When you need a loan, the cost and speed of obtaining it can be as critical as the financing itself, a principle that may be even more relevant today in our fragile pandemic-stricken economy than ever before. . Today, a company that offers to reduce both the time and the cost of obtaining financing, with a platform, initially aimed at SMEs, which allows business owners to pledge their property as collateral to obtain the loan, announces a round of financing to expand its business.
Selina finance, which provides loans to small and medium-sized businesses in the form of flexible credit facilities – you only repay what you borrow, and you do so over time, rather than as a single payment – which are guaranteed by the Your Personal Home Value announces today that it has raised £ 42million ($ 53million) – £ 12million in equity and £ 30million in debt to distribute in the form of loans. The company said it plans to raise significantly more debt in the coming months as its business grows.
Funding comes from several investors, including Picus Capital and Global Founders Capital, two companies linked in part to the Samwer brothers, who built the Rocket Internet e-commerce incubator in Berlin. The valuation of the company is not disclosed.
London-based Selina plans to use the funding in several areas: First, to continue growing its business in the UK, which was founded by Andrea Olivari, Hubert Fenwick and Leonard Benning and launched in June 2019; and secondly, to start the process of opening up to other markets in Europe.
Selina now focuses on SMEs whose demands are qualified as “prime” (as opposed to subprime). They can borrow up to £ 1million of funds – the average amount is significantly lower, £ 150,000, Olivari says – with interest rates starting at 4.95% APR. This lowers the rates of typical unsecured loans. Selina is also in the process of obtaining a license to expand its offering to consumer borrowers.
We are passed from the days when real estate investing was so stable that “safe as a home” was a common expression to mean absolute reliability. But for most people, their properties continue to be the most important asset they own and thus become a key part of how a person might build their larger financial profile when it comes to borrowing. money.
Selina’s technology essentially operates a kind of two-sided market: on the one hand, its algorithms process the details of your property to determine its market value and how it will appreciate (or depreciate), and on the other hand , it assesses the health of the SME. the business and the purpose of the loan, to determine if the borrower will be right for it. He’s only one year old, so it’s hard to say if he’s a strong balance sheet, but Benning notes that so far no clients have defaulted on their loans.
“We have home security, yes,” he said, “but we only take creditworthy customers to make sure the default scenario doesn’t happen. It is something that we avoid at all costs. Technically, there is a long process that leads to this result, but it hardly ever happens. He noted that Selina has people on her team who have worked for subprime lenders, which gives them experience to help determine the best opportunities.
More generally, the idea of using your property to raise capital – for example, through a re-mortgage or a loan against its value – is not a new concept: banks are offering and distributing this type. funding for years. The problem Selina tackles is that these deals usually come with high interest rates and commissions, and can take six to eight weeks between application and approval and finally the loan. Selina’s argument is that he can cut that down to five days, or even less.
“It is essential that we can make a loan in five days to be nimble and precise because this is an area where banks are failing,” Fenwick said. “It can take two weeks for someone to come on behalf of a bank to do an assessment. It’s just a retrograde and archaic process. We can use big data and leverage different domains and dynamics [and put] all this in a model to assess the valuation of a property with a small margin of error.
Selina isn’t the only tech company to seize this opportunity – in particular, Figure, the startup founded by Mike Cagney (formerly of SoFi), also offers loans to individuals on the value of their property, among other services. And for those who have followed other business startups funded by the Samwers, you could even argue that there is a hint of cloning going on here, with even the sites of the two showing similarities. But for now at least, Selina appears to be the only one of her kind in the UK, and for now, that represents an opportunity.
“Selina Finance is bringing much needed innovation to the UK lending space by enabling clients to access equity locked in their residential property transparently and on flexible terms,” said Robin Godenrath, Managing Director of Picus Capital, in a press release. “The team has impressed us with the importance they place on creating a fully digital customer experience and have already achieved a great product market fit with their business loan use case. We are delighted and confident that Selina’s consumer proposal will also become an attractive alternative in the area of consumer loans.