Introduction 

SMEs are at a huge disadvantage when it comes to offering their consumer customers interest free finance.  It is almost impossible for them to obtain a facility from a finance house unless they are FCA authorised, have been going for at least two years and have a turnover of at least £0.5 million or even £1 million.

There are literally tens or even hundreds of thousands of such businesses who therefore cannot compete with large established businesses.

We have the answer to this problem.

The Answer

As a first step we have designed a system which clients access online and which allows them to set up instalment plans for their consumer customers which are fully compliant with all legal and regulatory requirements.  The system manages the instalment plans, collects the instalments and even chases any payments that are missed.  The whole process is paperless. 

This is our best value Standard product where clients bear the risk and bear the capital strain.

As a fintech business the whole process requires little manual intervention.  The two main areas are to approve all new clients and in chasing missed payments.  So the need for staff, premises and equipment is small.  

All instalment plans are interest free and are for no more than 12 monthly payments.  So FCA authorisation is not required for ourselves or our customers although the system and service complies with all FCA principles.

Our Clients Want More

Not surprisingly, they want us to take the risk and provide the money up front.  We have done this and created a Bespoke product for a few customers and now want to scale up as a prelude to becoming a market disrupter whereby we can help any client who needs us.

Of course, dealing with small clients is risky and so the price of the service reflects this.  But at least they will have a solution.

The Bespoke products are modularly constructed so that clients can choose whether they want us to take the risk, provide money up front or both.

Industry sectors that most benefit are service providers such as photographic studios, beauty clinics, training providers as well as those in maintenance and repairs.  Retailers also need us. 

We do not impose minimum requirements but we do review all clients before they are accepted and require ID checks on all customers.  Any clients applying for Bespoke products are risk assessed.

Competition

We have few if any competitors and so the potential is huge.  Even with minimal marketing spend we are already seeing a steady stream of enquiries.  Because we are limited in the funds we have available we have only been able to satisfy a few of these so far. 

Progress So Far

We have just filed our second set of statutory accounts.  These both show profits and it is this profit and money from our own resources that has enabled us to grow the business so far.  We have taken only minimal salaries and it is our intention to ensure the business returns profits all the time whatever growth is achieved.  We use conservative accounting policies so that there are significant unrealised profits and all assets can be converted into cash at full value should the need arise.

Future Requirements and Repayment

Once the funds are fully utilised we may seek additional facilities.  Indeed, as time progresses the amount required will inevitably grow and different sources of finance may be used.  This may include an equity requirement.

Bonds and Security

We are seeking a maximum of £200,000 funding through the issue of up to 200,000 £1 Bonds. The Bonds are for a term of three years offering interest of 9% p.a. paid monthly. The Bonds are secured through a debenture on the assets of the company. 

Repayment will be achieved by replacing the bond with a new one, as way of a new financing arrangement or by repayment from the assets of the company.  The latter would be achieved by scaling back the business and realising part of the debtor assets; we estimate this process would take about six months and would commence after two and a half year if necessary.