Spotcap Q&A with small business lender Max Verploegen

Spotcap offers loans of up to £250,000 to businesses, priding itself on one working day decisions. To date, it has lent over €250m worldwide

Spotcap provides loans of between £50,000 and £250,000 to small- and medium-sized businesses that have been operational for three years or more, with an annual turnover of at least £500,000, repayable over two years.

Backed by an initial investment from venture capital firm Rocket Internet, Spotcap launched in Spain in September 2014. After launching in the Netherlands and Australia in 2015, Spotcap opened its London office in November 2016. Around 30 people work in the London office and 120 worldwide.

Since then it has raised €100 million in funding from investors including Rocket Internet, Finstar Financial Group, Access Industries, Holtzbrinck Ventures and Heartland Bank.

Max Verploegen has been Spotcap for almost two years, initially based in Amsterdam before moving to Britain last August as a business relationship manager. He sees his role as educating potential clients about the benefits of taking on external finance.

How much has Spotcap lent to date?

Last August, we announced that Spotcap has issued more than €250 million in credit lines.

Why should an entrepreneur come to Spotcap as opposed to a high street bank?

It could be the company is too small for a bank to consider this type of business.

What we offer is a flexible, speedy product, which is focused on helping businesses. What we’ve found is that speed is important, but it also has to goes hand-in-hand with quality of service. You need to take the business owner by the hand because you also need to handle every transaction with care.

We’re offering unsecured finance for working capital, and we can arrange things quickly. We have dedicated relationship managers and a sales support team who can liaise directly with the client.

‘Word of mouth referrals are the biggest compliment you can get’

How many applications does Spotcap receive each month?

Globally, we receive between 800-1,000 applications per month.

What do you look for in businesses approaching you for loans?

What we’re looking for is control and healthy payment behaviour. We focus on business that are handling their businesses and finances with care. The first thing I try to do is measure where this client is going in terms of finance journey. For example, there are some business owners who have only used family money to grow their business. I need to establish a personal connection.

We see a lot of businesses struggling with finding the right finance. Once businesses start growing, they struggle with controlling their costs.

How is a loan application processed?

Applications are first done online through our website and we give approval in principle within one working day. We use technology to conduct a pre-check, after which I meet an in-house underwriter. We have a high-quality risk assessment in place. Then we use technology to structure the financial data of the client. An underwriter assesses. Usually, I can decide within a couple of hours.

We have the technology, but we also know the client – understanding the business plan is a positive.

How many loan applications are approved?

The success rate is around 40 per cent – high due to a large portion coming from collaborations with regional growth hubs, business advisors, accountants and brokers.

How does drawdown take place? What happens if I don’t need the money anymore?

It’s a very flexible product. We only charge interest on the money that’s drawn down into your account. We only charge an arrangement fee when the client uses the funds, as opposed to an overdraft facility. You will always pay a certain fee for having an overdraft.

Also, most other financial products have a couple of weeks to consider the offer, whereas we offer one month.

And there’s no repayment fee if the facility is cancelled early or not used in its entirety.

What percentage of those loans default or get into arrears?

As a balance-sheet lender, Spotcap has skin in the game. As such we focus on high-quality credit risk assessment which includes both innovative tech and human underwriting elements. As a result, our default rates are lower than industry averages.

What happens if you cannot help a client?

We offer aftercare, advice for business we can’t help. We will have a call with the client and explain why this product is not a fit.

What would you say to an entrepreneur hesitating about using external finance?

We don’t want to be the biggest lender, but we do want to be the best. We have a single product offering and that’s what we want of focus on. We’re in the right space and we get a lot of positive client feedback. A large source of referrals of clients is word of mouth. That’s the biggest compliment you can get.

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