As one auction closes, another opens.
Yesterday saw an exciting close to the SBS B-rated loan. A flurry of bids knocked out the more expensive offers, and the service-provider now has a £250,000 loan at a gross yield of 10.4 per cent.
Today sees the unveiling of a new offer. Money&Co. lenders will be part of the financing of the purchase of a barbers shop in Wimbledon. Jacks of London (JOL) hit upon a brilliantly simple way of getting men into the shop – free beer! Some business models are difficult to understand. This one isn't: haircuts with a free beer thrown in.
The loan is A-rated and the borrower is seeking £188,500. At the time of writing it is 4 per cent filled with an indicative gross yield of 12.5 per cent. It is a near-certainty that the expensive offers of credit will be knocked out (as happened yesterday) as the loan closes.
Here are the words of the would-be borrower: "This is the shop that originated the JOL concept and has been the set standard of rolling the same concept of barbers to a few cities. Despite this branch being owned by the brand owner, it will be subject to a franchise agreement so that we can continue to use the name and the branding as well as having the support structure that a franchise enables. This shop will be purchased with a new franchise agreement in place that will be favourable to all parties. The agreed purchase price of the shop is £390k, of which £170k is being funded by me. Money and Co. will further provide funding of the same amount of £170k and there is a vendor loan of £50k....
"Over 20 years ago [the owner] decided to start a new era of barbers, and she started this at the Wimbledon branch. She decided to do something completely different, in order to bring in the customers, she decided to offer free beers! She got leaflets made, stood outside the station and offered free beer for all customers, before she knew it, she had a very long queue at the shop, and the rest is history. Today JOL still offer free beer and great haircuts, and this has proven a very good recipe for success. She has always believed in her concept and the brand, so over 8 years ago she decided to start franchising the business, and accordingly there are over 5 shops (Guildford, Kingston, Bristol, Birmingham and Nottingham). Further shops are opening in Manchester & Bath. The business on average has grown 15% year on year, and in the last 3 months the business has grown by 25%."
We have done due diligence on this offering and we believe that the borrower's statements are true – but we cannot and do not warrant that this is the case. Bear in mind that lending puts capital at risk. Please read the risk warnings on the Home, Lend and Frequently Asked Questions pages.