Home-backed loan provider Selina Finance lands £42m
Selina Finance, a London-based lender which provides loans to businesses backed by their personal home, has landed £42 million in funding.
Some £12 million of its Series A counts for equity, whilst the remaining £30 million makes up debt to distribute as loans.
Investors Picus Capital and Global Founders joined the round – both of which hold partial ties to the Samwer brothers, who built e-commerce incubator Rocket Internet in Berlin.
How the loans work
Selina Finance offers small and medium-sized enterprises (SMEs) loans in the form of flexible credit facilities.
Businesses pay back what they borrow over time, and the loans are backed by the value of their personal home.
The overdraft-style credit facility allows business owners to unlock the equity tied up in their home or investment property.
Borrowers can draw – and repay – funds whenever they want and pay interest on what is outstanding.
Because the loans are secured against physical property, SMEs can get access to loans as large as £1 million. Though the average loan value for Selina Finance customers is a much smaller £150,000.
The start-up’s interest begins at an 4.95% annual percentage rate, undercutting rates offered on unsecured loans. It also promises a loan turnaround time of less than five days.
The start-up says the fresh funding is the start of a bigger debt raise in the coming months. It also plans to use cash injection to prop the imminent launch of a consumer product later this year.
This does, however, depend on the fintech landing a regulatory licence to tap the consumer lending marketplace.
Launched in June 2019, Selina Finance is already looking at the process of opening up to other markets in Europe. It says it has recorded no defaults or arrears since launch.
To date, it’s gathered more than 200 commercial finance and mortgage distribution partners across the UK.
“We’re bringing a completely new product to the lending market which, unlike a conventional loan, offers customers real flexibility,” says co-founder Leonard Benning.