City centre bar chain BurningNight has secured GBP700,000 in the first days of its crowdfunding campaign on Crowdstacker, a UK-based peer-to-peer (P2P) lending platform.
BurningNight is offering 7 per cent per annum interest to those participating in the overall GBP3.5 million fundraise, to expand its chain of bar brands which operate in city centres including Leeds, Liverpool, Manchester and Cardiff.
Employing/contracting over 500 people and with generated turnover in excess of GBP17 million in 2016, BurningNight Group plans to plough the investment raised on Crowdstacker into further growth by upgrading existing sites and creating new ones for brands such as its German themed Bierkeller, its sports bars ‘Shooters’, and global beer concept bar ‘Around the World’.
“Generating 20 per cent of our target within just days of opening our campaign is incredible and really demonstrates the attraction of P2P investments for people looking for better rates of return than products like cash ISAs can currently offer,” says Alan Harper, CEO of BurningNight.
“We chose the P2P route because it is also a way for us to engage with our huge community of customers and fans. All our bars have a strong contingent of regulars, and we wanted to give them a way to benefit from our success by becoming involved with our expansion.”
Approximately half the money raised so far has been invested via the tax efficient Innovative Finance ISA. Crowdstacker enables its lenders to hold their P2P loans in this investment wrapper, which was introduced by the government in April 2016, because it is one of only a handful of P2P platforms with the required FCA permissions and is an HMRC approved Innovative Finance ISA Manager.
“We aim to do things differently at Crowdstacker,” says Karteek Patel, CEO and co-founder of Crowdstacker.
“We are very much focused on attention to detail and adopt a careful methodical approach to all that we do. This has stood us in good stead to secure the necessary full FCA authorisation so that we are able to offer everyday investors looking for potentially better rates of interest additional benefits such as the tax-free ISA. And it also means that we are able to offer investors more robust options, which can offer higher levels of security than some other P2P investments.
“When you invest through us, you are able to choose specific, hand-picked businesses to lend to. We do a huge amount of due diligence before we even consider allowing a business to raise money on our platform. And loans are only approved if that business is willing and able to offer sufficient levels of protection to investors.”
The minimum investment for the loan is GBP500 and the term is three years with interest payments made quarterly.
Security has been structured in several ways to mitigate as many risks as possible. Loans are secured on the assets of BurningNight via a first ranking debenture and six of its principal subsidiaries will provide cross guarantees where they guarantee BurningNight’s liabilities. Two of its principal subsidiaries have given a first ranking debenture over their assets and business.
“Crowdstacker adopts a ‘belt and braces’ approach to lending via P2P, people can go in with their eyes opens, understanding the risks and benefits with the potential to earn a better rate of return than other investments,” says Patel.