Each year it’s worth looking back to take stock, and we’ve been doing some of that at Marketlend – we’re happy to see that Marketlend performance in 2018 was as strong as it has ever been. Watch Marketlend CEO Leo Tyndall outline what it was that made 2018 a strong year for Marketlend’s investors and borrowers, and what’s making him excited about the future of peer to peer lending. You can also read the transcript below.
We had a great year. So from a volume point of view we’ve been very successfully growing our book. At the same time, from a risk point of view, we’ve been able to ensure that our book has grown, but not increased the negative effects of such a growth factor. So what we’ve seen is our default rates have actually reduced, it’s gone down from the 4.6% that we had for the year down to around 2-2.2%. But what we’ve also seen is we’ve been able to control the product that we produce and that means that investors have been able to get a great return. So the average return from a net point of view has been 10.2%. What we’ve seen is that we’ve been able to grow, and as I mentioned in other videos, that we’ve seen a growth of our book double compared to last year, so we’re up to $61 million funded.
We still look at December being a strong month as well, but what we’re seeing very much is also an increased focus of due diligence and implementation of some of the measures we brought in early in the year. We send out an external accountant if the exposure’s greater than $250,000, which has helped us significantly to really get to know our client, and then spending a lot of time interacting with our client post settlement. So we’ve put on settlement clerks, you could put it, so that they can interact with them post settlement so that we can increase the utilisation as well of the actual portfolio. So it’s been a great year for us.
As far as staff goes we’ve now got a total of about 35 people. In Australia we have around 15 to 16. I count that number because we only just put on two new people again today. So we’re continuously growing the actual support staff. We’ve also got the Philippines team which is a total of 14 people, and then we have developers all over the world. So it’s been a great year for us.
Founder and CEO of Marketlend Leo Tyndall explains the significant differences that make the Marketlend platform so powerful and supportive for investors. If you prefer, you can read the transcript below.
What makes Marketlend unique is that we’re able to give SMEs direct access to the capital markets, but in a secure and also price competitive environment. By using insurance, and also using loss reserves, we’re able to give the SME the benefit of those so therefore getting better pricing for them, and at the same time give the investor comfort that when they invest in an SME, that they have additional protection against the possibility of a loss. Now, matching … In, in, by doing this we use trade credit facilities, which is an unusual thing. In that, what we’re doing is, we’re becoming the owner of the goods. And then essentially what we’re finding is the SME’s able to then buy more goods and then within 90 days repay us, and therefore giving them an improved profitability so that they have a, a better, you know, cost of funds. And then also, giving them the ability to have money now versus waiting for 30, 60, 90 days depending on the type of facility. So it’s actually having the money to actually pay expenses or buy more goods and enable them to improve their profitability of their business.
Watch Marketlend’s Founder and CEO, Leo Tyndall, talk about Marketlend’s loss reserve, a important feature that protects investors. The text of his comments appears below if you prefer to read.
So a loss reserve for us in Marketlend is actually built on the basis of protecting against the possibility that we have someone who falls in default and therefore there is a differential or shortfall between say, in an insured position, the amount of insurance that’s paid and the amount that’s actually, essentially owed or in the case of an uninsured it’ll be that the assets themselves don’t sufficiently cover the shortfall to the amount that’s been advanced to the borrower himself, or the account holder. What we do with the loss reserve is, is that we essentially collect that loss reserve and if the actual borrower has paid on time at all times, they’ll get their loss reserve deducted off their balance when they owe the money.However, what we do do is, we actually hold that in a separate trust account and we enable that loss reserve to be assisting investors to actually protect against that additional risk they have that the insurance may have a shortfall. Not significant but, or that the actual underlying assets and the guarantor guarantee situation isn’t sufficient to cover that. As well as, possibly the fact that it takes a lot longer to actually collect the debt so therefore there is a need to cover that cost during that time.
As a former Regional Commissioner NSW, Australian Securities & Investment Commission, Chris Van Homrigh has brought his deep background in market regulation and best practice to the Marketlend team over the last year. At Marketlend, this knowledge and experience has helped support the continual refinement of a first-of-its-kind lending platform, and our constant focus on transparency and delivery of value for investors and SMEs. If you prefer to read Homrigh’s thoughts, you can scroll down for the transcript.
Well, I mean, if you look back at what ASIC looks at, it primarily has two primary objectives: one, is to have a fair and efficient markets, and the other is about having confident, informed consumers, and investors, or financial consumers, and investors. So, from a regulatory perspective, working on the investors’ side, it’s about knowing what we need to disclose to investors, the level of detail.
