frequently asked questions
FAQs relating to our new Terms and Conditions, November 2020
We have introduced this fee to offset the charges imposed by our Banks for holding cash deposits, given the ongoing historically low interest rate environment.
The bank charges being applied have increased rapidly in recent months and we can no longer absorb these charges.
We are therefore asking lenders to review the available cash they have on the platform and to withdraw what they don’t need.
All lenders with over €50 available cash on the platform on the 1st day of each month will be eligible for this charge. If you have an available balance of less than €50, this charge will not be applied.
If you have successfully bid on a loan within the previous 3 months, the charge will not be applied.
If you have more than €5000 available cash on the platform, you will be eligible for the charge regardless of your bidding activity.
As of January 1st 2021, the Balance Fee charge will be the equivalent of 1.25% p.a. of your available cash balance. It is calculated daily from the 1st day of the month and it is deducted from your account on the last calendar day of the month.
The charge does not apply to any amounts you have invested in loans.
You can avoid or significantly reduce the Balance Fee amount deducted from your account by:
- Reducing your available cash balance on the Linked Finance Platform. Any balances below €50 will not incur a charge.
- Log into the platform regularly to check your balance.
- Make sure your autobid settings are up to date so you have every opportunity to bid on new loans.
If you have an available cash balance on 1st January 2021 of €100 and you have not invested in a loan in the previous 3 months, the charge deducted from your account on 31st January will be €0.10.
If you have an available cash balance on 1st January 2021 of €250, the charge deducted on 31st January will be €0.26.
The charge will not apply to available cash balances of less than €50.
We would recommend that you use our autobid facility as that will ensure that as soon as a loan goes live on the platform at a grade and term you’ve chosen to invest in, your money will be allocated to that new loan.
You can withdraw any money in your lender account that you have not currently invested in loans on the Linked Finance platform. Unless you are closing your account, the minimum withdrawal amount is €50.
Log in to your Linked Finance account and go to the Deposits and Withdrawals tab. All withdrawals are free until 31 December 2020.
For your first withdrawal, our KYC and AML policies require proof of identity before we can release your funds. The following items are accepted:
- Proof of Identity: Copy of Passport/Drivers Licence/EU Card.
- Proof of Address: Financial statement which must be dated within the last 3 months.
After 1st January 2021, you can make one free withdrawal of over €250 per month. Withdrawals under €250 will be charged at €5 per withdrawal.
General Lender FAQs
Any person or company can be a lender on Linked Finance, but you must meet the following criteria:
a) If you are lending as an individual, you must:
be over 18 and a have valid passport or driving licence
have a European Union bank account
b) If you are lending as a company, you must:
be registered with the Companies Registration Office or equivalent in your relevant jurisdiction.
have a European Union bank account
There is no cap on the total you can lend to businesses on Linked Finance. You can make bids from €50 to €5,000 on each loan request.
The interest rates available on Linked Finance range from 6% to 17.5% depending on the loan request.
On Linked Finance, you can lend to limited companies, sole traders and partnerships, who are looking for loans of between €5,000 and €300,000.
We review each potential borrower and we only allow businesses to borrow if they have successfully completed a full, rigorous credit evaluation process. We base this process on validating key up-to-date financial information and ensuring the creditworthiness of each borrower posted on the site.
Unlike most marketplace sites for business lending, we do NOT rely solely on third-party credit scores. We believe that relying largely on credit rating agencies for this information would be inappropriate in the context of the Irish market. Their information and risk ratings are often out of date and cannot be relied on as a measurement of current performance.
Instead, we base our credit decisions on up-to-date information relevant to the credit assessment of potential borrowers. We have also devised a grading system for loan requests based on the outcomes of our own credit evaluation process This system determines the interest rate that will apply to each loan request.
When a loan request goes through our rigorous credit evaluation process it is assigned a loan grade based on the results.
Please note: Loan grades are provided for informational purposes only and they do not constitute investment advice. Use of Autobid may limit your ability to evaluate each individual loan and bids cannot be refunded once they have been placed.
Loan grades are set based on how businesses perform during our credit evaluation process with ‘A+’ grade loans representing the lowest risk. ‘Y’ grade loans are for young businesses that have been trading for less than 24 months.
