Planet Ark Power has jumped onto the opportunities for expansion through borrowing funds without needing to rely on real estate securities, thanks to Greenlend, the new clean energy funding platform from MarketLend. Robert Harley reports.
Fifty sophisticated investors have provided a $500,000 loan to commercial clean energy provider Planet Ark Power in a first for a new green business funding option from innovative financier, MarketLend.
The new option, called Greenlend, provides a platform for sophisticated investors – high net worth individuals and institutions – to invest in loans that help the growth of small to medium enterprises (SMEs) in the clean energy sector.
For enterprises in the sector, Greenlend can deliver competitive funding for necessities like trade credit and working capital without the need for real estate security so often demanded by the big banks.
The founder of Marketlend, Leo Tyndall said his investors increasingly demanded an opportunity to fund solar and renewable assets. At the same time, businesses in the sector had long sought funding which avoided the security provisions or “exorbitant interest rates” of the big banks.
Similar factors are driving the global surge in green lending, from green bonds at the big end of town, to the plethora of funding now available for household solar installations.
“Investors are increasingly looking to invest beyond their cheque books and with their consciences,” Mr Tyndall said. “Prior to GreenLend, however, it was often difficult for investors to find and fund the businesses which aligned with their values.”
Mr Tyndall describes Marketlend, which he founded in 2014, as “eBay for finance”.
It’s a platform that allows sophisticated investors to choose what SMEs they finance and how much they choose to invest. In fact they can choose to invest as little as $100 in an individual finance package and spread their funds across a diverse range of businesses.
The MarketLend platform provides formal details of the potential loans and in some cases sets up town hall meetings to give investors an even better idea of the businesses in which they are investing.
Mr Tyndall says Marketlend’s platform is far more mature, fair, transparent and secure than any peer-to-peer lender.
“Robust legal structures, secure payment systems, and proprietary risk assessment predictability software gives qualified investors the assurances they need to invest confidently, while ensuring SMEs can keep their businesses running smoothly and competitively,” he said.
He acknowledges that as in all lending operations Marketlend will have arrears and defaults. But there are directors guarantees, loan insurance and in some cases security over business assets. “So far no investor has had a loss because we have substantial provisions,” he says.
In four years, Marketlend, has provided over $56 million in finance to over 600 SMEs.
It was then a small step to use the platform to create Greenlend and provide a focus for SMEs in clean energy.
“At Marketlend, we always take a long-term view when it comes to financing SMEs – we want businesses to thrive long into the future,” he says.
“We saw GreenLend as a way to better serve Australia’s energy future, while ensuring today’s energy innovators get access to capital they need so they can continue addressing one of the world’s most pressing concerns – climate change.”
A platform for clean energy, sustainable products, recycling and energy efficiency
SMEs working in clean energy, sustainable products, recycling and energy efficiency will be marked on the platform with a special badge.
Mr Tyndall says the market will decide what is green, and what is not green enough.
The market will decide if it’s green enough
“The transparency of the process will ensure that the proposals meet green critieria,” he says. We don’t hide anything. If it turns out that investors say this offering is not green enough, we will review it,” says Tyndall.
The pricing for borrowers and investors is set by demand. Green borrowers can expect to pay what Mr Tyndall calls a “special interest rate” of around 8-9 per cent. (Remember this is without any property security.)
Investors can expect to earn between 5-7 per cent.
Planet Ark Power is first of the green borrowers
The first GreenLend borrower, Planet Ark Power, will use the funding option to improve cash flow, trade credit and working capital.
Executive director, Richard Romanowski, says the energy provider’s main focus is making renewable energy as efficient and hassle free as possible.
“The greater the uptake of renewables, the greater the benefit to the planet,” he says. “But in the past financial hurdles have hindered growth plans.”
“GreenLend will connect us directly with investors, helping us rapidly increase recruitment and installation of more rooftop solar panels across Australia,” he said. “In turn, we’re able to save households and businesses millions of dollars while reducing our carbon footprint – it’s game changing stuff.”
Robert Harley is former property editor at The Australian Financial Review. See his report on the Tomorrowland session on sustainable investment issues he moderated in September.