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Frequently Asked Questions

General Questions

About Folk2Folk

What is Folk2Folk?

Folk2Folk is a people-orientated business that acts as an intermediary between likeminded people, who either wish to lend or borrow, in other words “good folk to good folk”. Folk2Folk, has as at 1 July 2015, introduced over £60m to businesses and people on a secured loan basis. Folk2Folk has strong community values and is powered by people, not by banks. Read more about us

Is Folk2Folk a Lender?

No. Folk2Folk does not lend its own money but introduces people with funds to those who need it.

Is Folk2Folk a bank?

No. Folk2folk does not hold a banking licence and does not hold deposit funds.

When did Folk2Folk begin?

Folk2Folk can trace its origins back over 100 years when private mortgages were being arranged by Parnalls Solicitors. The owners of Parnalls founded Folk2Folk in early 2013. Read more about our history.

Who started Folk2Folk?

The founders are Mark Parnall and Louis Mathers, who set up Folk2Folk in February 2013 with the help of the staff who previously ran the Santander Agency.

Why was Folk2Folk set up?

• A desire from our founders to support local business people
• An element of frustration towards large banks not supporting hard working people, in particular in rural areas
• A desire to connect people in a protected way, without need for City/State intervention
• To create a fair lending deal

What is the philosophy behind Folk2Folk?

Our guiding principles are summarised as:

  • Fairness for all
  • Personal, face to face contact
  • Supporting local areas and businesses
  • Honesty
  • Loyalty

Read more about our values and ethos.

Who owns Folk2Folk?

Folk2Folk is owned by its original Founders, some of the leadership team and a selection of local shareholders who have supported Folk2Folk from its inception. It is not owned by City institutions and is truly powered by people.

Who comprises the Folk2Folk leadership team?

Folk2Folk is headed up by Jane Dumeresque our CEO, supported by the wider management team including our MD, David Brown. Our Founders are still heavily involved in various aspects of the business as is our Chairman, Tim Sawyer.

How can I contact Folk2Folk?

Folk2Folk is a people-facing organisation and we are happy to be contacted by phone or email but equally our customers can come and meet us at one of our offices. Our contact details.

How is Folk2Folk different from other peer to peer lenders?

Folk2Folk prides itself with being unique. Folk2Folk has strong community and traditional values that can be traced back hundreds of years through the founders’ related legal practice, which conducted private mortgages. These private mortgages were local arrangements protected by the local law firm. Folk2Folk strives to replicate the private mortgage arrangement in the context of modern day financial services. Folk2Folk is also at the cautious end of the risk spectrum, looking to take good security on every loan and vetting Borrowers both financially and reputationally. Folk2Folk is also one of the only peer to peer lending companies with high street presence.

Why would I come to Folk2Folk instead of a bank?

Banks have become more and more centralised and are becoming increasingly detached from its customers (despite what they may tell you). Folk2Folk makes its lending decisions by applying local knowledge and actively encourages customer interaction. From a timescale point of view, the banks have become very slow and can take many months to progress a loan. Folk2Folk on the other hand can process a loan within 7-10 days, without shortcutting any processes.

Do Folk2Folk only loan to people refused by Banks?

No. We look to compete with high street Banks and other Lenders for good quality Borrowers. It is true to say that we have greater flexibility than most Banks but that is not to say that we take on riskier lending propositions. It might be that a Borrower has been refused finance due to their age, type of sector that they operate in, or other reasons that don’t go to their ability to repay.

Where are Folk2Folk’s offices?

Folk2Folk has offices throughout the wider South West but is also represented further afield by a growing team of personnel. Folk2Folk also has strong relationships with a number of law firms throughout the country that also help to reinforce our wider presence. Our office locations.

What are Folk2Folk’s fees?

Folk2Folk is paid an introduction fee by the Borrower who also pays any legal costs in relation to the loan. Thereafter, a Borrower pays an annual service fee as a percentage of the outstanding loan. There are also ancillary costs as referred to in our terms and conditions, as amended from time to time.

What does the future hold for Folk2Folk?

Folk2Folk is going from strength to strength and is gaining greater coverage all the time. We wish to continue our expansion whilst maintaining the key ingredients of what made Folk2Folk so popular in its early years.

Regulation and Operations

Is Folk2Folk regulated?

Yes. Folk2Folk is regulated under Interim Permission from the Financial Conduct Authority (FCA 720867). Folk2Folk is in the process of obtaining full authorisation, which should be in place in early 2016.

Folk2Folk Customers

Who are Folk2Folk’s customers?