The grading system gives you another insight into each loan request that you can consider along with the other profile and financial information displayed on the site.
Yes. Linked Finance has helped to provide loans for businesses right across Ireland. As a lender, you might prefer to support businesses from your local area or county when you are making lending decisions. The county that each loan request comes from is clearly displayed on the ‘Live Loans’ page and there is also a filter that you can use to search for past and present loans by ‘County’, ‘Industry’ or ‘Grade’.
First, register as a lender with Linked Finance. Second, transfer funds into your Linked Finance lender account. Once you have registered, you will be taken to My Account every time you log in.
There are two main ways you can lend on Linked Finance:
- Lend quickly and easily using the Autobid tool (see questions 9, 10 and 11).
- Search our ‘Live Loans’ and choose the businesses to which you want to lend by bidding on their loan requests.
If your bid succeeds, money will be transferred from your Linked Finance lender account to the Linked Finance account of the borrower. When the loan is issued to the borrower, you will hold a loan contract. This entitles you to monthly repayments at the interest rate that accompanied the loan request.
The Autobid lending tool allows you to bid automatically on ‘Live Loans’. You can find Autobid in the ‘My Account’ section. It’s on the furthest tab to the right.
This tool is designed for lenders who may be too busy to look at each individual loan request, but who know how much they would like to lend under the various loan grades and terms.
It is perfect for people who want to build their loan book quickly and spread their funds across a wide range of businesses. Creating a diverse portfolio of loans is the key to successful lending on Linked Finance. We always advise new lenders to lend small amounts to a wide range of businesses and never lend too much to any one business. Instead, make loans across many businesses to spread your risk. Autobid is a very effective tool to help you do this.
Loans close as soon as they reach their funding target. This means you have to log-in regularly or you could miss out on lending opportunities that might interest you. Autobid can help you to successfully bid on loans without logging in to your Linked Finance account. It’s easy. Just pick the loan grades you like and select how much you would like to lend across each grade. You can also select different amounts for each term of loan within each loan grade.
For example, if you are only interested in the lowest risk loans, you could set-up your Autobid to lend €50 to every 6-month, A+-grade loan and leave everything else blank. If you wanted a more diverse spread of businesses and levels of return, you can put a range of different loan amounts across all loan grades and the various terms within each one.
Autobid will automatically place bids on your behalf when a loan that meets your criteria appears on the market place. As long as you have sufficient funds in your account, your bid will be placed for you. Even if you don’t have the full amount of your Autobid available, the system will place a bid for whatever funds you have, rounded down to the nearest €50 amount. You can opt out of this feature if you wish.
When a loan request appears on the market place, all Autobids will be placed instantly. The order in which these bids are accepted is based on when you originally activated your Autobid rule for that loan grade and term. Turning off an Autobid will cause you to lose your place in the bidding order.
Log in to ‘My Account’
Go to the ‘Autobid’ tab
Pick the loan grade and hit ‘Edit’
Choose your amount for each term in that grade
Click the ‘Save’ button.
Repeat for all loan grades you want to Autobid on
When you hit ‘Save’, your Autobid rule for that Loan Grade will be active. For example, if you have selected to bid €50 on 36-month, Grade C loans, a bid of €50 will automatically be placed for you the very next time a 36-month, Grade C loan goes live on the marketplace. As long as you have sufficient funds in your account Autobid will keep placing bids automatically, provided the loan has not already been fully funded by other Autobids.
Autobids can not be refunded, as loans may have closed or other bids may have been rejected as a result. Make sure you are happy to lend the amount you have selected to any business in that loan grade and over that term, before you hit save. Autobids are placed on each loan in the order that lenders first set up the Autobid rule for that loan grade and term. You can edit the amounts that you want to bid at any time. Unless you select ‘No Autobid’, this will not affect your position in the bidding order.
If you select and save ‘No Autobid’ you are turning off the Autobid rule and your position in the bidding order will be lost. If you set up a new rule for that loan grade and term your bids will be placed after lenders whose Autobid rules have been continually active for that loan grade and term for longer.
