have been historically, we're confident they will stay on a positive footing."
In addition to private investors, institutions such as Portuguese digital bank BNI Europa have also committed to lend at scale through the Linked Finance platform.
Dorrian says it is inevitable some SMEs will struggle in the coming months. He says that some of the government supports, such as the wage subsidy scheme and Revenue's pause on VAT payments, have been successful.
However, he thinks they have created something of a false economy for SMEs. "In some cases they actually have more cash now than they did back in March.
"What we're doing is working with our customers and advising them to really start looking now at your financial structure, what are your cashflow forecasts for the next 12 months, what facilities do you need to start thinking about putting in place."
While challenges clearly lie ahead, Linked Finance itself has ambitious plans for the future.
The British peer-to-peer lending market is well developed but Dorrian sees opportunities in Europe for more cross-border lending.
He expects that technological advancements will speed up lending processes for business significantly in the next few years. "It's really going to change the whole game and we expect Linked Finance to be at the forefront of that."
Name: Niall Dorrian
Position: Chief executive of Linked Finance
Education: Our Lady and St Patrick's College, Belfast; Heriot-Watt University, Edinburgh
Previous experience: Diageo, Digicel, Eir
Family: Married to Caroline
Pastimes: I'm a lifelong Liverpool fan. Caroline and I are keen skiers. I am trying to do a bit more running and have started doing pilates
Favourite box-set: The West Wing
Favourite book: I read quite a lot and have just finished American Dirt by Jeanine Cummins, which was fantastic
After working abroad for a decade, what observations did you have about Irish business on your return?
In terms of anybody running a business, you have to be able to talk finance. You don’t need to be an expert, but you need to understand it. And I think that is a gap in Irish businesses, particularly in the SME sector. I was always told ‘know your numbers’ and it does amaze me at times, some large businesses are just not on top of their numbers.
Best piece of business advice?
I would always advise people to, given the opportunity, get international experience. It gives you a different perspective. And always looks for advisers or mentors, particularly in the early part of your career.