Digital lender Selina Finance enhances business loans
Digital lender Selina Finance has enhanced its business lending offering by doubling its maximum loan term to 10 years. Selina Finance offers ‘flexi-loans’ up to £1m by allowing business owners to borrow against the equity locked up in a home or investment property. The lender has also announced changes to its property investor product to help investors release equity from portfolio properties quickly and easily.
Until now, the credit facility – which works like an overdraft had a maximum term of 5 years. The key benefit of this flexible structure is that borrowers can draw funds as and when required, and only pay interest on funds outstanding. Extending the term to 10 years will boost affordability by lowering the monthly repayments for business owners.
The enhanced 10-year offering will operate as a ‘flexi-loan’ within the first 5 years, after which it reverts onto a full repayment schedule for the remainder of the term. Selina has also added a 5-year fixed rate option to give borrowers the certainty of a fixed rate over the ‘flexi-loan’ term. In contrast to other lenders, Selina Finance’s offering is feeless, with no setup, early repayment, or valuation fees. Rates start from 4.95%, much lower than rates typically charged on unsecured loans.
The lender has also announced changes to its property investor product, which works as a revolving credit facility for portfolio landlords: they will now lend up to 75% loan-to-value (LTV) against multiple properties held by an SPV or individual applicant. This follows the ‘Stamp Duty holiday’ announced by the chancellor in July, effectively reducing the tax payable on new purchases by up to £15,000 for property investors. Selina Finance’s credit facility is tailored for investors looking to make a quick purchase and helps them to release equity from portfolio properties quickly and easily.
Alongside the product launches Selina Finance has enhanced its underwriting and valuations by moving to a cash-flow based underwriting methodology which assesses affordability based on business circumstances.
Their proprietary automated valuation model (AVM) has also been upgraded which removes the need for physical valuations. The algorithm analyses various data sources to value a property including size, type, comparable sold values, and location-specific factors such as market liquidity.
Andrea Olivari, co-founder of Selina Finance, commented: “We pride ourselves on offering credit that is both flexible and affordable, enabling borrowers to easily unlock the value tied up in their property. Part of our vision is to make business lending as affordable as a mortgage with the flexibility of an overdraft, and these improvements to our product offering bring us one step closer to that.”
Darvish Heshejin, VP Growth at Selina Finance, commented: “We’re excited to make our products more accessible to SMEs and property investors across the UK. We’ve been busy during lockdown listening to feedback from partners about how we can improve our offering and implementing all the necessary processes and policies to make it happen. As the economy begins its recovery from the pandemic, we think it’s a perfect time to see some real innovation in the SME and property lending markets.”