If you have insufficient funds in your Linked Finance account, your Autobid will remain on but bids will not be placed. You won’t lose your place in the bidding order and when you deposit funds your Autobid will start placing bids again as new loan requests become available.
The ‘Live Loans’ section is the most exciting part of the site – it is where the borrowing and lending happens. It shows all of the active loan requests and a selection of previously successful loans. You can find a link to it at the top of every page on our site.
On the ‘Live Loans page you can view the loan requests from borrowers and place bids. If you click on a loan request, it will expand to give you detailed information on that application. You will find a full list of the bids on that loan, the business profile, financial information and there is a section where you can ask the borrower questions.
To make a bid, click on the orange ‘Place a Bid’ button in the top right-hand corner. Type the amount you are prepared to lend and then click ‘Bid Now’.
Once you have done that, you will see your bid posted live on the market.
Linked Finance charges lenders a service fee of 0.1% of the value of all of their outstanding loans at the start of every month. If you are a lender, we deduct this fee from your account on a proportional basis each month when you receive a repayment from a borrower.
Linked Finance also charges each Lender who meets certain criteria a monthly fee, called a Balance Fee on any uninvested deposits over €50 that they have in their Linked Finance Account.
The Balance Fee is to cover the costs of bank charges levied on available cash deposits held in the Linked Finance Lenders Account as a result of the current negative interest rate environment.
Lenders that meet either or both of the following criteria on the first day of any calendar month will be eligible for the Balance Fee charge:
- The total value of available cash deposits in their Linked Finance account exceeds €5000 (regardless of investment activity)
- The Lender has not invested in any Loans within the previous three months.
Lenders with Available Cash balances under €50 will not be charged.
The Balance Fee will be calculated daily and the total accrued charges will be deducted from your Linked Finance account on the last calendar day of any month where the above criteria are met.
The rate used to calculate the Balance Fee may change from time to time, in line with the prevailing charges set by our bank account providers. The current rate is 1.25% per annum on the value of the Lender’s available cash balance.
We clearly understand that this is your money, not ours. The available cash that you have in your Linked Finance account is not actually held online. These funds are held in totally segregated Lenders’ Funds Accounts at AIB and Bank of Ireland. Linked Finance manages these accounts in line with best practice and they do not form part of our assets.
Linked Finance believes it is important to remember that with lending to businesses, there is an element of risk. Some businesses may not be able to fully repay their loan. If this happens, the loan becomes what is known as a bad debt.
All of our borrowers undergo a rigorous credit evaluation process before they post a loan request on Linked Finance.
This process includes the following checks:
Credit History – the business must have a good record of managing their finances.
Affordability – the business must clearly show that it can comfortably afford the repayments.
Stability – we check each borrower’s identity and creditworthiness in detail, using the same business information that all the best financial institutions use. We also validate all their original bank statements and audited financial accounts.
Our experienced credit team review every application in full before it can be posted on Linked Finance. Those businesses that are successful are then assigned a loan grade based on how they have performed during the credit evaluation. This determines the interest rate that will apply to that loan request.
We advise all lenders to spread their money across many businesses in order to reduce their risk. By lending only a small proportion of each business loan, you reduce your exposure. This is a key factor in successful lending on Linked Finance.
We undertake various measures behind the scenes to reduce the likelihood of fraud. We use reputable third-party software to carry out comprehensive identity and credit checks on business directors or partners who want to borrow on Linked Finance.
Once you have registered, you will see the My Account section every time you log in. The first screen you see is a summary of your lending activity, giving you a breakdown of your current funds, how much you have in available cash, how much in bidding and how much is invested. It also shows how much interest you have earned, how much you have lent and how much has been repaid.
If you want more detail relating to the funds you’ve lent, the bids you have placed, your tax statements, your Autobid rules or deposits & withdrawals, you can find this information on the relevant tabs within the ‘My Account’ section.
When your money displays in your Account Summary as a Live Bid, this means the loan is still open for funding or that the loan offer has not yet been accepted by the borrower.
If the borrower accepts the loan offer, the money that was displayed as a Live Bid will transfer to their account and the amount you bid will be shown in the principal outstanding total.