Marketlend, as you know, is quite transparent with all the information we provide. So, when we establish a facility with a borrower, all the information that we have, with respect to that borrower, is basically passed through to the investors. So, disclosure is a big tenant. Asset focuses a lot on disclosure, so it’s being consistent, and very apparent with the disclosure.
Again, being a lending business, there’s always loans that you don’t think are going to go into arrears, but they’ll go into arrears, or potentially go into default, and again, it’s about getting the information in a timely manner across to the investors, and the right level of information.
Now, of course we do have some investors who want more information than others, but, again, it’s about getting that information, and answering their questions. Sometimes with the legal process where things go into arrears or in default, that can be protracted. Investors are always concerned about getting their money back in a timely basis, and obviously in return they get for making the investments.
The Banking Royal Commission has opened many people’s eyes to the need for greater transparency in the financial sector. It has also shed light on how challenging it has been for SMEs to get funding. Marketlend CEO and Founder Leo Tyndall breaks down why the push for greater transparency and accountability from the finance sector helps cutting edge platforms like Marketlend which have these values built in. Leo also suggests that banks are now shying away from SME lending, making funding sources like Marketlend even more important. Click play to hear what he has to say or scroll down to read a transcript of his interview.
Look, I think the faith in banks generally has fallen away a little bit. The credibility definitely has been damaged, and investors are now looking at alternatives, especially in the investing side. They’re actually looking at who’s out there, who’s actually lending, right, sort of brought up an article recently where they said they saw a serious influx of more investment capital.
We look at high net worth individuals or sophisticated investors or experienced investors, so we’re in a different bucket than, say, [others]. But, we have found that our investors are definitely willing to put more money to work with us, and are looking at our businesses and going well, I can see everything you’re doing. The big thing with us is transparency: they can see everything that’s being done. The Royal Commission, I think the best thing about it, is, it shows us a lack of transparency. It shows that there’s things going on that you just don’t know what the bank’s up to.
And I mean, it depends on the press, who’s saying what. But the reality is that if people are charging fees for people who are no longer around, and they’ve been running forwards and the like, I mean, the whole faith in the banking system is really faint.
Now, I must say, that I would’ve said that there was a common thread, I think in the economists around post GFC, that banks will become more like utilities, and I think with the royal commission a few others, the banks are gonna get less and less money for lend, and it will be that there will be more like utilities without taking the money paid out, or receiving paid out, and you won’t see that type of lending that you saw in the past. And we are seeing that banks are very, very, reluctant to lend at the moment.
We’re seeing clients come to us, who, typically, would’ve said the bankers actually would’ve given them more facility, and we’ve also spoke to banks, and they’ve told us similarly.
Your small business is thriving. You’re growing. You need to hire, but unsure where to begin and what resources are available. The right hire can boost your business productivity and profitability. The wrong hire can be an expensive and time-consuming mistake. Here are a few best practices for hiring employees for your small business.
1. Define the position
Before you set out to hire, ask yourself:
- What challenge is my company grappling with that a new hire could solve?
- Is this a long-term job or a temporary, contract position?
- Am I open to a remote hire?
- Can I afford a new person without damaging my bottom line?
Research each question and talk with your team. A remote hire is cheaper, but your team might struggle with the distance. A contract worker can also be a cheaper option, but if your company is growing, you may just need a full-time on-site staff member. Evaluate the full cost, including salary, benefits, taxes, workspace and equipment before you make your decision. Requirements can vary widely across regions and countries. Australia, for example, has a range of requirements that can get complicated very quickly, the Government’s Fair Work Ombudsman has a page devoted to this that includes a Pay Calculator.
2. Set your hiring budget
Hiring can be an expensive endeavor. Before you advertise the position, make a spreadsheet with the following categories:
- Job boards and advertising – Note the cost of each post per site. If you have a premium membership that lets you post for free, write the zero.
- Assessment – Skill tests run by an external company will have a flat rate per candidate. Multiply the number of applicants you want tested by the exam price.
- External recruiting – Consider outside organizations who can search and hire for you and record the cost. Remember recruiters typically take a percentage of the employee’s compensation, but this amount will usually be refunded through a “claw back” fee if the hire doesn’t work out in an agreed period of time.
- Human Resource hours – Multiply the hourly rate of each person on your hiring team by hours spent on resume reviews, interviews and follow-up.
Keep in mind that the cost to recruit is unpredictable. Record your actual costs after the process is complete and keep an eye on your hiring budget from month to month.