Both our Borrowers and Lenders are essentially high net worth individuals, either in need of liquidity or with liquidity but wanting to earn income from it.

What does Folk2Folk offer Borrowers?

We provide access to funds following a short application process.  We are approachable and hold all of our Borrowers in extremely high regard.  Borrowers get an excellent personal service throughout and we are finding that many Borrowers are coming back to us time and time again. Read more about what we offer Borrowers.

How do Folk2Folk select which Borrower applications to accept

All loan applications have to pass our vetting process, before we will put them forward for our Lenders’ consideration. The vetting process covers:

  • Borrower’s credit history
  • Security – this has to be a property/land/commercial property, other than the borrowers’ residential home. We will not lend more than 60% of the value of the security
  • How they will service the loan
  • Exit plan – how will the money be repaid.
  • Underpinning all of this is a reference check from the Borrowers’ accountant or solicitor – someone who can vouch for the Borrower.

We have a Credit Committee who make the decision on whether or not to approve a borrowing proposition.

What does Folk2Folk offer Lenders?

Lenders get a very good return on their investment as well as knowing that their money is being put to good use.  Lenders are directly named on the security documentation, so at the end of the loan process and registration they are provided with Land Registry entries showing that the security is protected and they are named along with the other co-Lenders. Read more about what we offer Lenders.

Borrower Questions

How it works

Who can apply for a loan?

Provided the loan is required for business purposes and security in the form of property is available then you can apply for a loan at Folk2Folk. Business purposes includes purchase of a second property, refurbishment of house, purchase of investment property.  Minimum loan amount is £25,000.

How quickly can I get a loan?

We aim to complete a loan within seven days from receiving an application.  To achieve this timescale, we need full cooperation from you in providing information and if you have your own solicitors to ensure that they are fully engaged to work with us to hit the target completion date.

What is a minimum and maximum loan amounts?

There is no maximum loan amount but a minimum loan size of £25,000.

Can my business have more than one loan?

Yes. Provided there is enough security and the propositions otherwise satisfy our criteria.

What is the duration of Folk2Folk’s loans?

Loan durations range from fixed loans of between one to five years, or a more flexible loan that comes to an end on notice:

  • Fixed. The borrower specifies the length of time the loan will be over. This needs to be five years or less.  The loan must be repaid in full on expiry of the fixed term. A fixed term loan can still be brought to an end early by a Borrower, although extra interest payments apply.  Lenders cannot come out of the loan during the fixed period other than in exceptional circumstances when Folk2Folk will look to replace a lenders’ money, subject to an administrative charge.
  • Easy-in, easy-out. The Borrower or Lender has the option to give three months notice to end the arrangement. However, Folk2Folk discourage Lenders from treating this as a ‘deposit’ facility and should only serve notice in unexpected circumstances.

How quickly can a loan be arranged?

Provided we have all the information required and everything passes through our vetting process, we can have the loan agreed and money available to you within 7–10 days.

How do I repay?

For easy-in, easy-out loans you will need to give the required three months notice of your intention to repay the loan, or pay three months interest in lieu of notice. For fixed term loans, you will pay an interest penalty depending on the length of the fixed term unexpired, but this usually only equates to six months’ interest.

Application

What do I do if I want to proceed?

Either complete an application form online or make an appointment to discuss your requirements face to face.

Can you give me an ‘in principle’ agreement?

Yes. We can often give an indication of whether or not a loan application will be successful. We will need to know some basic details from you to get an idea of what the proposal is.

What information do I have to provide to Folk2Folk?

We have designed an application process to set out what we need from you. However, we do not want to discourage borrowers from making an application should any of this information not be at hand and we would ask you to call us to chat through your circumstances. We will need a title number, plan or clear description of any property being put forward as security so we can start the various security checks needed at the outset of an application. 

Can I cancel my loan application?

Yes.  You may cancel a loan application but please note that we invest a significant amount of time to every loan application and we would therefore expect there to be good reasons for such cancellation.  Should an offer letter be signed by you and you later wish to cancel your application then a fee will be payable to cover our abortive costs.  We expect our Borrowers and Lenders to commit to their actions and if they fail to do so then this does not instil confidence in us to deal with you again in the future.

Will the Lenders know my name?

Yes. But only after you have signed the offer letter. If there is a lender you prefer would not be included in the loan then we will look to replace as long as we are notified in suitable time prior to completion of the loan.

Can my business remain anonymous when borrowing?

We keep the Borrowers name and address anonymous until Lenders have been found. The Lenders are then in due course informed of the Borrower’s identity. We understand that Borrowers wish to keep their details confidential before committing to a loan and Lenders are only given limited information on the security and the project.