If the borrower decides to withdraw the loan request or not accept the loan offer, your funds will return to your account and become part of the ‘available cash’ total on your account ‘Summary’ tab.
Not necessarily. It may mean that you have Live Bids that haven’t been accepted yet. You can find a summary of your Live Bids in your account summary.
As funds are lent in denominations of €10, you may have a few euros and cents left over.
If you find that loans have fully funded before you have a chance to bid you should make sure that you have not unsubscribed from the daily email alerts that we send when loans go live. Alternatively, you might consider making use of the Autobid tool.
The first repayment you get from a borrower will usually arrive within 30 days of the loan contract being accepted by the borrower.
Yes. Any money you get from borrower repayments is automatically added to your available cash fund. Therefore, you can use it to lend to other borrowers. This allows you to harness the power of compound interest and maximise your returns.
You can withdraw any money in your lender account that you have not currently invested in loans on the Linked Finance platform. Unless you are closing your account, the minimum withdrawal amount is €50. For your first withdrawal, our KYC and AML policies require proof of identity before we can release your funds. The following items are accepted:
Proof of Identity: Copy of Passport/Drivers Licence/EU Card.
Proof of Address: Financial statement which must be dated within the last 3 months.
You can make one free withdrawal of over €250 per month. Withdrawals under €250 will be charged at €5 per withdrawal. A minimum limit of €50 will be enforced for all withdrawals unless your total balance is less than €50.
All withdrawal requests should be made via the ‘Deposits & Withdrawals’ tab in your Linked Finance account.
Tax is not currently deducted from your returns on lending through Linked Finance. You will, however, have to file a self-assessed tax return showing the interest you receive from borrowers (see question 26).
For almost all Linked Finance lenders, lending will be an investment activity. As a lender, you get interest without a tax deduction. Interest earned from any of our loans qualifies as unearned income for taxation purposes ie. money earned from investments. You will need to show the interest you receive in each tax year on your self-assessment returns.
To calculate this figure you will be able to download this information from My Account and use it to help you complete your annual self-assessment tax return.
We have developed a comprehensive debt recovery program that combines our own in-house collections expertise and where necessary a third-party collections agency to manage any defaults on payments by borrowers.
Borrowers who have defaulted will be pursued where possible. Any money recovered will be forwarded to the lenders. The borrower will have to meet the costs of recovery – this is a condition of their loan. If there is a shortfall, all the lenders to that borrower will share the cost of it on a pro-rata basis.
Repayment Example: €100 loan at 8.5% interest over 3 year.
|Month||Monthly Repayment||Interest Paid @ 8.5%||Principal Paid||Remaining Principal|
Linked Finance charges lenders’ a service fee of 0.1% of the value of all of their outstanding loans at the start of every month.
Fee Example: €100 loan at 8.5% interest over 3 years.
|Month||Principal Paid||Remaining Principal||Fee|
A borrower can repay a loan early and at any time. In the event of such a transaction, you will receive the remainder of your outstanding principal, less any Linked Finance fees, plus interest accrued until the end of the month in which the loan is repaid.
If a borrower chooses not to accept the offer of a loan, we will return the bid amounts to your account as soon as we process the transaction.
From time-to-time there may be a requirement to adjust the duration, term, amount or other information relating to a loan request. Any such changes will be reflected in the ‘Live Loans’ section.
When you bid on a loan you are bidding at an annualised percentage rate. This is the standard industry way that interest rates are displayed.
Repayments and interest are calculated using amortisation. In simple terms, this means that interest is charged each month and only on the principal outstanding.
Here’s an example.
You lend €100 at 8.5% on a 12-month fixed rate loan.
If the loan was repaid in one lump sum at the end of the term, the interest charged would be 8.5% or €8.50.
Because, however, the loan is being paid back on a monthly basis and the interest is charged on a reducing balance, the total interest charged over the 12 months would be approximately €4.66 and not €8.50.
You also need to consider the Linked Finance lender fee of 0.1% per month which is also calculated on the reducing balance. In this instance, the fee charged would be about €0.66.
