Peer-to-business lending

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1 Peer-to-business lending Register today: rebuildingsociety.com rebuildingsociety.com is regulated by the FCA Read more inside and at Company No

2 Once upon a time... Savers enjoyed a passive income from interest earnings and businesses had access to credit. But now... & Savers get poor rates of interest Entrepreneurs can t trust banks So... We created an online marketplace to cut out banks! 2

3 The rise of peer-to business lending The web has enabled business transactions to be direct and instant. It has also cut the cost of many business models. Now its time for the finance industry to modernise! ebay, itunes and easyjet have transformed the way people buy, sell and consume. ebay allows people to buy and sell directly with each other in a marketplace, as has been mankind s way since people traded flint for woolly mammoths, without spending the time and effort in a physical market. itunes used the web for peer-distribution of digital music, revolutionising the record industry that had become complacent with traditional methods of music delivery. easyjet reinvented the air travel industry when it first launched by allowing customers to buy flights directly, rather than through travel agents, giving birth to the modern budget airline industry, saving consumers time and money in the process. It has also challenged established airlines to compete better on price. Everywhere you look, the web is facilitating small transactions that make our lives easier and cheaper. We believe the time has come for similar change in banking... With your participation, peer-to-business lending will solve two of society s biggest financial problems; restricted access to growth for businesses and better returns* for lenders. This guide explains how... *Past returns are not a guide to future earnings 3

4 Guide to peer-to-business lending Peer-to-business lending can help you build a diverse and profitable investment portfolio. It is being used by investors young and old from around the UK. Our average investment is just over 5,000 per lender, ranging from 100 to over 750,000. It s an exciting time... investors will soon be able to use their NISA allocation for peerto-peer lending. Tax-free lending could result in vastly improved returns, particularly for higher rate tax payers. At rebuildingsociety, we show gross returns, because individual investors need to allow for tax deductions and bad debt, which may affect your rate of return. Illustrative return on 10,000 invested through rebuildingsociety at the total weighted average from January 2013-August 2014 of 16.1%* gross return: easier and cheaper. Return minus tax at 45% Return minus tax at 40% Return minus tax at 20% 1, No tax deducted 1, *We forecast an average default rate of 3% to 5%. Our current bad debt rate is 2.2% Past performance is not indicative of future performance and the rate of tax payable is dependent on the investor s higher marginal rate of tax. 4

5 Lending statistics: Our statistics, correct at the time of print. App Risk #Loans Loaned Outstanding Avg.Rate Defaults Bad Debts Late Late (<30 days) (<30 days) A % A , , % B 34 1,807,030 1,108, % C 24 1,334,000 1,148, % D % All 77 4,011,010 2,793, % Loan security type chart correct at time of print (from same source) Different forms of security can reduce the time it takes to recover on a debt in the event that a business defaults. Learn 5

6 How does it work? Entrepreneurs describe their business on an online loan profile, explaining why, how much, how long and specifically what they need to borrow for. People then bid amounts of money with an interest rate they want to lend at, which should reflect the risk a lender sees in the business. When the auction ends (7-21 days), the auction is closed. Borrowers then consider the average interest rate offered and decide whether to accept the loan or not. A repayment schedule is then setup so that repayments are distributed from the borrower to the many lenders, according to the individual loan amounts and rates. Early repayment One of rebuildingsociety s most popular borrowing features is our early repayment charge waiver. Lenders need to be aware that when purchasing a micro loan for a premium, the stated return is over the life of the loan and should the borrower refinance early, only interest payable in the month of refinancing is due. Did you know? You can use BidPal to automatically bid on your behalf when the right opportunity comes up. Select the amount, rate and grade of business you re prepared to lend to and BidPal does the rest. Our Secondary Market The rebuildingsociety Secondary Market is where investors can trade micro loans from completed deals. Investors can charge a premium for micro loans to increase their returns, or offer a discount if liquidity is the aim. All our available micro loans are listed along with the borrower s repayment history and the company s question and answer section. Investors can buy in bulk using our Portfolio Builder facility. 6

7 Scrutinise each business We give lenders the opportunity to review each new loan auction and ask questions of the borrower to inform their decision. Spread your lending Keeping your loans small and spread across a number of companies may minimise losses as a percentage of your overall portfolio. Lend to your risk appetite All loans carry risk. The important thing is to consider what your specific needs are and ask yourself questions about your appetite for risk. It s an age old rule, but only invest what you are prepared to lose. Who lends with rebuildingsociety? Our lenders come from all walks of society. Some invest for the long term, others because they re frustrated with bank savings rates and specifically what they need to borrow for. Ellie Kirby is just one of our lenders. She is 25, runs her own business and is investing to achieve financial freedom, which she defines as interest from investments paying for day-to-day expenses. Ellie spreads her lending across many businesses in the auction and secondary market and has been an active lender since March