Fees and Interest Rate

What fees does Folk2Folk charge?

There is a one off 2% arrangement fee, a legal fee including disbursements and VAT (as detailed in our terms and conditions) then the monthly payment of interest which is currently 6.5%.

Folk2Folk also charge an annual 1% ongoing fee paid over the course of the year (monthly).

Can the interest rate change during the loan?

This depends upon the type of loan. If the loan is fixed then the interest rate is fixed for the term of the loan. The rate may vary for an easy-in, easy-out loan. There will be a period of notice before this happens.

Can I change the monthly repayment date for the loan?

The monthly repayment date depends on the date that the loan is completed. We don’t usually change the date and there may be a small administrative fee for doing so.

What happens if I can’t pay one month?

Most importantly, you should let us know as soon as you think this may happen. The interest rate is raised by 2% until payment is made.

We will contact you to try and make arrangements for you to pay your lenders. If you are three working days late, then your account would be regarded as overdue and a £12.50 fee will be charged.

If the payment is seven working days late, we will hand the matter to our Solicitors to seek recovery of the outstanding sums. Their costs will be added to the loan.

About Your Lenders

What information is made available to Lenders?

Lenders are usually informed of the nature of the security and the purpose of the loan and a brief geographic location.  Lenders are provided with a story board so that they understand the purpose of the loan and the security that stands behind it.

What if a Lender wants to pull out of my loan?

If your loan is easy-in, easy-out, the Lender has the right to give 3 months notice to recall their funds. However, Folk2Folk discourage Lenders from serving notice other than in exceptional circumstances or say where you have defaulted in the loan. Where we can Folk2Folk will endeavour to find a replacement Lender. If a replacement Lender is found then a Panel Firm will be appointed to update the due dilligence.  The cost of this will be borne by the Borrower and are detailed in the Fee Schedule attached to the Terms & Conditions. Ultimately, if we cannot find a replacement lender, you are responsible for repaying the loan/lender.

If your loan is fixed, the Lender has to honour that term. However, in exceptional circumstances, as a service to our Lender, Folk2Folk would endeavour to find a replacement Lender, at the Lender’s cost.

What happens in the event of a Lender's death?

In the event of a Lender's death, the benefit of the loan will fall into the Lender's estate and the executors can request Folk2Folk to put the loan in the name of the beneficiaries at a small cost.  Folk2Folk will be able to do this on the sight of the grant of probate.  The beneficiaries may decided in an Easy In/Easy Out loan to withdraw from the loan, in such circumstances we will endeavor to find a replacement Lender and the costs incurred will be borne by the Borrower. 

Security

What types of property do Folk2Folk accept as security?

We would accept most freehold property as security, provided that it is not the principal dwelling of the Borrower. Naturally, we only lend up to a certain percentage of the value of the property (usually 60%) so the value of the property needs to be sufficient for the Borrower’s loan requirements.

Your Account

How do I change my contact details?

You will shortly be able to log in to our website and change your contact details, but for now, please contact us to advise us of the change by phone or email.

I wish to make a complaint, what are the next steps?

We have a complaints policy which is located on our website and the first step is usually to contact our CEO. We are regulated by the Financial Conduct Authority (FRN 720867) and we have to adhere any requirements of the FCA concerning complaints from time to time.

Lender Questions

How it works

How is Folk2Folk different to other Peer to Peer lenders?

  • We will only put forward and arrange loans which are secured by a Legal Charge with a maximum of 60% loan to value
  • Interest is paid directly into each Lenders’ chosen account every month
  • On Easy In/Easy Out loans, Lenders have the option to request repayment of their loan by giving 3 months notice
  • Our Founders Parnalls have been successfully arranging loans of this type for over 90 years, so we have a long history of operating in this area
  • We are able to give ‘in principle’ agreements really quickly, often on the Borrowers first approach. We also have a strict timescale for all the checks and legal work which means your money will be lent out and earning interest without too much of a delay;
  • All of our Borrowers are aware that even a late payment of interest incurs a financial penalty. 

Who can become a Lender at Folk2Folk?

A UK citizen or company registered in England and Wales can be a Lender, together with partnerships and other UK based legal entities.  We do carry out checks on our Lenders and take standard forms of ID. Should any money be sent from what appears to be an unusual source then we will raise appropriate enquiries with you to ensure that the source of funds are acceptable to us.

How do I lend?

