The way firms borrow money is changing as crowdfunding continues to grow.

RfM consultant Paul Newsham
RfM consultant Paul Newsham
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It has been called the Bank of Joe Public. Now businesses are turning away from the traditional forms of borrowing to raise capital through crowdfunding.

And a North West accountants group has won access to one of the world’s biggest workplace lending platforms for its clients.

RfM+more, which has six branches in the region including Leyland, the Fylde, Lancaster and Morecambe, has hooked up with Funding Circle to offer businesses a way to raise cash through the increasingly popular alternative finance industry.

“It’s a simple idea and an exciting idea – one which we think will appeal to a lot of our clients,” said RfM group consultant Paul Newsham.

“When businesses borrow money through Funding Circle they actually borrow from hundreds of individual lenders like you and me.

“People who want to make their savings work better for them lend any amount of money to the business – it can be as little as £20 – and the return they get from their investment can be more than seven per cent a year.”

Funding Circle was founded in 2010 and has so far loaned out more than £1.2bn to small and medium-sized companies, making it the UK’s third-largest net lender to small businesses after RBS and Lloyds Banking Group.

Around 15,000 businesses have accessed finance provided by almost 49,000 individual investors – one of those the Government-owned British Business Bank, which has put in more than £40m.

Loans can range from £5,000 to £1m, with terms of up to five years. Applicants can typically get their hands on the cash within one week.

The company sums up its role as “a marketplace that connects established businesses looking to borrow with people and other investors who want to lend.”

Consultant Paul met with Funding Circle executives in London recently and agreed RfM would act as a broker through its six offices in the North West.

“I was really impressed with the work Funding Circle were doing and asked if RfM could promote it as something we could offer through our branches.

“We regularly have clients who ask our advice about raising capital and now we can show them just how Funding Circle works, what they need to qualify for a loan and how to apply. If a company qualifies for funding then their application goes on the Funding Circle website inviting investors. People can then decide if they want to put their money in.

“When I first looked at the site I thought it would be people investing a few thousand each, but it’s people lending sums as small as £20. Many of them spread their investments by lending small amounts to lots of projects.”

He added: “I’m excited that we are now able to offer this to clients of RfM. Using our group to access Funding Circle and letting us do the work for them can mean reduced arrangement fees and fast access to funds.”