8 Big Investors Institutional or HNW investors can capitalise on the growing peer-to-peer lending market by quickly buying a portfolio of performing business loans. rebuildingsociety.com offers the best gross returns on the peer-to-business lending market, according to the industry news site, p2pmoney.co.uk. * Each loan is backed with the minimum of a director s guarantee and in many cases with asset security, either a residential property or the business assets. All loan data is available on request. Liquidity is strong in our secondary market. Loans re-sold at par or just above are typically sold within 10 days. This gives easy-access to your investment funds. On current volumes, we can place up to 500,000 a month spread over at least 25 separate loans. As loan repayments are made, further portfolio diversification is possible as new loans are created. We re also innovators. We help others establish platforms using our proven technology and can introduce institutional investors to our partners across the world. Did you know? We ve got an API that interfaces with investment management software, which makes investment easy for you. Past returns are not a guide to future earnings. Any unrepaid capital is at risk of arrears or default. 8 *SOURCE:

9 Accessing your money... Loans to businesses are between 6 months and 5 years, so this could be the length of time your money will be repaid over, unless you cash in early. rebuildingsociety offers instant access to any funds that are not committed, so neither a loan or a bid. You can also either wait for loan repayments to come in or use our Secondary Market. This allows you to sell loans to other lenders. The Secondary Market is often used by new investors to quickly acquire a diverse portfolio. However, should a borrower choose to refinance, only interest due in the month or refinancing is due. However, lenders should be aware that unpaid interest is foregone if borrowers refinance. Lifestyle interest... Many savers want to get back to having a passive income from their interest payments on savings. Allowing businesses to work your money can net you a decent living, from the interest payments alone. For example, an 8.5% return on 250k capital is 21,250 pa gross before deductions for tax and accounting for bad debt, which we estimate to be approximately 3-5%. All interest: Monthly transfer of all interest earned Half interest: Monthly transfer of half the interest earned Compounder: Interest earnings may be re-used and loaned out automatically according to your BidPal preferences Fixed amount: Specify an amount to receive each month Manual: Simply use your dashboard to withdraw on request rebuildingsociety.com is regulated by the FCA, uncovered by the Financial Services Compensation Scheme. Read more at: 9

10 Embracing the new laws and the Financial Conduct Authority (FCA)... Since the crash, the government has been keen to promote alternatives to banks. So the FCA consulted with crowdfunding platforms (like ours) to draft new legislation into the Financial Services Act. In April 2014, the peer-to-peer lending industry became regulated by the FCA. This means that platforms in the market are now subject to recourse from the regulator. rebuildingsociety was born from the market failure of the big banks, so good governance, treating customers fairly and strong systems and controls are in our DNA. We do everything we can to win and keep your trust, since it was lost by the banking sector. For many years, people have wondered what can be done about the banking system Now, with your help, and with the scrutiny of the regulator we have the opportunity to change finance for the better, for everyone, forever. We publish a series of blog posts about how our customer-centric-culture is helping us build a community that contributes to society. This includes 3 key areas: Customer Intimacy being close to our customers. Hyper Efficiency We automate what we can and pass value back Product Leadership We lead the way with new finance 10

11 Who s behind rebuildingsociety.com? Online businesses don t always have a public face, but we do. We re physically in an office in Leeds and recognise the confidence that human contact brings to online business. You ll find us at events and we re contactable by phone. The founder and Managing Director of rebuildingsociety is Daniel Rajkumar. He felt that investors could offer more than just finance to companies they lend to and believes businesses will favour this method of funding ahead of banks in the future. Businesses and investors value the advantages of peer-tobusiness lending, which stems from the belief that lenders have a vested interest in seeing their borrowers succeed. We re also a firm believer in the founding principles of building societies and have applied some of the values to our philosophy. Early stage investor David Powell joined the advisory board in early He was joined by Julian Wells as Marketing Director in July and Nick Moules was appointed Communications Manager in September. Following a period of technology development, the site began accepting loan applications in September This started a marketing push, which resulted in rebuildingsociety.com funding its first deal in January Since then, rebuildingsociety has grown to a team of nine, along with four key consultants and a network of freelance workers that complete vital tasks in design, web development, testing and project work. 11

12 Spread the word... Once you ve read this useful guide please pass it on. If you become a lender and want to refer others, we ve established an ambassador scheme to help spread the word about rebuildingsociety.com and reward people for doing just that. It s simple, whenever anyone registers on the site using the unique URL you ll collect by signing up to the scheme, we track all of their activity and display it for you to see on your affiliate homepage. When they pass through certain thresholds you ll be eligible for rewards: When a referral lends 1,000 you ll earn 50 When a borrower applies you ll receive 100 All you need to do is register and begin telling people about us. When you ve got successful referrals that need to be paid for, we ll credit your account. rebuildingsociety.com 16 Queen Square Leeds LS2 8AJ T: E: facebook.com/rebuildings rebuildingsociety.com rebuildingsociety rebuildingsociety-com * rebuildingsociety.com may amend or withdraw this offer at anytime. For our full terms and conditions, please visit rebuildingsociety.com is regulated by the FCA (under Interim Permission) uncovered by the FSCS. Company Registration Number Information Commissioner Office No. Z