You first need to make an application to become a registered Lender, further details of which can be found by contacting a member of our staff or by looking at the appropriate sections of our website. An application to become a registered Lender does not commit you to any particular loans and merely lets us know that you are interested in becoming a lender. As and when you are a registered Lender, you will be given some log in details to our website but you will also be contacted so that we can understand your loan preferences and to keep you up to date with various loan opportunities that arise.

Where is my money held?

When you have expressed an interest in a loan and have agreed to commit to that loan, we do not ask for you to transfer money at that stage unless there is a short deadline for completion, we may then give you a date for transfer of funds.  We will usually subsequently contact you to let you know when the money is required.  Money is not currently sent to Folk2Folk Limited but to the solicitors who have been appointed by Folk2Folk to act on your behalf.  The solicitors are duty bound to hold your money in a client account and will only release the money to a Borrower when the law firm is happy that your interests are suitably protected. 

Can I invest in more than one loan?

Yes. We actively encourage Lenders to spread their investment out over several loans and there is usually no limit other than a minimum of £25,000 per loan.

What is a minimum and maximum amount I can lend?

The minimum is £25,000 but there is no maximum.

What do I get out of it?

Once your money has been loaned out, you receive monthly interest paid directly into your bank account Our current interest rate is 6.5%. You should also gain some satisfaction from knowing that your money has been invested locally. We also hope that you feel part of a wider "club".

How do I get my money back?

There are two types of loan:

  • Easy In/Easy Out – this allows both parties to give three months notice to end the loan. However, we discourage Lenders from treating this as a "deposit facility" (which it is not) and they should only serve notice in unexpected circumstances.  The Borrower is responsible for he administration costs incurred each instance of a Lender replacement, such costs are detailed in the Fee Schedule in our General Terms & Conditions.
  • Fixed – in this instance the loan is fixed.  However, if in exceptional circumstances a Lender needed their money back, Folk2Folk will endeavour to replace the funds but there is likely to be an administrative charge for this. If Folk2Folk cannot replace the Lender, then the Lender will not be able to obtain his or her money back until the end of the fixed term.

Application

What do I do if I want to go ahead?

To register as a potential Lender, you can complete an online application form or visit any of our offices. You need to provide two documents to prove your identity. Once this is done, we send you a username and password for you to access the Lender section of our website which lists current loans available.

Can I lend if I am a resident in the Channel Islands or the Isle of Man?

It may be possible for residents of the Channel Islands or the Isle of Man to become Lenders depending on their tax domicile.

Fees and Interest Rate

What fees does Folk2Folk charge?

Folk2Folk does not charge a Lender a fee at the outset of a loan, nor are there any recurring fees during the lifetime of the loan. We may charge Lenders a fee should they wish to change details, add or change who is on the loan or should they wish to have their money back without notice or where they have invested in a fixed term loan. There may be other fees but we will notify you from time to time.

Is tax payable on the interest?

Yes. Interest is paid to Lenders Gross ie without the deduction of income tax. All interest received will need to be declared to HMRC on the Lender’s annual (self-assessment) tax return.

Folk2Folk will send certificates of interest after the end of the financial year.

What are the tax consequences of lending as an individual?

The interest that you earn is classified as income and you must disclose this income in your tax return and pay any tax due on it.  We pay interest to you as gross (i.e. free of any deductions).

What do Folk2Folk get out of it?

Folk2Folk charge Borrowers an initial arrangement fee and a small annual charge to cover the ongoing administration costs.

About Your Borrowers

Why would a Borrower come to Folk2Folk instead of a Bank?

Some Borrowers merely come to us because we are easier to deal with than Banks and due to high levels of personal service and turnaround speed.

Some Borrowers merely come to us because we are easier to deal with than Banks and due to high levels of personal service and turnaround speed.

Can I lend to more than one Borrower?

Yes. You can lend to numerous Borrowers, the minimum amount is £25,000 for each loan.

Will the Borrower know my name?

Yes. But only once you have decided to go ahead with a loan. The Borrower would know your surname either when they receive an offer letter or when the Solicitors are instructed to undertake the due diligence on the security. 

What happens if a Borrower is late or stops paying, or goes bankrupt?

If an interest payment is not paid within 3 days of the due date Folk2Folk may charge the full interest rate of 8.5% until all outstanding interest is paid.

If the Borrower defaults or goes bankrupt, Folk2Folk will instruct one of its Panel of solicitors to take appropriate action. Ultimately, the security could be sold to repay Lenders.  Due to our 60% Loan To Value, we would hope that no losses will be incurred to any Lender, but there remains a risk that full recovery is not obtained.

