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.
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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 discovered that the smaller exposure
profiles and more stable values of equipment assets were attractive
to investors. Supercars and agricultural equipment have been among
some of the more unusual deals funded by private lenders.
As a result, web-based First Funding has teamed
up with Asset Finance Solutions (UK) Limited, a large 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”.
To date, four First Funding lenders
have committed to this spin-off, and are ready to lend as soon as
its IT systems are finalised.
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By GlobalDataRather 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 would be 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
percent rate.
To avoid potentially fraudulent applications,
the fund will be aimed at repeat investments from long-standing
clients, such as haulage companies and manufacturers looking for
new equipment.
In many cases the deals will be those “with
strong assets for reasonable customers, or reasonable assets
required by strong clients,” Flatau said. Either way, they will be
those that have fallen through the gaps for bank underwriters, but
which retain a healthy overall risk profile.
“Our broker network is seeing up to 50 deals a
month simply falling through the cracks in asset finance lending,
because the funders are unwilling to consider anything but the
strongest of deals. Our Asset Venture Fund is targeting those
clients with deals that deserve funding, and we have innovative
systems to handle the new business,” Flatau said.
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 incoming transaction. These
will come in from brokers through a web-based platform, using
digital signature technology to streamline and speed up the process
of funding.
