Unusually for a challenger bank, Cashplus has been in profit for the past eight years. In 2018-19 it generated £46.5m in turnover – a year-on-year increase of 19pc.
Should its banking licence be approved, Cashplus will fund its SME lending through the £500m of deposits it has built up since its launch in 2005.
Rich Wagner, chief executive of Cashplus, said: “The day we become a bank we will be able to unlock £400m of money and be able to lend that out to overlooked SMEs, which will almost supercharge our growth.”
Today, Cashplus serves250,00 customers, of which nearly one third are startups and entrepreneurs.
Since launch, Cashplus has expanded its range of services to include overdraft-style products to SMEs, called iDraft as well as other credit facilities.
- SME’s can apply for iDraft facilities of anything between £200 and £2,500. The average iDraft limit is about £620 and typically small business customers repay this within 10-15 days.
- Up to £10,000 through a corporate credit card
- Offering up to £25,000 in merchant cash advances, secured lending against credit card and debit card transactions, in much the same was as PayPal.
Cashplus began life in 2005 when it launched the UK’s first prepaid consumer debit card. At the time, there two million people in Britain who did not have access to even the most basic current account. The idea was to offer a prepaid card and provide people with a basic bank account for people at that time with a poor credit history. You topped up the debit card in much the same way as a basic current account operates, with no overdraft facility.
Cashplus raised £14m to launch, raised through US private equity house Trident Capital, which remains the challenger bank’s sole shareholder.
In 2013 Cashplus launched business accounts. The attraction of using Cashplus for startups is that there are no credit checks, its application process is quick and online, and you are issued with a sort code and current account number within minutes.
Cashplus aims to provide ease and speed with a product very similar to a current account with no overdraft facility. The key difference between a challenger bank account, like Cashplus, and a high-street bank business account is that high street banks have a 35-45pc decline rate. This is because they do a credit search on applicants immediately prior to opening an account. Unsurprisingly, entrepreneurs often fail this basic test.
Challenger banks are required to have the same capital retention requirements as a high street bank such as Lloyds, however, some bankers have suggested that if the Government is serious about opening up SME lending to challenger banks, then capital requirement restrictions may have to be loosened.
Cashplus is based in London Bridge with around 150 staff in headquarters and another 50 staff at a satellite office in Birkenhead.
Leave a Reply