Risk Regulation and Operations

Is my money safe? What’s the risk?

All lending and investments carry a degree of risk.  We mitigate risk to our Lenders by taking security against property, and by only lending up to 60% of the value of that property. We will only put forward and arrange loans which pass our checks.

Does Folk2Folk use institutional money?

Folk2Folk is passionate about people and does not seek out institutional money, preferring instead to position itself towards high net worth individuals. We believe deeply in "folk" and we feel people, rather than institutions, should at all times remain at the heart of our organisation.

What happens if Folk2Folk goes bankrupt?

Folk2Folk introduce the lending opportunities and manages the administration of the loan, it is not strictly a party to the transaction itself.  A non-trading Trust company (Folk Nominee Ltd) will hold the security on behalf of the Lenders. Such, should anything happen to Folk2Folk, this would not affect the loan, which otherwise remains in place.  If Folk2Folk cease trading, we have arrangements in place with Parnalls Solicitors Limited who would take on the management and administration of the loans.

What happens in the event of a Borrower’s death?

The Borrower’s estate will need to service the loan or otherwise look to repay.  It may result in their being a delay on payments of interest and Lenders should be prepared for such delays.  The delays could be caused by the executors of the estate needing to obtain grant of probate before being able to operate the Borrower’s bank accounts.

What happens in the event of an Investor’s death?

The benefit of the loan will fall into the Lender’s estate and the executors can request Folk2Folk to put the loan in the name of the beneficiaries at a small cost.  Folk2Folk will be able to do this on the sight of the grant of probate.

Investing in P2P lending via other Investment products

Can I include Folk2Folk loan parts in an ISA?

The Government has just announced a new Innovative Finance ISA to enable lenders to use their ISA entitlement to invest through a P2P platform.  The Innovative Finance ISA is launching in April 2016.  Look out for further information from us shortly.

Can I lend via a Self Invested Personal Pension (SIPP)?

Yes. But the administrators of your SIPP will need to approve this.  We have spoken to a number of SIPP providers who are happy to administer funds through Folk2Folk and we can give you contact details should you wish to move your SIPP assets across to a company that can facilitate Folk2Folk lending.

Customer Service

How do I change my contact details?

Please contact us to advise us of any change in your contact details by phone or email.

What do I do if I’ve lost my Lender log in details?

Please let us know if you have lost your log in details and we will issue new details to you.

I wish to make a complaint, what are the next steps?

We have a complaints policy which is located on our website and the first step is usually to contact our CEO. We are regulated by the Financial Conduct Authority (FRN 720867) and we have to adhere any requirements of the FCA concerning complaints from time to time.

Latest News

  • Folk2Folk joins industry trade body the P2PFA

            Folk2Folk is pleased to announce it has joined the Peer-to-Peer Finance Association (P2PFA), recognised as a beacon for good standards of business conduct...
  • Gastro guesthouse: Coombeshead Farm opens with help from Folk2Folk

    Cornwall is renowned for its culinary talents to turn amazing local produce into exquisite plates of food in fantastic settings. As a result, there is an abundance of award winning restaurants and...
  • Local swimming pool business stays afloat through Folk2Folk

    Business owner Laura of Aqua Stars Academy of Swimming turned to Folk2Folk to help her achieve her business goal of owning her own pool after years of renting a facility, allowing her to set up her...
  • Folk2Folk wins industry award

    We’re very pleased to announce that Folk2Folk has finished off the year with an award win.  This week, we were named by industry leading publication AltFi News as the UK’s “Up...
  • Folk2Folk gains FCA authorisation

    Today we are delighted to share some exciting news and a significant milestone for Folk2Folk as a P2P lending business as we are now fully authorised by the FCA.    Regulation is a huge...

Customer Stories

  • Richard's Story - Borrower

    "Sharp & Tappin is a precision engineering company and has been going for 11 years. The business has two parts: one is onboard cameras for ships and the other is composite blade saws...
  • Jim’s Story - Lender

    "I started my working life as a pilot in the Royal Air Force and after a 10 year commission I went to work in a building society which had a business arrangement with Parnalls solicitors who...
  • Pam's Story - Borrower

    "In 2009, I, together with my husband Robert and daughter Robyn, bought a pub which I had previously owned with my husband and sister in law and brother in law and sold in 2001. Since then it...
  • Nick's Story - Borrower

    Originally I was a farmer, but after Foot and Mouth affected us we had to diversify and Folk2Folk have enabled me to do this.  

    Initially I borrowed money through Parnalls Solicitors in 2011...
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