How Wirefund Aims to Reduce “Borrower Stress” An interview with Amit Sankey, Founder and CEO

 

About Wirefund

 

Wirefund () launched in July 2016, looking to lend between £1,000 and £25,000 to UK Small and Medium Enterprises (SMEs). Sounds similar to other products? Actually not – we think Wirefund are taking a fresh approach here. They charge a single fee (currently 19%), take daily repayments, charge no interest AND take NO Personal Guarantees (PGs). We stand to be corrected, but we don’t see any other SME lender taking such a clear approach. PGs are arguably the biggest reason why owners avoid borrowing, even when it might make commercial sense to do so.

 

We recently caught up with Wirefund’s Founder and CEO, Amit Sankey, to find out more about him and what is driving this (possibly!) unique approach.

 

Amit’s Background

 

Amit’s personal experiences tell us a lot about what is driving his passion to make a success out of Wirefund.

Amit studied Chemistry at Imperial College before doing a short stint at Citibank, where he found himself “a very tiny cog in a big machine – it’s difficult not to feel insignificant!” That said, Citibank were sufficiently aware of Amit to send him to India, where he had the chance to see how they assessed small business lending on the sub-continent. “The key lesson I learned was that very simple pieces of information were used to make a judgement call on whether to lend or not” – something that he has looked to embed in to Wirefund’s assessment process.

After 9 months with a global megabank, Amit switched his efforts to building a small business, selling baby foods in the UK and West Africa. Needing finance to grow, he’d not only signed a Personal Guarantee (PG) to his Bank but got his Mum to do the same (Amit’s PG not being worth a great deal at that point). In 2008, with the business struggling, a nervous Bank called in those PGs – Ouch! For Amit, “this was a really bad time for me, but particularly for my family – it made me terrified of borrowing!”

As a true entrepreneur, Amit did not hold back from starting again. This time he built a successful business managing catering services on offshore oil rigs – never borrowing a penny from a bank, as he “remained scared from past experiences”. Having proven his business (and catering) skills, Amit then looked at developing a restaurant, for which he would need a loan facility. Amit hunted high and low for finance that DID NOT require a “PG”, but failed every time.

 

So, what’s the point of a company’s “Limited Liability”?

 

Amit, off the back of his restaurant experience, found himself asking “just what is the point of Limited Liability” when every Bank demanded a PG. Utterly frustrated, he decided to address the issue of “borrower stress” on the business owner. His own research was showing him that you had to be a really quite large business to avoid additional risk being placed on the individual behind the business. “Banks see small businesses as too risky and too expensive, the Bank definition of a small business being a sub £25million turnover – that’s pretty big in my eyes, and no doubt to 90% of the population”.  Amit is not a “Bank Basher”, and understands why “any bank will prefer a more secure £2m loan to a risky £20,000 loan – and they can’t make a profit on the latter given the way they are set up”.

In Amit’s view, the average person “wants good credit, wants to repay and really doesn’t want to walk away from what they owe”. It’s why Wirefund adhere to the “Limited Liability” principle, and don’t look to take a PG when lending.

 

How does Wirefund make a Lending Decision?

 

On the face of it, Wirefund are building more risk in to their business model, by not taking PGs. However, Amit says “right from the start, we aim to be responsible lenders, and we have to be comfortable with the risk in the actual business”. Due diligence appears quick and simple – Wirefund expect a high credit score (+50 with Experian) and will review bank statements to assess payments and receipts track record.

It’s not just about data checks however; Wirefund look at each business as an individual case, and will talk directly to the business owner.

Amit adds that “we are typically looking at businesses that have been trading for several years – these are owners who want to stay in business”.

 

How key is technology to the Wirefund business model?

 

If Banks cannot make a return from lending to SMEs, how does Wirefund do so (a question for Alternative Lenders!)? Amit stress the importance of technology: “Technology is fundamental to what we do, and there is a need for constant learning, constant improvements to security, speeding up assessment, keeping overheads to the absolute minimum”. Amit’s co-founder is Hasher Marouf – a fellow entrepreneur who has great experience in developing web apps for the health, property and crowdfunding sectors. Amit gave just one example of how they can use technology to speed up verification. “We ask the applicant to post up a picture of their passport and then post up a picture of themselves using their mobile phone – quick and low cost. A Bank will still ask you to schedule an appointment to present yourself in person, carrying your passport”.   

 

The Future for Wirefund

 

Wirefund have made an encouraging start - “In the space of 3 months, we have already handled some 500 applications, and all new customers are performing well”. We asked Amit about his ambitions for the business. “For me it’s simple; we want to lend more, safely and responsibly”. He also wants positive feedback. “I get great pleasure when we get positive feedback from an SME owner – and positive compared to the huge businesses with huge resources we compete against”!

 

You will be able to meet Amit at our next Seminar on 22nd November - Equity Options - Finding the Right Investors for your Business