Business Finance Market set to Stimulate the £150bn SME lending Market
Two weeks on from the launch of our latest EIS-eligible investment opportunity with Business Finance Market, we offer an overview of the innovative fintech platform as a whole, exploring their experienced team, unique market proposition and innovative revenue model.
An overview of Business Finance Market
A data-rich fintech platform that stimulates the market for SME lending. By combining a data-rich platform with a re-engineered customer journey that matches lenders and SMEs together to help secure finance, BFM’s proposition is a well-needed addition to its industry, offering a streamlined solution to the broken, outdated and inefficient systems currently present within it. Not only will SMEs experience quicker finance decisions based on addressable market access, but lenders and intermediaries will have themselves a fintech platform at their disposal to help manage the end-to-end application process, improve deal flow, and deliver faster credit decisions.
A team boasting decades of experience
Business Finance Market was founded by Craig Iley in 2020. Craig has over 35 years of experience in the finance sector as a commercial banker, author, and founder of two neo challenger banks (Atom Bank and Bank North). The BFM team now consists of a group of senior banking specialists and SME business experts who have experienced the frustrations and failures of the current UK SME lending marketplace from both sides. With a deep understanding of the commercial lending market, the team identified a need for a financial lending platform that addresses the significant problems currently experienced by lenders, intermediaries, and SMEs when looking to secure finance. Their combination of industry knowledge and expertise with a powerful fintech platform, will create a clearly differentiated approach to streamlining the SME lending process.
Addressing a strong market need
The overall UK ‘bank based’ business lending market is worth an estimated £166bn. The average loan origination and repayment cycle is approximately 4 to 5 years, which means that the ‘new’ lending requirement or Serviceable Available Market equates conservatively to around one quarter of the Total Available Market, which is circa £33.2bn. The lending market today consists of over c2,000 commercial finance brokers who now handle more than 50% of all UK deal origination. As banks continue to shed front-line staff and close branches, the traditional means of securing bank finance are in decline. With an estimated £22bn funding gap to the 5.9m UK SMEs, more needs to be done to make commercial funding more readily available, particularly at a time when SMEs begin to withdraw their reliance on the recent Government-backed Covid-19 funding schemes. Whilst Covid has certainly exacerbated the situation, the expectations of SMEs have been changing for years. A need for more focused lending products with faster credit decisions and improved funding chances with flexible options has placed pressure on the industry to revisit the methods of traditional lending. In 2019, the then Governor of the Bank of England Mark Carney expressed his concern for the future of UK lending: “Despite facing a £22bn funding gap, almost half of all UK SMEs have no plan to utilise external financing sources. The Bank is keen to champion a data platform to assist SMEs in applying for, and obtaining, credit with a single ‘data passport’. This means that SMEs could easily apply for finance from a multitude of providers at the click of a button.”
Speaking on Bank of England’s alignment with BFM’s mission, Craig Iley added: “The Bank of England is part of the government apparatus for growing the economy and doing it safely, and they can see that these problems exist. They are guardians of the UK's economic growth story and have a vested interest in making sure that this works.”
As a whole Business Finance Market aims to revolutionise the industry and deliver the vision of a one-stop lending platform where a lack of access to finance is no longer a key critical factor in SME growth and development, with recent industry data and government support suggesting this proposition is well overdue.
An industry-first revenue model
An innovative revenue model centred around SME loan management and delivery, Business Finance Market’s unique multi-pronged profit delivery approach will initially generate revenue across three key channels. Exploring the details of the team’s innovative revenue model, the above video offers an insight into BFM’s direct brokerage, broker platform and introducer revenue channels, that work cohesively to drive profit significantly more efficiently than anything currently available in the market.
A multiple benefit investment opportunity
Alongside prioritising a growth-focused strategy forecasted to deliver 24x money-on-money returns, a multiple stakeholder demand providing benefit across five key areas, and an impact driven mission aimed at supporting the nation’s underserviced SMEs, BFM offers investors a host of valuable tax efficiencies. Being an Enterprise Investment Scheme (EIS) eligible investment opportunity, Business Finance Market affords investors access to a host of valuable tax advantages, from 30% income tax relief to capital gains tax exemption and inheritance tax relief. Mitigating downside risk by minimising their tax bill, investors have the opportunity to plan for the future tax efficiently, contribute to the UK’s record-breaking fintech industry and drive positive impact across Britain's most promising SMEs with our latest high target growth opportunity.
Chief Executive Officer at GCV, Norm Peterson, added: “SMEs have for many years now found it increasingly difficult to access the finance they need to grow. As the backbone of the UK economy, more focus on supporting SMEs is needed - and this is one of the key reasons we are delighted to be supporting Business Finance Market. The team’s experience in commercial banking and within the SME landscape is first class and it is not only fantastic to witness the output of the team’s progress to date, but it’s immensely exciting to see how they could transform the SME lending landscape over the coming 18 months.”