Loan application guidance notes

HOW TO APPLY

We’ll need some documentary evidence to establish basic things like you are who say you are, plus a business plan. Unlike a traditional personal loan from a regular bank, where what they primarily want to know whether you have something like a house as collateral, the emphasis in the Zopa-PRIME Olderpreneur loan is on your business plan. The lenders will be deciding whether to lend primarily on the strength of your business plan. You have to convince them that your proposed business will generate enough money to support you, the business and pay off the loan. So think Dragon’s Den rather than filling in a building society application.

REQUIRED DOCUMENTS

  1. Fully completed application form
  2. An original utility bill dated in the last three months
  3. Last three months consecutive bank statements
  4. A CV or personal profile
  5. Copy of credit search dated in the last four weeks to include three years address history ( Credit searches can be obtained free or for a small fee from: www.equifax.co.uk or www.experian.co.uk)
  6.  Last but not least: your business plan

You’ll be asked to include some physical documents with your application, which is why it needs to be made by post.

FREQUENTLY ASKED QUESTIONS

Who is Zopa?
The UK loan exchange pioneer, originally launching in March 2005. There is more about Zopa here.

Why can’t I go straight to Zopa?
You can. If you are credit worthy and have a strong proposition to put forward there may be no reason not to try listing there straight away. But going via the Zopa-PRIME Olderpreneur scheme may increase your attractiveness to lenders.

Why Bank of America?
PRIME now has a strategic corporate partnership with Bank of America Charitable Foundation, which means we are one of the main charities it supports in the UK. Funded by Bank of America, the Foundation gave more than US$200 million in 2007 worldwide, making the bank the most generous financial institution in the world.


What is the role of The Prince of Wales Enterprise Endowment?
This is the name of the fund that guarantees part of loans made to applicants that succeed in winning PRIME’s endorsement. Note that the fund does not provide money or a guarantee to the borrower, but to lenders on the Zopa exchange who decide to back a PRIME-endorsed client. So this arrangement do not reduce the obligation on you the borrower to pay back the whole of the amount outstanding. You will still get chased if you don’t, so think carefully about whether you will be able to repay before applying for this loan.

What the fund does do is remove part of the risk from lenders (but only part of the risk), thus hopefully encouraging more of them to lend to people over 50 just starting in business. We believe this incentive to be particularly needed in the current economic climate, where lending to people for business startups has virtually ceased unless you have a rock-solid business track record and an impecable credit score.

Who is my loan contract actually with?
Zopa lenders, not PRIME or any of the other sponsors.

See also:

Summary of the whole application process

  • 1. You start by completing the PRIME application form and returning it with the other required information to PRIME.
  • 2. PRIME will review and vet the business plan. We might ring you for a half-hour phone conversation regarding your application. Note that if we approve your application it does not mean we guarantee your business will succeed. That is up to you. PRIME’s endorsement means we think you have a plausible plan that has a good chance of success, and one that we are prepared to recommend to lenders.
  • 3. Successful applicants become a PRIME-approved applicant, and we’ll issue you with a unique six-digit reference number (URN). You will need to use this code when you submit your online application on Zopa’s UK web site.
  • 4. You complete the Zopa online listing. This process will give you an opportunity within the Personal Profile section to sell your business plan to the Zopa lenders. You need to make a convincing case.
  • 5. Zopa then runs a check with a credit reference agency (this may show on your credit file).
  • 6. When your listing becomes live (once Zopa has approved it with some further checks) then the auction starts. Lenders - if they so desire, offer you the funding on a one-to one-basis, each lender offering a sum at their chosen rate.
  • 7. This continues for a maximum of 10 days. If your required loan value has been met, the interest rate is averaged and you are offered the loan and informed of the interest value. You have 48 hours to accept or decline. If you accept, then you have become a Zopa client and the standard personal loan agreements apply.
  • 8. If you do not obtain the full amount you have asked for, then you get nothing and your loan application fails. So for example if you asked £10K and all the lenders involved only offered a total of £5k, you will be declined by Zopa and you will not be able to accept the £5k.This is for two reasons. Firstly the fact that not enough lenders came forward shows a lack of confidence in your proposition and/or your ability to pay the loan back by the Zopa community, and Zopa doesn’t allow such loans to go ahead.Secondly from PRIME’s point of view we vetted a business plan with a certain amount of loan finance behind it - in this case £10,000. With less funding behind it is a different proposition, so we can no longer say we endorse it. However, you may reapply to PRIME by submitting a new business plan and associated details to PRIME after a period of reflection.

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