A leading businessman in Cork has given his backing to crowdsourced funding as a means for small and medium-sized enterprises to obtain funding, following his experience raising capital for a new venture.
Restaurant owner and Cork Business Association president and restaurant owner Ernest J Cantillon said several members of the 200-strong association had inquired about obtaining crowdsourced funding after they had difficulty securing loans from banks.
“I’m lucky in that I have a good relationship with the banks but a lot of our members don’t,” said Mr Cantillon. “So this has given me the opportunity to try it out.”
He said he was highly encouraged by his experience with Linked Finance, where he applied for a €10,000 loan towards the €60,000 cost of a kiosk on the South Mall in Cork for selling ice cream and coffee. Within two days the money required was subscribed.
Under the crowdsourced funding model as operated by Linked Finance, after a person applies for a loan, details are posted on the company’s website. Individuals participate in the auction by bidding the amounts of money they wish to offer and the interest rates they require.
Mr Cantillon said in his case the loan offers ranged from €50 to €1,000 and the auction was 2.5 times oversubscribed. The auction has remained open so Mr Cantillon can choose the best interest rate possible.
“There are 10 days left on the loan and we have an opportunity to accept the loan now but the interest rate is only going to come down as more bids come in at lower rates – at the moment the interest rate is averaging out at 6.5 per cent but it looks like ending up at 5 per cent,” he said.
“The banks may not be lending for good reason in that they may have other ancillary stuff on their books which may not be performing where as Linked Finance are looking at just that one business which may be a good core business.”