The key to maximising your return is to redeploy your funds into new loans as soon as they are paid back into your Linked Finance account. This will ensure that your money is working as hard as possible as well as diversifying your portfolio and minimising risk.
The minimum amount you can borrow is €5,000. The maximum is €300,000. The loan is at a fixed rate of interest* and the term of the loan is up to 5 years. The loan is repayable in monthly instalments and by direct debit.
The loan should be used to help grow your business. For example, you might use it for:
- improving working capital
- asset finance (such as the purchase of new machinery, vehicles or information technology)
- expansion capital (which could involve employing a new salesperson to help grow your business)
*Further details on interest rates may be seen in FAQ 4
Any established and creditworthy business, whether it is a limited company, sole trader or business partnership, can apply for a loan on Linked Finance.
Some conditions apply. These include:
If you are a sole trader, you must be a permanent resident of Ireland.
If your business is a partnership, it must have a permanent place of business in Ireland and at least half of its partners must be permanent residents of Ireland.
If your business is a limited company, it must be registered with the Companies Registration Office (CRO).
It must have filed accounts with the CRO.
Your business must have been actively trading for at least the past two years.
Your business must meet our minimum credit risk and fraud criteria.
In special circumstances, we can support younger companies who have demonstrated strong growth potential over a shorter trading history but this is at Linked Finance’s sole discretion.
Our lenders will be ordinary individuals, companies or other organisations. In order to lend on Linked Finance, lenders will need to have registered on the platform and deposited funds.
To ensure you get a fair interest rate on a Linked Finance loan, the rate you pay is always determined by our credit evaluation process. The rates available range from 6% to 17.5% depending on the term and the loan grade we assign to your request.
First, register as a borrower on Linked Finance. Second, complete our online loan application form. Once you have done this, we will request supporting documentation from you in order to carry out credit and fraud checks using the information you have given us. Your application cannot progress until we have received this documentation.
If your application is successful, we will provide you with an official loan offer which will show the grade, interest rate, monthly repayments and fees. At that point, you can decide if you would like to have your loan request published on the platform.
If you decide to proceed, you are committing to taking the loan and paying the fees, unless your loan request fails to fund.
Once your loan request is posted on the site, the funding process will commence.
We comply strictly with anti-money-laundering (AML) and know your customer (KYC) legislative guidelines, as outlined in the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 adopted by the Central Bank of Ireland.
AML guidelines detail the legal controls that require us to prevent, detect and report money-laundering activities. The KYC guidelines refer to the due diligence activities we must carry out to ensure that our clients are exactly who they say they are and do exactly what they say they do.
As we must comply with these guidelines, we need you to give us copies of a photographic ID (ideally your passport or driving licence) and original proof of address documents, as well as documentation relating to your business. (See question 7 for more detail on this documentation.)
Using the information you give us in your application, we will assess your application based on these guidelines. We will only accept a loan application after we have carried out comprehensive credit and identity checks and validated all your documents.
We need the following documents from you:
A clear copy of your passport or driving licence
Any one of the following:
an original utility bill
an original document issued by the Revenue Commissioners (for example, a PAYE tax certificate, a P60, a C2 cert and so on)
an original car or home insurance certificate
an original document issued by the Department of Social & Family Affairs
an original financial statement (for example, a credit card statement)
We need these documents from your business:
Company bank statements for the past twelve months.
Your most recent set of ‘signed-off’ accounts
Tax clearance information
Occasionally, we may request additional information, such as management accounts or proof of contracts, in order to support your loan application. If required, these will be requested, in a clear and timely manner.
Potential lenders can see the following information before making a bid:
Your business name
The type of business (that is, whether you are a sole trader or your business is a partnership or a limited company)
The location of your business
The amount you want to borrow
The applicable interest rate
Your loan grade
A brief business profile as well as Information on how your business has performed financially in recent times. This includes a P&L and balance sheet from the previous year, as well as other financial data that we can fully validate, such as information that is freely available from the CRO.
Any other details you give about your business
Sensitive information such as details of your bank statements and existing loans from other sources will NOT be shared with lenders on Linked Finance.
Once you provide the documents required to complete your application, we typically provide a credit decision within one working day. If approved and you are happy to accept the loan offer, we can publish your loan request on the platform and have the funds ready for drawdown within 24 hours.
