Esme Loans, the NatWest-backed digital lending platform for SMEs and scale-up businesses, wants to be lending £1bn annually within a few years.
The platform, which went live three years ago, is about to cross the £100m lending threshold.
The NatWest spinoff says that it would like half of the current annual £2bn alternative-finance SME lending market, which itself accounts for one third of the total £6.2bn alternative finance market. It points out that despite drop-off, the SME lending market still grew by 20pc in 2018. The total amount lent to British SMEs in 2018 was £58bn.
Veronika Lovett, chief marketing officer and co-founder of Esme, said: “We want to become the UK’s most-loved SME finance provider. There’s no reason why we can’t be matching and at least surpassing the Funding Circles of this world. Because unlike Funding Circle, we’re not reliant on individual investors.”
Esme launched in 2017, offering fully automated unsecured loans of up to £150,000, over one to five years. average loan size is between £40,000-£65,000, with the average loan over three years.
Interest rates begin at 3.8pc per annum and rise up to the teens, depending on risk. There are no arrangement fees or penalty charges for early repayment.
Lovett said that Esme began as NatWest’s response to the arrival of peer-to-peer lending and fintechs. Although the front ends of new SME lenders were slick, often the decision-making process took just as long – lengthy, reliant on paperwork and credit committees. The Esme team decided to build their platform from scratch, launching the lending platform within nine months and using machine intelligence to make lending decisions. Customers link Esme to their company bank statements, VAT returns and crucially to their cloud accounting platform. In addition, Esme uses publicly available data from different sources including Companies House and HMRC.
‘You shouldn’t have to pay a premium just for speed’
Lovett said: “A lot of them were offering a quicker decision but at a premium. You shouldn’t have to pay a premium just for speed. We wanted to come up with a hassle-free process and speed up the decision.”
Esme says the entire process can take less than 30 minutes from beginning the application to money being in your bank account.
By comparison, some alternative lenders can take anything between 10 to 15 days to providing funds once the loan quote has been accepted by the customer, says Esme.
Lovett said: “Data helps us build a more accurate picture of your business. In turn, machine learning allows us to continuously improve the process. The more data we put in, the faster the decision making becomes.
“Data-driven, customer-centred innovation is absolutely critical. Our fundamental belief is that customers are not interested in what type of product they have, just whether it’s suitable for their company. It’s about providing a single product that’s individually tailored to the customer and the needs of the business.”