Recently, a number of new and small businesses being mentored by Cornerstone have raised the issue of the increase in the number of funding comparison or ‘aggregator’ platforms that appear when they are looking for finance for their business. These platforms do not offer to lend themselves, but like well-established insurance comparison websites offer an overview of sources competing for business, ostensibly making it easier to find the right deal.
However, some peer-to-peer lenders have warned that the sheer number of different sites has had a confusing and off-putting effect for small businesses and results in few successful applications for the lenders. The sites offer no support in terms of more detailed advice or help in completing an application and many are not comparing ‘like with like’. Therefore, without a broker or business advisor to work with, both the lender and applicant waste valuable time on an application for a product for which eligibility has not been established. There is also the issue that lenders must pay to be included on these platforms and, as in the insurance business, not all possibilities are represented. In some instances, the lender is having to pay a fee regardless of whether it results in any lending business.
You may have heard of Swoop, a rebrand of BizFly; Capalona or the Federation of Small Businesses’ (FSB) own Funding Platform.
Dave Stallon, the FSB’s commercial director, recognised the confusion becoming apparent in the industry and said the FSB launched its own platform ‘in order to provide credibility and instil trust amongst its users’. However, more established aggregator platforms such as Funding Options claim the newer players are making little impact on the market and that there is bound to be a simplification of the offer in coming months and years as the larger and more successful players drive out the less useful alternatives.
In the meantime, those seeking funding to support their business need to be on their guard to ensure they are receiving the very best financial advice. If one of the aggregator platforms is used, there may be something to be said for an initial comparison before a direct approach to lenders of interest.
If you are a small business in Somerset with concerns about finding the best ways to ensure your business is successful, you can always get in touch with us here at Cornerstone. Our volunteer mentors all have years of successful experience in business and there are very few issues they haven’t faced themselves.