FAQs - Business Loans

FAQs

1. How much can I apply for?

£500 - £50,000

2. What interest rate will I be charged?

Typically 17.1% APR (Underlying rate 15%)

3. What does APR mean?

APR stands for the Annual Percentage Rate of charge. You can use it to compare different credit and loan offers. The APR includes important factors such as:

  • the interest rate you must pay;
  • how you repay the loan; the length of the loan agreement (or term); frequency and timing of instalment payments; and amount of each payment;
  • certain fees associated with the loan; and
  • premiums for payment protection insurance that the lender chooses to make compulsory.

All lenders have to tell you what their APR is before you sign an agreement. It will vary from lender to lender. Generally, the lower the APR the better the deal for you, so if you are thinking about borrowing, shop around. ("Money Made Clear" - Financial Services Authority - June 2008)

4. What is it likely to cost?

A typical loan of £12k repayable over 5 years costs with a 2% arangement deducted from the loan will cost £285.48 per month

5. How quickly do I have to repay Foundation East?

Typical repayment periods are between 6 months up to 10 years

6. I have no money of my own to invest, is this a problem?

Not necessarily. We are looking for a good idea, viable plan and lots of determination.

7. I have no security to offer, is this a problem?

Not necessarily - see point 6 above

8. I have no credit history/ I have a bad credit history, is this a problem?

Not necessarily. Just be honest with us from the start - that is all we ask.

9. How is interest calculated?

Interest is calculated on the outstanding balance on a daily basis. It is applied to the loan balance monthly.

10. What if I want to repay earlier?

a) We are happy to accept ad-hoc repayments (in addition to scheduled ones) which will reduce your loan balance and, therefore, the total interest due over the period of the loan. There is no charge for this.
b) If you wish to repay the entire loan early, you may also do this without charge.

11. How do I make repayments?

Monthly by direct debit. If you do not have a bank account we may be able to assist you in opening one.

12. Is there any proposal we won’t finance?

We do not have any specific sector that we either target or avoid. The only overriding criteria we apply is that the purpose of the business must be legal and, as a Values-driven, ethical. We would not finance any activity that we feel might bring us into disrepute.

This happens about once in every 100 applications received so don’t be out off at this stage

13. What geographical areas do you operate in?

We lend to businesses based in / primarily operating in the East of England – this comprises Bedfordshire, Cambridgeshire, Essex, Hertfordshire, Norfolk and Suffolk.

14. Do I need to provide “match funding”?

Some lenders (including banks occasionally) will only lend you part of the cash you require to start or grow your business, insisting that you find the remainder elsewhere.

Whilst we recognise that personal investment can lead to personal commitment, here at Foundation East we also understand that some people only have their time, skills, energy and enthusiasm to contribute.

Alternatively, if you are able to obtain some support form the bank then that is great. If you need us to provide “match funding” for them then we will be pleased to consider your needs.

The presence or lack of “match funding” or personal investment will not speed up or slow down the application process in anyway. It is the idea, the business and, most importantly, the person that we lend to and, since we do not rely on computers to make our lending decisions, we need time to formulate our opinions. 

15. How long does it take / what is the process?

 Typically:-
 
Day
What happens / what do I need to do?
 

1

You ‘phone or email us

We receive your enquiry General chat about what you do and if you are eligible to apply (see FAQ12 and 13) 

You make your decision to apply and download an application form / we post you an application form

 
5

We receive your completed application form and supporting documents (detailed on application form). We aim to appraise all applications received within 2 days of receipt. 

The biggest problem we encounter is missing / lack of information. The more  information you can send us the more likely it is that your application will go quickly and smoothly.

 
7

Initial application appraised by us. Email and / or letter to you advising the issues / areas we need to clarify further.

 
8

Only you know how long it will take you to work on the issues raised. Some applicants have the answers to hand immediately, others take months! Generally, people take about a week. 

 
13

Meeting arranged with you and the Loan Manager covering the area you are based in / operate in. 

The meeting will primarily be aimed at answering / clarifying the questions / issues raised at the initial appraisal stage. 

The second biggest problem we encounter is attending meetings where applicants are not able to answer all the questions we have posed at the initial appraisal stage. If this happens we sometimes have to repeat the cycle and organise another meeting. 

 
14-18

Possible further work by applicant if not all information available at first meeting 

 
19 All information now provided
 

Loan Manager in a position to make a “recommendation” 

a)       “Decline” We do not believe that your business has a reasonable chance of success based on our understanding of your ability to repay a business loan from us. You may wish to re-apply in the future if / when things change 

b)       “Recommend” Assuming your loan is for more than a couple of hundred pounds it is most likely that your Loan Manager will need to submit your application to our Loan Assessment Panel (LAP) 

How does LAP work?
 (i)         LAP comprises of 3 approved people who provide external scrutiny to ensure   that we are applying a good level of business analysis to your application
(ii)         How often does the LAP sit?
           Every Wednesday
(iii)      Do I attend the LAP?
          No, we do not think that is fair on you or the LAP Member if you attend. Your Loan Manager will “champion” your case at LAP
 
(iv)       What are my chances of being "Recommended" to LAP?
      Approximately 1 in every 2 applications are recommended to LAP
(v)     What are my chances of success at LAP?
           We only submit applications to LAP that we feel have a better than 90% chance of being approved. .
 (vi)      How quickly will I find out the LAP decision?
           Most likely the same day.
(vii)       What if they say no?
           Sometimes a “no” means a “no” with no opportunity to re-apply / re-submit; more often than not if a decision cannot be made on the day some further information needs to be obtained before it can be re-submitted.
 
Ø       Further information is only requested in a minority of cases.
 
Ø       Approximately 10% of applications are declined by LAP with no opportunity to re-submit.
 
20
Application submitted to LAP
 
27
LAP sits to make a decision
 
27
Application approved by LAP
 
28+
Post LAP paperwork
 
The length of time this takes depends on your circumstances and whether or not your application is covered by the Consumer Credit Act.
 
Generally, we would expect for you to have the cash in your bank account within 7-10 days. Sometimes this can be quicker.
 

 16. What if I wish to make a complaint?

We have a standard complaints procedure, and welcome feedback if you feel we have fallen below our usual standards of good service.

 However, we would advise that our Complaints Procedure is aimed at customer service, and does not cover where your application for support has been declined for commercial reasons by your allocated Loan Manager or by our Loan Assessment Panel (LAP)-see FAQ 15 above.