A new business fund could set
a precedent for private investors in leasing, writes Fred
Crawley.
Go deeper with GlobalData
A
new asset finance fund drawing on money from wealthy private
individuals is poised to start lending. Should the scheme provide
good returns to its pioneering funders, it may set a precedent for
much wider involvement in leasing by private investors.
Entrepreneur William Flatau has set
up Asset Venture Fund as an extension of the Firstfunding.org
network he started in early 2009. A combination of high processing
speed and flexible underwriting involving experienced private
lenders will be well suited to businesses looking for an
alternative to bank lending.
First Funding matches private
lenders with small businesses looking for loans, with rates and
terms agreed between participants. It recorded “good levels of
activity” during its first year in business, Flatau said.
After seeing private lenders
express interest in property lending, Flatau found that the smaller
exposure profiles and more stable values of equipment assets were
attractive to them. Supercars and agricultural equipment have been
among some of the more unusual deals funded.
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By GlobalDataAs a result, web-based First
Funding has teamed up with Asset Finance Solutions (UK) Limited, an
asset finance broker with a network of more than 25 salespeople.
Together they intend to close deals with private investors,
“solidifying the case for a dedicated asset fund”.
Four First Funding lenders have
committed to this spin-off, and are ready to lend as soon as its IT
systems are finalised.
Rather than linking individual
lenders up to individual deals, the fund will act as a pool between
several lenders. The fund will have a mandate to lend under
specific criteria meeting an agreed credit policy.
Ideal transactions are small cap
deals in the £25,000 (€30,520) to £30,000 bracket, secured on hard
assets such as construction plant, and spread over four years at a
15% rate.
The fund will be aimed at repeat
investments from long-standing clients, such as hauliers and
manufacturers. In many cases deals will be those “with strong
assets for reasonable customers, or reasonable assets required by
strong clients,” Flatau said. They will be those that have fallen
through the gaps for bank underwriters, but which retain a healthy
overall risk profile.
“Our broker network sees up to 50
deals a month falling through the cracks in asset finance lending
because funders are unwilling to consider anything but the
strongest deals. Our Asset Venture Fund is targeting clients with
deals that deserve funding, and we have innovative systems to
handle the new business.”
Underwriting for First Funding’s asset deals will be carried out
by a risk manager, with at least two of the asset fund’s directors
signing off each transaction. They will come in from brokers
through a web-based platform, using digital signature technology to
streamline the process.