3. Write the Job Post
A good job post should be a clear description of the job. It should entice candidates with the essence of what the company has to offer with these basic elements:
- A clear title for the position
- A thorough overview
- The desired qualifications or experience level
- Information about how to apply
- For local hires, try Seek
- Quality remote hires can be found at WeWorkRemotely, RemoteOK, and FlexJobs
Check your job ad on any board or website to make sure your description is displayed properly and any associated links work when clicked.
4. Make the Most of Social Media
The typical company today has a minimum of seven social media accounts. Make the most of these spaces and attract your next employee with the contacts you already have at hand.
- Focus on what sets you apart – draw candidates in with industry news, updates on projects and photos of your team. Give them a peek into your company before the official application.
- Highlight value – think about what your employees love about their work. For example, UPS tells potential hires they can “Deliver wishes” as an employee. Play up the best qualities of your company and share them on all your social channels.
- Find niche networks – look for the online forum specific to your position. If you need an SEO expert, you want to post on Freedom with Writing. Developers prefer StackOverflow while Moz is home to marketers.
5. Review resumes
Resume and cover letter reviews can be a good chance to get to know each candidate. Each is a chance to see how much care a candidate put into her application and what she can add to your company.
- Look at the big picture – Read through cover letters with care. Is this a form letter or a piece written directly to your company? Review the language choice and professionalism used in the text to make sure this person knows your industry. No cover letter? Move on.
- Think in terms of Yes/No questions – Does the candidate have the qualifications you specify in the job description? Can the candidate be trained?
- Red flags – Long, over-written descriptions that take up a lot of space, spelling or grammatical errors or general descriptive language that doesn’t really tell you anything, like “a leader” or “enthusiastic” are all red flags that should give you pause.
- Find your favorite – Take the applications you like best and start the next phase of the process.
6. Interview candidates
Good job candidates see the interview process as an opportunity to talk about the job, the company, and why they would be a good fit. An interview should be a comfortable, professional conversation. But be prepared with specific questions that will help you know whether the candidate meets your needs. Additional tips:
- Assess and test – Check for a skill match with technical questions or a skills assessment test as a part of the interview. This way you know how each person works and how fast they can produce.
- Keep a goal in mind – If you want to know how a worker interacts with authority, try “What kind of oversight would an ideal boss provide?” Autonomous workers will want an absent boss while collaborators prefer an accessible leader.
- Ask for questions – At the end of the interview, give your visitor a chance to ask you something. You want an employee who asks about future projects or milestones, has questions about you as a boss or office culture.
- Watch for body language – Look for moments when your candidate’s face lights up with enthusiasm or sits forward. These are signs of deep passion.
- Define your culture – Think about what kind of office you run. Do you value teamwork? Place a premium on collegiality? Or are you looking for a lone wolf who can just get the job done? Make sure your candidate fits your company culture.
- Hire people you like – Do you like the candidate? The interview should be an opportunity for you to see whether there is any professional rapport. You’re building a team, after all, that needs to want to work together. And you’re the head of it.
7. After the interview
Narrow down your choices to two to three candidates. Start with your top candidate and do your research.
- Fact check – Is the work history accurate? Has your candidate exaggerated her experience or invented a past company?
- References – Call them. Ask them to describe their professional relationship and be specific about why the candidate would be a good fit for the job. Strengths and weaknesses. Ability to work with people. Attention to detail and deadlines. Ask them what else you should know about the candidate.
- Other calls – Do you have mutual colleagues who might have insights on this person? These calls can be more helpful than the listed references.
- Keep in touch – Potential recruits with good skill sets will get snatched away fast. Maintain a correspondence with your top two or three and let them know they are still in the running.
8. Extend the Offer and Negotiate
You have your favorite, you’re ready to hire, now what?
- Act Quickly – Decide as fast as you can so you don’t lose your hire to a competitor. Aim for one to three days after the interview.
- Put the job offer in writing – the whole job and all the details. Include any policies your company upholds including sexual harassment, dress, extra work days or hours.
- Make the Offer – Schedule time to present the offer. In person is always best, but not always possible. Then, present it with enthusiasm! Make sure the candidate understands all the elements of the offer, both in writing and in your presentation.
- Set a Deadline for a Response – Give the candidate time to consider the offer, discuss it with family, etc. But set a deadline for a response.
- Negotiate – If the candidate wants to negotiate salary or other elements of the offer, be prepared. This is where your budget comes in handy. Be flexible, but know what your budget will allow you to offer.
- Make the Hire – If the candidate accepts the position, you have a new hire! If not, move on to your next resume and keep going.
