While many P2P lenders have fallen to the wayside or moved on to accepting only institutional funding, Folk2Folk perseveres with its original mission. Today, Folk2Folk claims the title of the UK’s largest peer-to-peer lending platform in terms of cumulative lending, having facilitated £653 million in business loans funded primarily by retail investors.
Founded in 2013, the now ten-year-old platform sought to facilitate access to capital for British SMEs by providing a “local money exchange” or a loan secured by land or other assets. In 2016, Folk2Folk received full authorization from the UK Financial Conduct Authority. Folk2Folk states they are enabling local impact, focusing on people instead of digital data using the term “Folkonomics.” During its first year of operation, Folk2Folk funded £22 million in SME loans.
Folk2Folk states that it currently offers lenders (investors) a rate of return starting at 8.75% per annum alongside an ISA process. A secondary market is available to provide liquidity for investors. While minimum borrowing stands at £100,000, investors may participate at a minimum of £20,000.
Folk2Folk co-founder, Louis Mathers, explains that the company was created with an anti-establishment element as part of its ambition.
“We wanted to demonstrate that we could provide funding, and investment opportunities, better than the banks. There are invisible barriers to finance for rural small businesses and in effect, they are discriminated against compared to their urban counterparts. We wanted to level the playing field for these businesses and our answer was to organise the funding ourselves.”
Mathers adds they always sought to balance the needs of their borrowers and the expectations of investors.
”Folk2Folk is not the type of business you can entirely automate,” says Louis. “Our operations have undeniably led to more prosperous rural locales and it’s not hard to see the impact when speaking with our customers.”