Lender Frequently Asked Questions

Most Common Questions Asked

Simple Backing has tried to answer the most frequently asked questions about lending through our crowdfunding platform. Please contact us if you have any other questions not found below.

Who is Simple Backing?

Simple Backing is a UK organisation bringing together lenders and borrowers in a transparent and fair environment.

How is Simple Backing Regulated?

Simple Backing is a trading name of Focus 2020 Limited. We are regulated by the Financial Conduct Authority.

Who Can Become a Lender?

Application to become an Investor / Lender is open to all but admittance is strictly vetted. If you are an individual you must be 18 years of age or over. If you are a partnership, limited liability partnership or a limited company we will expect that you are correctly constituted and regulated. We will request ID, undertake anti-money laundering and anti-fraud checks which will comprise of standard identity checks and credit reference checks.

Part of the registration process is that all our Lenders confirm they are able to pledge a minimum amount of £5,000 per loan request.

What is the Minimum and Maximum Amount I Can Lend on Each Loan Request?

The minimum amount per pledge amount is £5,000 per request. The maximum amount is the loan application amount. What most Lenders will do is spread their available funds across a number of loans as this will ensure that your portfolio is well diversified and not overly concentrated in a small number of loans.

How Do You Ensure the Borrower Is Who They Say They Are?

We carry out all reasonable steps via a series of industry-standard checks to satisfy ourselves as to the identity of the borrower.

What is the Process for Assessing an Application?

We have a four-step assessment process:

Step One: Upon the Application being received the information provided is reviewed and a ‘first pass’ decision is taken

Step Two: We will call the Borrower to confirm the nature of the request and ask supplementary questions

Step Three: If an Application passes Steps One and Two the applicant is called in for a face-to-face meeting. This element of our process differs from other peer-to-peer lenders; we feel it is important that we have the opportunity to meet the applicant or its representatives/officers in order to get a better sense of the business and the promoters.

The meeting is also an opportunity for the Borrower to ask questions of us and our process.

If, following the meeting and the application passing other checks, we are as satisfied as we reasonably can be that the request has merit, the proposal moves to the final step.

Step Four: The application then has a final review. The application will be reviewed from a number of perspectives in order to make a final decision to either support or decline the request.

It is important to understand that whilst we endeavour to cover all aspects of an applicant’s background and business it is ultimately your decision to support the request or turn it aside.

What Information Do We Get About the Borrower, Their Business and the Loan Request?

In order for you to make an informed decision on whether to lend to you or not the following information can be requested:

  • The borrower’s name, business name, or the name they trade under
  • The legal status of the business i.e. sole trader, partnership, limited liability partnership or limited company
  • Description of the business
  • Details of existing borrowing
  • A summary of financial performance to include Annual Accounts, Management Accounts and projections
  • The purpose of the loan
  • The amount requested
  • Repayment term
  • Monthly repayment amount
  • Credit Rating Score Band
  • Type of security being offered
  • The Credit Assessment Team’s recommendation
  • Any other information deemed to be helpful in assisting to reach a decision
How Do You Arrive at the Risk Grade?

Each loan proposal and business has a different level of risk; some will be low risk and others of a higher risk. The differing levels of risk are reflected in the interest rate and so each loan request is assigned a risk band and this is done via a Credit Rating Score Band (CRSB).  It should be noted that this is for Simple Backing’s internal process and should not be used to make your decision.

The CRSBs are:

  • A – Low Risk
  • B – Mild Risk
  • C – Moderate Risk
  • D – High Risk

In order to avoid applicants attempting to present information in such a way as to improve the CRSB we do not disclose how they are calculated. However, key factors include:

  • Age of the business
  • Director’s/owner’s experience
  • Financial performance from Annual Accounts and Management Information
  • The business/directors/owner’s external credit rating and past credit history
  • Type of security (if any) offered and the valuation
  • The industry sector

Whilst we can put a series of parameters in place to assess the level of risk ultimately it’s down to you as to whether you agree or disagree with the CRSB. You need to arrive at your own view as to the perceived level of risk and whether you are comfortable at that level before decide to support the request.

Where Do I Send My Share of a Loan Request and How Is It Held?

We act as the go-between. Your money is held in a designated Client Account pending disbursement to the Borrower (after all documentation and security is in place).

How Am I Paid Back?

We will act as the collection agent for receipt of the payment. When funds are received the capital and interest portion of the loan are credited to an internal account held on your behalf.

Can I invest my ISA pot and allowance into a project through this platform?

Yes you can.  Simple Backing received ISA Management authorisation from the HMRC in December 2016.

If you are interested in investing your ISA funds through our platform, then please get in touch with the Simple Backing team.

What Return Will I Get on the Money I Loan?

Unlike some peer-to-peer lending platforms we do not run a bidding process; each loan has a fixed interest rate. In this way you immediately know what your return will be.

From a portfolio perspective you will have to discount any losses made on individual loans and other costs which may be incurred, to arrive at your overall rate of return.

Is Tax Deducted From the Interest We Are Paid?

No, your interest is paid gross via the monthly repayment you receive. It is up to you to account for the interest you receive via the normal tax reporting procedures. If you are unsure about your tax position we recommend that you seek independent professional advice.

Do You Charge Lenders Any Fees?

There are no fees for Lenders to register or to participate in a Loan request.

How Is the Security Taken?

Where possible, borrowings will be secured. The security document will be drawn up by a Solicitor and will be held by a Security Trustee company Simple Property Limited for the benefit of the Lenders on a pro-rata basis of the loan amount.

If a Borrower Fails to Pay Back or the Business Fails. How Am I Protected?

Firstly, it is important to understand that utilising your money via lending attracts a risk. Whilst we have a credit assessment process you have to be prepared for an element of loss due to events which may occur after the initial approval is granted.

In circumstances where a borrower does default a debt collection firm will be appointed on your behalf and you, together with your lending partners, can chose to follow this with appropriate legal action.

In cases where security is held the security trustee is able to exercise your rights under the terms of the security documents.  Remember that the value of any security can go down as well as up.

Could I Lose my Money?

Yes – you should assume that a small proportion of loans will run into difficulties. We will do all we can to prevent this from happening. In the rare situation that a borrower fails to repay, Simple Backing works to recover whatever is possible from the borrower, and distribute it to the lenders involved in that loan.

If a borrower actually went out of business or bankrupt, we would work with the administrator where applicable (the person who has the legal responsibility to run a company in trouble) to reclaim as much as possible. In some cases, we may choose to appoint a debt collector.

Can I or my Business Invest More Than Once?

Yes, you or your business can invest more than once with Simple Backing.

Can I Access my Money on Loan in an Emergency?

You cannot access your money that is on loan. There may be an opportunity to sell your ‘loan share‘ provided there is a new lender available to match your existing loans but this is not guaranteed and should not be relied upon.

Am I Investing into a Fund?

No your money is not being invested into a collective pool of money.  Each loan you decide to support is on a standalone basis.

Can I Cancel my Contract?

You have a ‘cooling off’ period from when you sign the contract with us.  This will be discussed as part of our conversations.

If you have further questions or wish to speak to the Simple Backing team, please contact us. Your custom is important to us.