Harris Khan- Investors: CrossLend connects MarketFinance to investors keen on exposure to UK small business growth opportunities
- Returns: Investors making yields of 5% to 8% (annualised) on 35-day duration investments backed by invoices
- Opportunity: MarketFinance has advanced over £2b for institutional investors to UK businesses. Opportunity to deploy £1m to £10m as demand for finance surges for growth businesses.
Fintech business lender MarketFinance has secured funds from a European bank, through fintech CrossLend, to facilitate lending to UK businesses. The news comes as demand for finance is surging, with MarketFinance research indicating that as many as 84% of businesses will be seeking loans this winter. Already in 2020, MarketFinance has advanced over £342m for institutional investors to meet the needs of UK businesses.
CrossLend, a European digital debt marketplace, originated and closed the transaction1 with MarketFinance for institutional investors. This is the third capital markets transaction that CrossLend has executed with MarketFinance. Their two previous deals included note issuance in dollars, euros, and sterling, and their recent transaction will further enable institutional investors to gain exposure to the returns from working capital invoice assets in note format. This third transaction includes loan receivables partially guaranteed by the UK Government under the Coronavirus Business Interruption Loan Scheme (CBILS), which is administered by the British Business Bank.
MarketFinance has built a track record and market share having advanced over £2b of investors’ capital to UK businesses since 2011. A large amount of this lending has been through the popular invoice finance product which offers a short duration investment opportunity (typically 35 days). It is currently available under CBILS and non-CBILS terms providing net returns of up to 8% to investors. This offers both diversification and an attractive risk reward dynamic, especially as 80% of the advance is backed by the UK Government under CBILS. The businesses seeking the funding are growth companies, with a typical turnover of £2m, from a range of industries including consulting, creative services and technology.
Tom Stenhouse, CFO of MarketFinance, commented: “We have continued to support the UK’s business community with funding throughout the pandemic and impact of the stop-start lockdowns. We have taken a measured approach, assessed their COVID-19 exposure and determined that they remain robust businesses. We’re grateful to all our investors who have helped us lend £2b over the past 9 years. Our investor base ranges from HNWs to institutions including Barclays and the British Business Bank. As we grow our product offering and client base we’re excited to be able to offer even more investors the opportunity to be a part of the pandemic recovery and enable more small businesses to get the working capital they need.”
Earlier this year, MarketFinance was awarded a £10m grant to bring more choice and competition to the business lending industry. These funds will be used to create a new set of products that will service smaller and younger businesses, enabling them to establish themselves and scale their ambitions.
Oliver Schimek, CEO and Founder at CrossLend added: “CrossLend is pleased to continue working with MarketFinance, particularly in these COVID-19 times. Both on the origination and investment side, huge challenges have presented themselves for market players, and we have been able to offer our support through providing our specialised tools and digital infrastructure. We have demonstrated flexibility by tailoring our structure to help get funding to SMEs across Europe. We are happy to be doing our part to contribute to the recovery effort”.
As its network of institutional investors grows, CrossLend will continue to assist in the broadening of MarketFinance’s investors to expand its support for SMEs over the coming years.
MarketFinance business highlights (2020):
- Strengthened leadership team with a new CFO, CRO and CTO
- Accredited as a CBILS lender for term loans and revolving credit facilities
- In response to COVID-19 impact, launched a Furlough Advance product to ease cash flow pressure on businesses as they wait to be paid from HMRC
- Awarded £10m grant from UK government to to bring more choice and competition to the business lending industry
- Launched entrepreneur grants through the Business Booster Fund providing £5,000 grants to UK small businesses