It is not possible to edit the details of your loan once posted. However, in exceptional circumstances Linked Finance may be able to adjust the duration, term, value or any other information relating to your loan request after the request has been published. Please contact us directly to review such items.
You can cancel your loan request at any time prior to accepting the loan offer. If you accept the offer and your loan request is published on the platform for funding, you may still opt not to take the loan but you will be liable to pay the Linked Finance fees.
Once your loan request becomes fully funded, you have five days to complete the loan contract. If you don’t sign it within those five days, your loan request may be cancelled and all bids will be made void. You will still be liable to pay the Linked Finance fees associated with publishing and funding your loan request.
If you want to accept the loan, read the loan contract documentation carefully before signing it. It includes the loan conditions and key contract terms of the loan to which you are agreeing.
The money you have borrowed, less the completion fee is transferred from the Linked Finance Lenders’ Funds account to your nominated bank account after you have signed the contract. Your repayments must be made to the Linked Finance Lenders’ Funds account on a monthly basis, where the funds will be held on each relevant lender’s behalf.
If your loan request has not been fully funded within the time limit but has achieved at least 90% of the final requested value, we can still proceed to fund your loan request for that amount achieved at the end of the bidding period. If your loan request has not achieved at least 90% funding within the time limit, we will remove it from Linked Finance and all bids will be returned to lenders.
Once your loan becomes fully funded, you will receive an electronic copy of your loan contract. You can then read the loan contract carefully and if you want to accept the terms you can electronically sign the document.
Once your loan is fully funded, you have five working days to complete the loan contract.
Yes, you can submit a new loan request once the first three* monthly repayments have been met on your current loan. Each individual loan request will undergo a full credit assessment prior to an approval decision.
*Linked Finance reserves the right vary this policy in exceptional circumstances.
To apply for a loan with Linked Finance, you must pay an application fee of €125.
If your loan is successfully funded, we will also charge you a completion fee based on the total loan amount.
This is to cover the costs of facilitating the borrowing process. We will deduct these fees from the loan before we transfer the funds to you. For more information on the fees we charge, contact our loans team now on 01 906 0300.
If you accept a loan offer but choose not to take the loan after it has been fully funded, you will still be invoiced for both the application fee and completion fee detailed in the loan offer.
Fees apply to missed payments. These fees are specified in your loan contract.
When you are approved for credit, you will be offered a loan at an annualised percentage rate. This is the standard industry way that interest rates are displayed.
Repayments and interest are calculated using amortisation. In simple terms, this means that interest is charged each month and only on the principal outstanding.
Here’s an example.
You borrow €10,000 at 8.5% on a 12-month fixed rate loan.
If the loan was repaid in one lump sum at the end of the term, the interest charged would be 8.5% or €850.
Because, however, the loan is being paid back on a monthly basis and the interest is charged on a reducing balance, the total interest charged over the 12 months would be approximately €466 and not €850.
When you receive a loan offer, your account manager will show you the rate, monthly repayments, interest, and fees. You can then decide if you would like to proceed.
Your loan contract specifies the monthly repayments payable to each lender. Each month we collect the repayments from your bank or building society account by direct debit. It is up to you to ensure that you have sufficient funds in your account to make the repayments.
Your repayments generally start within 30 days of your loan request funding. The exact date is specified in your loan contract.
Please contact us immediately if you think you may be late making a repayment.
If you fail to make a payment or only make a part-payment, we will contact you and ask you to explain why you missed the payment. Three days later, we will try to collect the outstanding payment a second time. If this fails, we may instruct a debt collection agency to try to collect the amount on behalf of our lenders.
Continued missed payments will result in further debt recovery actions, up to and including formal legal proceedings.
Yes, you can repay a loan early at any time at no extra cost. We don’t penalise borrowers who want to pay off the loan early. You just pay the outstanding principal and the interest accrued until the end of the month in which the loan is repaid.
You can view the status of your loan at any time by logging into your Linked Finance account and clicking into My Account.
Provided you have paid off your loan fully, you may close your Linked Finance account at any time by contacting us.