Would you lend to businesses of which you are either a customer or a supplier?

Dec 15, 2016 Blog  Business , SME

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Following our most recent product launch i.e. Business-to-Retail Lending  (see press release), we sent out a survey to determine what current and potential retail lenders** thought about the product, specifically about lending to established businesses of which the lenders are either a customer or a supplier.

The favourable response we received was very encouraging; an overwhelming 96% of the respondents said that they would lend in the above scenario.

We asked our user base how much they would be willing to lend to these businesses. 46% of the respondents selected R500 – R1 000 range, which ties in with the current average amount lent to businesses on the RainFin platform.  Interestingly, 38% selected the >R10 000 range  – which indicates a significant expression of intent to lend larger amounts.

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From an analysis of the results data, we can infer that the intent to lend larger amounts is linked to the decision to integrate Crowd-Funding/Lending type benefits  into  the Business-to-Retail product.  The proposed benefits are:

  • Exclusive access to once-off products e.g. signature ranges or customised products
  • Exclusive access to once-off experiences
  • Formal recognition for contibuting to the business’ growth
  • Formal recognition for contributing to socio-economic impact (economic growth, job creation, wealth creation, etc.)
  • Employment Opportunities
  • Future Investment Opportunities (shareholding)
  • Branded Merchandise

The results of this survey question were as follows:

  • Investment opportunities (shareholding) was scored as the biggest primary benefit by most of the respondents.
  • 2nd highest benefit was employment opportunities.

This shows us that, in return for lending to businesses, lenders are seeking opportunities to be actively involved in value creation.  This is an interesting insight as it aligns to secondary research we’ve reviewed, which speaks to the mind set shift in the retail investor base i.e.  from a consumerist mind set to an investment/savings and active contribution mind set.

Lenders  also seem to have a distcinctive preference for the types of businesses they would prefer to lend to.  The options listed, and results were as follows:

graph-2

For us the survey affirms our intial hypothesis: Marketplace Lending has become as much a marketing and branding tool as it is a financing tool.  It allows businesses to connect to, and potentially reward, current and potential customers.  The survey affirms that when businesses allow its customers and/or suppliers to invest (by lending), it (the business) reinforces the relationship with its customers, which enhances customer loyalty.

Take the survey and tell us about the businesses and/or brands you would lend to, in exchange for enhanced value.

** Retail Lender: an individual who lends in his or her personal capacity rather than for an organisation. 

 

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