Introduction to Flender in the Irish Lending Landscape
The landscape of business finance in Ireland has seen significant transformation with the rise of digital lending platforms. Among these, Flender, operating as Flender Ireland Limited, has positioned itself as a notable player, focusing on providing capital to small and medium-sized enterprises, often referred to as SMEs. Established in 2014, this Dublin-based company sought to innovate traditional lending by connecting businesses in need of funds with a diverse pool of individual and institutional lenders.
Company Background and Vision
Founded by Kristjan Koik, Oliver Cavanagh, and Jeremy Davies, Flender emerged with a vision to streamline access to business finance through a peer-to-peer digital model. While Oliver Cavanagh departed in 2019, Kristjan Koik continues as Chief Executive Officer, alongside Jeremy Davies as Chief Financial Officer, and Colin Barry, formerly a senior underwriter at AIB, as Head of Credit. The company has successfully raised significant capital, including a ten-million-euro Series A round in 2018 led by Eiffel Investment Group, as part of a larger funding target.
Flender's business model revolves around its digital platform, which facilitates direct lending. This approach allows borrowing businesses to propose their desired interest rates, aiming to attract lenders. Flender's revenue is primarily generated through origination fees charged to borrowers, and by retaining a margin between the rates offered by borrowers and those accepted by lenders. The platform primarily targets established Irish SMEs that demonstrate proven cash flow and have typically been trading for more than two years.
Flender's Loan Products and Financial Terms
Flender offers a tailored suite of financial products designed to meet various business needs, distinguishing itself through speed and flexibility, though with specific terms and conditions.
Business Loan Offerings
- Term Loans: These are available for amounts ranging from 10,000 euros to 300,000 euros. Repayment terms are flexible, spanning from six months up to forty-eight months. The interest rates for these loans vary depending on the business's credit grade and the rate set by the borrower, typically falling between 6.45 percent and 16.3 percent.
- Merchant Cash Advance (MCA): For businesses with significant card revenue, Flender offers Merchant Cash Advances from 10,000 euros to 250,000 euros. The repayment terms for MCAs are shorter, ranging from three to twelve months, with repayments directly tied to a share of the business's daily card transactions.
- Emergency/Deferred Start Loans: In response to specific economic challenges, such as the Covid-19 pandemic, Flender has offered specialized loans up to 100,000 euros. These loans featured an initial three-month payment-free period, followed by twelve months of amortization. Businesses considering this option should confirm its current availability.
Understanding Interest Rates and Fees
Interest rates on Flender's platform are borrower-set, influenced by an internal credit grading system that ranges from A+ to V. For a twelve-month term, example rates are:
- Grade A+: 8.45%
- Grade A: 8.95%
- Grade B: 9.95%
- Grade C: 12.0%
- Grade D: 13.5%
- Grade V: 16.0%
Regarding fees, borrowers are charged an origination fee. However, Flender introduced a significant platform fee for investors in August 2023: a flat 12.50 euro monthly charge. This unexpected fee led to considerable user backlash and is currently under review. Standard industry rates apply for late payments, though specific details are not publicly disclosed.
Repayment Structures and Collateral
Flender's term loans feature fully amortizing repayments, meaning each fixed monthly payment includes both principal and interest, ensuring the loan is paid off by the end of the term. Repayment options are available for 6, 12, 18, 24, 30, 36, 42, and 48 months. A key aspect of Flender's offerings is that loans are primarily unsecured, meaning no traditional collateral is required from the borrower, which can be an advantage for businesses lacking tangible assets to pledge.
Applying for a Loan with Flender
The application process with Flender is designed for digital convenience, reflecting its modern lending approach.
The Online Application Process
Businesses wishing to apply for a loan with Flender must do so entirely online through its website, flender.ie. The process includes digital contract signing and identity verification, removing the need for physical branch visits. This fully online channel ensures rapid application submission and processing.
Key Requirements and Underwriting
To qualify for a Flender loan, businesses must provide comprehensive documentation. This includes company registration details, unabridged financial accounts for the past two years, six months of recent bank statements, and tax certificates. Flender employs digital identity verification and conducts credit checks through its UK underwriting partner, Equifax. The internal risk assessment is led by the Head of Credit, whose team grades borrowers from A+ to V based on financial health and cash-flow analysis, a process comparable to traditional bank underwriting procedures.
Post-Approval and Disbursement
One of Flender's touted advantages is its speed. Upon approval, funds are typically disbursed via bank transfer to the borrower's Irish business account within twenty-four hours. This rapid access to capital can be crucial for businesses facing immediate funding needs.
Technology, Regulatory Status, and User Experience
As a digital-first platform, Flender's technology and regulatory adherence are central to its operation, directly impacting customer perception.
Digital Platform and Mobile Access
Flender's digital presence is primarily through its website, flender.ie, which features a responsive design and dedicated portals for both borrowers and lenders. While the website is mobile-optimized, Flender does not currently offer dedicated iOS or Android mobile applications specifically for borrowing. All services are accessed directly through the mobile web browser, which may be a consideration for users accustomed to native app experiences.
