Nadeem Siam, an entrepreneur based in London, has launched a startup to help fill the gap in the short-term lending market, left after the fall of notorious lending giants such as Wonga and The Money Shop.
The startup in question, Fund Ourselves, offers a peer-to-peer lending platform, where those in need of short-term finance can borrow lower rate loans, while investors benefit from returns ranging from 5% – 15%.
Fund Ourselves was created with the goal of tackling what Siam himself states to be “the Wonga problem”. The high-cost short-term loans industry has come under heavy scrutiny in recent years, known for charging eye-watering rates that would often exceed 1,000%. The lenders that have contributed to the build-up of this bad reputation have been branded “legalised loan sharks”.
Strict Regulations Implemented by the FCA
The FCA introduced strict regulations in 2015 that subsequently led to the downfall of many major players in the industry.
Then, during 2018, the UK’s financial watchdog began encouraging borrowers who felt they had been mis-sold loans to make claims – including those where affordability and eligibility checks did not take place.
From this, many of the country’s biggest lenders in the industry were fined millions, or even sometimes hundreds of millions. Lending giants, including Wonga, QuickQuid, Uncle Buck, and The Money Shop soon fell into administration as a result.
A Gap in the Short-Term Lending Market
While the lenders now infamous for mis-selling loans had now collapsed, there still remained a considerable demand for short-term loans. In fact, three million people a year are still actively using and looking for these types of loans.
Noticing this gap in the lending market, Siam then created Fund Ourselves, helping to meet this demand for short-term finance. The entrepreneur states:
“We want people to leave in a better financial position than when they started”
“We are totally committed to provide smarter and simpler ways to deliver financial services, helping individuals to borrow or invest in a self-serving marketplace that is easy and safe to use. We believe we can empower people by disrupting the status quo with our Fintech products and chance the way people go about their financial lives.”
Fund Ourselves – For the Borrowers
As a peer-to-peer fintech provider, Siam’s Fund Ourselves offers short-term loans directly from other users on the site that have chosen to become investors – and is becoming one of the UK’s most notable finance startups, which included placing 13th in TechRound’s highly regarded Fintech50.
The loans offered range from £50 to £500, with no Early Repayment Charges applied if the borrower ends up paying off the loan sooner than expected. Borrowers are also ensured that the interest they pay back on their loans will not exceed 0.8% a day.
Users can borrow the loans for a maximum of three months. However, if they begin to face financial difficulties, Fund Ourselves can offer a 12-month interest-free extension to help them get on top of their finances again.
Fund Ourselves – For the Investors
Fund Ourselves also offers the chance for users to invest via lending to borrowers on the platform.
Earnings lenders could potentially receive range from 5%-15% each year, investments spread out over a number of borrowers to keep portfolios diverse.