On the money (CLA Land & Business)

FOLK2FOLK matches local businesses looking for loans with individual investors. Here Managing Director Roy Warren answers the CLA’s questions.

FOLK2FOLK offers a lending service – but you also offer a chance for farmers and landowners to invest. What is the opportunity for landowners?

With recent and continuing uncertainty for farmers, landowners and rural businesses alike, the opportunity to create a capital buffer for challenging times ahead might sound attractive. For those with a cash surplus, and no immediate plans to use it, investing to earn an inflation-beating interest rate could be a practical strategy to ensure they have more to cover their own or their business’s future financial needs. By investing via FOLK2FOLK’s peer to peer lending platform they could earn an interest rate of typically 6.5% p.a. paid monthly, while their capital is secured against land or property. Investments start from £20,000.

What is your approach to risk?

We’re very aware that we’re dealing with individuals’ money and personally match-making them with business borrowers. As a result, we have an enviable track record when it comes to defaults. I’ve been FOLK2FOLK’s Head of Risk & Loan Portfolio for four years and am now Managing Director which demonstrates how seriously the company takes risk.

What sort of rural businesses do you work with?

We specialise in facilitating finance for local and rural businesses and typically the individuals who lend to them are also rural dwellers so we’re matching like-minded individuals. A ‘rural business’ can be any business run from a rural location and includes: farmers and landowners diversifying, country house hotels starting or expanding, manufacturing businesses branching out, small to medium sized property development, golf courses upgrading and vineyards growing.

How well do you know the rural sector?

FOLK2FOLK specialises in the rural sector. Th e company was founded by two country solicitors to support a local client base of farmers, landowners and rural dwellers. Th e company is still headquartered in the Cornish market town of Launceston.

How can CLA members use peer to peer lending to plan for their future at what for many is an uncertain time?

Customers use our peer to peer lending platform to secure their longer-term financial position in the following ways:

1. Investing surplus cash to increase their capital base by typically 6.5% p.a. secured against land/property.
2. Preparing for retirement with some short term borrowing against their
   land or property to perhaps purchase a retirement property or consolidate and refinance existing debt. We have some customers who then sell their farming assets, repay the loan and become FOLK2FOLK lenders, earning a monthly interest to supplement their retirement income.
3. Succession planning always requires a delicate balance between ensuring the retiring generation have enough cash without starving the business of much needed working capital. One solution is to invest capital via the FOLK2FOLK platform to generate a monthly income which could supplement the older generation’s retirement without reducing the capital holding of the farming business.

Article and Image first appeared in CLA Land & Business Magazine January Issue 2020.