Regulatory Framework and Protections in Ireland
Flender is authorized and regulated by the UK Financial Conduct Authority (FCA Reg. 657861) for its crowdfunding operations based in the United Kingdom. However, in Ireland, the regulatory landscape for crowdfunding platforms falls under the Central Bank of Ireland's Alternative Investment Fund Managers regime. Flender's specific licensing status under this Irish framework is not explicitly clarified in public sources. It is important for potential borrowers and investors to note that Flender, like many peer-to-peer platforms, does not typically offer coverage under a Deposit Guarantee Scheme or an Investor Compensation Scheme. The platform does, however, prominently display risk disclosures.
Customer Feedback and Market Perception
Customer feedback for Flender, particularly from investors, presents a mixed picture. On platforms like Trustpilot, Flender holds a rating of 1.4 out of 5 based on approximately fifty reviews. Common complaints from investors include the sudden introduction of the 12.50 euro monthly platform fee with insufficient notice, issues with withdrawal delays, and concerns over loan defaults and perceived lapses in due diligence leading to recovery shortfalls. There have also been reports of limited communication regarding delayed repayments. Conversely, borrower testimonials often highlight positive aspects such as the ease of the application process and the speed of fund disbursement, with one notable success story of a 100,000 euro grant disbursed in under a second in 2018. These contrasting views underscore the dual nature of peer-to-peer platforms, where investor and borrower experiences can diverge.
Flender's Position in the Irish Market and Competitor Comparison
Flender operates within a dynamic and competitive digital lending market in Ireland, contending with both established and emerging platforms.
Competing with Other Digital Lenders
Flender's primary competitors in Ireland include Linked Finance and the UK-based iwoca, which also serves the Irish market. A comparison reveals key differences:
- Flender: Offers loan sizes from 10,000 to 300,000 euros, with terms ranging from 6 to 48 months. Interest rates are typically between 6.45 percent and 16.3 percent, with all loans being unsecured. Its platform is exclusively web-based.
- Linked Finance: Provides a broader loan range, from 5,000 to 500,000 euros, with terms from 1 to 3 years. Interest rates can range from 6 percent to 32 percent. Like Flender, its loans are unsecured, but it offers both a web platform and a mobile application.
- iwoca: Focuses on smaller loan amounts, from 1,000 to 100,000 British pounds (or equivalent in euros), with flexible terms. Rates are around 1.5 percent per month. Its loans are also unsecured, and it features a web platform complemented by an API for integration.
This comparison highlights Flender's specific niche in loan amounts and terms, while also pointing out its web-only platform compared to competitors offering mobile applications.
Market Growth and Strategic Focus
In 2019, Flender secured a significant 75 million euro funding line, intended to reduce borrower rates and expand its lending capacity. While there were plans for a UK market launch in 2018, these were shelved, and Flender's current strategic focus remains firmly on serving Irish SMEs. The platform's growth post-2020 has reportedly slowed amidst market shifts, indicating the challenges and evolving nature of the peer-to-peer lending sector.
Practical Advice for Irish Businesses Considering Flender
For Irish businesses contemplating a loan from Flender, a thorough understanding of the platform's offerings, its operational nuances, and a careful assessment of one's own financial position are essential.
Assessing Your Business Needs
Before applying, clearly define your business's funding requirements. Consider the exact amount needed, the ideal repayment period, and your capacity to meet fixed monthly repayments. Flender's term loans and merchant cash advances cater to different financing needs, so select the product that best aligns with your business model and cash flow.
Key Considerations Before Applying
- Understand Interest Rates and Fees: While borrowers set rates, understand how your credit grade influences the final agreed-upon rate. Be aware of any origination fees that will be deducted from the loan amount.
- Eligibility and Documentation: Ensure your business meets Flender's stringent requirements, including trading history, financial accounts, and bank statements. Having all documentation ready can expedite the approval process.
- Unsecured Nature: Appreciate that while the loans are unsecured by traditional collateral, personal guarantees are often part of the agreement for SME loans, which could impact personal assets if the business defaults.
- Platform Stability: Be mindful of the reported investor complaints regarding fees and withdrawal issues. While these directly impact lenders, they can indirectly reflect on the overall stability and long-term viability of the lending platform.
Performing Due Diligence
It is always prudent to compare Flender's offerings with other digital lenders in Ireland, such as Linked Finance, and even traditional financial institutions or credit unions. Evaluate not only the interest rates and fees but also the overall terms, flexibility, and customer service experience. Reading recent borrower testimonials, alongside investor reviews, can provide a more balanced perspective. Given the lack of explicit clarity on Flender's Central Bank of Ireland licensing status for crowdfunding, businesses should conduct their own verification to ensure comfort with the regulatory oversight.
