Family and friends lending platform aims to raise £1m
A new family and friends lending platform has predicted a rise in demand, as it sets its sights on raising £1m and becoming regulated in the future.
JustLend allows borrowers to create their own loan campaigns to raise funds. They can set their own repayment terms, including interest rate and term length, and send the campaign to up to 10 family members and friends to invest in. Investors will earn a small interest rate in return.
The platform – which is still in beta mode and will launch formally later in the year – assigns risk scores to borrowers and creates the loan agreement from a prepopulated form the borrower fills in.
Craig Smith (pictured), co-founder and chief executive of JustLend, said the platform has raised £175,000 so far and is spending this on building the platform, hiring staff, operations and marketing.
He said lenders have funded loans for a variety of reasons, such as education, vet bills, home renovations, home appliances, driving lessons and IVF treatment.
Smith said he has seen “amazing” demand, and this will only rise as the cost of living creates a further need for consumer lending.
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“It’s been amazing when it comes to the different types of people using the platform,” he said.
“We aim and plan to grow the number of people using the platform and to really understand our customers in greater depth when it comes to their needs and how we can support them. And our goal is to understand the social dynamics of friends and family and to stop breakdowns in relationships.
“There will be a massive growth in this space and the reason for that is Help to Buy is ending and the cost of living, how will people pay bills, national insurance contributions are going up, student loan repayments are happening, there will be a growing need for support and it’s good to have support from family and friends who are best placed to go to when it comes to finance.”
Smith said that JustLend is in talks for its next funding round in which it hopes to raise around £1m and is keen to become regulated in future.
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“We have started conversations with a number of venture capitals and angels, and enthusiasm for the JustLend business is pleasingly high,” he said.
“We hope to have this next round nailed down this year, raising something in the region of a further £1m but it could be higher.
“And regarding the regulatory situation, I can confirm we have had lengthy, open conversations with the Financial Conduct Authority (FCA), primarily exploring the challenge of where exactly our specialist service sits.
“Because we are helping people make arrangements with other people they already know well, we currently end up sitting formally outside of the FCA’s existing responsibilities. But this situation is likely to evolve as the JustLend model evolves.
“Needless to say, we are keen to be regulated in the future for the customer’s reassurance as much as anything.”