You did it – you’ve made a great hire! And you now have a bank of resumes that might come in handy for future hires. Be sure to save them and note the ones that stand out.
Thank each of the candidates you interviewed with a personal call, if possible. Send email responses to all the candidates who applied for the position, thanking them for taking the time to apply and letting them know the position is filled.
The hiring process is a difficult one, for all involved. How you handle the candidates you don’t hire is as important as how you handle the ones you do. Your professional courtesy in this process will serve you well in the long run. You’ll likely be making more hires down the road, and word will travel about what it’s like to apply for a job with your company. Make sure it’s a good experience.
Running a SME is always a challenge and funding one can be particularly difficult. Marketlend Founder and CEO Leo Tyndall and his team are focused on delivering a more transparent and fair marketplace for SMEs. Part of this job is helping to educate the market to help SMEs avoid some of the pitfalls in the lending space. Watch below or scroll down for a transcript of his interview.
The problems there is there’s no long-term support to the SME industry. So, the typical loan and if you look at the last fintech report, they pointed that the majority of their lenders lend between six to eight months. For an SME, they need a lot longer loans, they need capital to be turning over regularly. They have growth or they have needs, and what happens is these lenders are firstly doing principle interest payments, it’s a short-term lend, it’s a little bit like what I would call a sugar high, it gives them money right there and then, but then it doesn’t set them up for the long term. The classic one is the … talking about the tea company, she’s able to deliver to Sydney Opera, but with … line, it would have been P and I and it would have drained her cash flow on a daily basis.
So the issues that seemed to be with the SME lenders is that they, themselves, probably still haven’t been able to get their heads around what the real risk is, so as a result of that, what they do is just go in quick and come out quick, and it is a case that they’re generally not interested in lending over about 50,000 dollars. They don’t want to go for higher, and part of the reason for that is if you set up a direct debit for say, 100,000 dollars, and you got back to the client and you say, “Look, here’s what you’re going to be paying per day,” the client may balk at it because he’ll go, “Well, that’s going to strain all my cash flow…”
Well, it’s not that they get away with it, it’s a need, it’s a demand thing, and it’s speed. So if you ring up tomorrow and you ask for a loan, and get (other firms), one of the others can give you a loan within 24 hours. We had a comment from one of our borrowers who was lending through us, and then they got a … loan, and they turned around and said, her husband actually did this, and her husband isn’t the finance guy, and she said it was so easy: just click the buttons and you went ahead and did it, and as a result of that, they caused him problems because we looked at the risk and said, “Well, why do you have this … loan that’s draining your cash flow?”
And it’s more that businesses don’t have time, typically, to look at their various options. They’re not strongly educated in that area of finance, and then they’re just looking at speed. They need to pay their next supplier, they need to pay their wages, and as far as they’re concerned, they’ll fix it up next day and it’s fine, and that’s their focus, and so it works okay for a while, but if you don’t have a very clear plan of how you’re going to pay it down, well, then the problem is it bites into your cashflow, and we’ve seen that happen a number of times.
Marketlend CEO and Founder Leo Tyndall wants his investors to know that no one applies for a loan on the site without a thorough review of their financials, and that transparency and responsibility –and ultimately care for the underlying businesses that borrow– drive Marketlend’s mission. In this video, Tyndall breaks down what his team looks for in a potential borrower’s financial profile. The key for Marketlend is the long term health of the businesses it lends to, because healthy SMEs thrive as businesses and as borrowers –that’s why assessing what is reasonable, fair and sustainable in terms of repayment ability is so critical. Click the video to hear about the process. Prefer to read? Scroll down for the transcript.
So, Marketlend requires at least one year’s financials. We look at their debt servicing ratios, we actually look at what it looks like before the loan and after the loan. We typically have a hurdle of 1.5% on debt servicing after the loan. We also turn around and we point out to the borrower that we’re doing a monthly charge, on the uninsured we may do weekly, but what we do, do is, we look at their ability to repay.
We don’t want a situation where we’ve advanced the money, and then they can’t pay us back. So what we’ll do is have a look at all their cash flows, we also look at, essentially, a new structure in the way of we look at their full cash flows, their expenses and then say, “Okay, what is their true flowing cash that they can afford to pay it?”
And we will go through their bank statements as well, so we will go through their bank statements, and for example, on a supply chain, we may turn around and someone says, “I want 100,000.” We look at their bank statements and say, “You couldn’t even pay 100,000 back to us on three months on the supply chain, so why would we advance you that money?”