Borrowers & Lenders All you need to know Peer To Peer Financing
About GRID Finance GRID Finance is transforming banking and financial services in Ireland by building innovative financial products for all generations. GRID Finance s vision is to lead change in banking, both in Ireland and globally by building practical financial products that support and respond to people s modern lifestyles. Get on the GRID to... 1 2 Access the money you need 3 Better manage and budget your money Get a return on the money you have GRID Finance s frst product is a peer to peer fnancing platform called the GRID. The GRID connects those who have money with those who need it, allowing real people to decide how to put their money to work by lending to local businesses 2
The GRID. How does it work? The GRID platform facilitates and formalises peer to peer transactions. Local businesses create projects with a specific need and value on the GRID. The GRID allows real people to finance a local business project with a small loan. Central to the GRID is transparency. All projects that need fnancing must have a specifc need and those who receive fnance can update their supporters on news and developments of the project as it progresses. Borrowers & Lenders. All you need to know. 3
249 per year subscription Lending for Limited Companies Minimum 3,000 2,000 PROJECT FINANCE Maximum 75,000 3 months Minimum loan period 3 years Maximum loan period For 249 per year, businesses can access a platform of lenders and raise project fnance up to 75,000 per project. The cost of raising project finance is set at % of the finance raised and is based on the loan term. - 12 month loan (3% fees) - 24 month loan (4% fees) - 36 month loan (5% fees) Fees % of project This fee is only incurred if the full amount fnance raised has been raised and the borrower has accepted the interest rate achieved. 4
As a business how do I borrow on the GRID? Whether you require project finance for a marketing campaign, to hire a new employee, to purchase equipment or to expand your business, the team at GRID Finance will work with you through the application process. Below is a check list to get you started: As a borrower you must: Be a Limited Liability company or sole trader registered in Ireland Have majority Irish directors Have a trading history Be able to demonstrate ability to repay the loan Have an Irish bank account Your application includes: (*required items) *Details of the project that requires financing *The amount of project finance required and the term of the loan *Six months bank statements Latest management accounts One year of fnancial statements A director s guarantee Details of your project should include: A description of your project Pictures or videos related to your project A link to your website and social media pages Borrowers & Lenders. All you need to know. 5
Borrower FAQs Why choose to borrow on the GRID rather than use a traditional bank loan? Project fnance of up to 75,000 can be raised Your application is processed within 48 hours You will access money at an interest rate that is potentially signifcantly lower than the bank You will have the opportunity to engage a network of supporters that will not only lend to your business but who have the potential to become your customer, your advocate and your ambassador When and how will I make repayments? Monthly repayments will be made by you directly to the platform where they will be automatically distributed to your lenders. 6
How do you determine if a business is a candidate for the GRID? How is a borrower s credit rating calculated? The GRID team use a number of processes to assess a business s credit score which include a combination of external and internal credit assessment processes. The result of these processes will determine the numerical score range within which the business falls. This numerical range determines the published credit score for the business which will be one of the following: AA, A, B, C, D and SB. Does GRID Finance require businesses to be transparent as to what the money will be used for? Yes. Businesses can only get access to the platform if they are raising fnance for a specifc project. Non-specifc projects are not permitted on the platform. Transparency is critical to the fundraising process. It is vital that businesses are clear on what they are raising money for and that lenders know what and who they are supporting and lending to. Will there be a minimum or maximum interest rate? The minimum interest rate that can be proposed by a lender is 0.1%, the maximum rate is 20%. The fnal interest rate that will be applied to the project fnance loan will be an average of the rates proposed by the lenders. When the project has been successfully fnanced and the fnal interest rate has been calculated, you will have an opportunity to accept or decline the project fnance. What happens if I do not raise the full project finance within the campaign period? If your project has not been fully financed by the end of the campaign period, the funds will be returned to the lenders at no additional cost to you or the lender. The GRID team will work with you to assess why the campaign was not successful and discuss an alternative approach to attracting lenders. Borrowers & Lenders. All you need to know. 7
Lender FAQs How much can I lend on the GRID? The minimum lend amount is 5 and the maximum you can lend to each business project is 50% of the project fnance. If the loan defaults will I lose all of my money? GRID Finance will do everything possible to ensure that the borrower meets their obligations. This includes the use of external debt collection agencies. We expect default rates to be very low given the community focus of the platform. We believe businesses will prioritise repaying their supporters and customers before anyone else. However we encourage lenders to consider and understand that there is a possibility of the borrower defaulting indefnitely. 8
What are the risks associated for the lender? As the lender, you decide what businesses and what projects to lend to by considering all the information that is available on the platform. GRID Finance s project and business credit assessment process ensures that only the best projects get access to the platform. We also urge lenders to lend to businesses they know and trust. What tax do I have to pay on my return? Do I need an accountant? Any tax due on any interest earned is handled in the same manner that tax on an investment is handled. When making your annual tax return, a lender should include any interest earned as part of their taxable income. If in any doubt a lender should consult a qualifed accountant. reasons to be 1 2 Make decisions about how your money is invested Three a lender... 3 Make a higher return than is achieved through savings alone Lend to businesses you know and trust Borrowers & Lenders. All you need to know. 9
What do people think? Elaine Harrington, an occupational therapist, who lent money to a local business via the GRID said: I loved using the GRID to support a local business. I offered to lend a certain amount to Happy Threads and was even able to specify the interest rate I wanted to charge. The original amount plus the interest rate was re-paid to me through the platform every month. It couldn t have been easier and I felt happy to be contributing to a local business. 10
#getonthegrid Medical uniform manufacturer Happy Threads, raised 2,000 for a marketing campaign. Owner Daniel Plewman said: We needed to boost awareness of our products and our brand but we didn t have the budget for a marketing campaign. As I needed a relatively small amount, I didn t want to look for a loan from the bank. Having spoken with the team at GRID Finance, I realised peer-to-peer financing was more cost effective than using my company overdraft or credit card. The project was live on the platform for 28 days, and we raised the full 2000 within that time. Mike O Shea, a chartered accountant and Head of Internal Audit for a large publicly quoted company said: I lent money to a couple of businesses on the GRID. It was simple and straightforward. It was great to see the repayments come through each month. It was clear what I was supporting and how the money could help the business. Borrowers & Lenders. All you need to know. 11
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