myi: How are you finding current market conditions?
The consumer finance industry has taken a battering over the last few years, both financially and in terms of reputation. We have to be honest with ourselves and recognise that most of it was self-inflicted. Over the last decade or two the pursuit of short-term personal gain has been given priority over building products and companies that stood the test of time. The worst offenders are largely gone now or a shadow of their former selves and the vacuum that is left offers a massive opportunity for entrepreneurs who understand and remember the basic reason we are here. People still need and want to borrow money, they want to do it in a way that is as easy to understand, as flexible and as cheap as possible. The next generation of companies that come out on top will be the ones that solve that problem, not the ones with the biggest, most sales-focused call centres.
myi: Amigo Loans are regular TV advertisers where two comedic Mexicans claim that you don't need a good credit rating, just a good amigo - what exactly is a guarantor loan?
A guarantor loan is what Banks used to call 'a loan' until the invention of computerised credit scoring. Back then your local bank manager would know you and lend to you based on your assets or your income. If he didn't feel comfortable lending to you secured on your pay cheque, your car or your house, he'd ask for your Mum, Dad brother or sister to guarantee the loan. Amigo guarantor loans are just the same old concept brought online and up to date. We talked about calling them Captain Mainwaring loans (after the Dads Army Bank Manager) but in the end the thought of two guys in sombreros was irresistible.
myi: Isn't mixing money with friendship a recipe for disaster?
When you ask someone to be your guarantor the first thing they'll ask you is why you need it and what other options you have. Family and friends know each other better than a computerised credit score ever could and make much better decisions, both to protect themselves and the borrower. Adding back the social layer that always used to exist in finance actually leads to fewer debt problems and loans being taken out for positive reasons. Your amigos will back you to start or grow your small business, but not to borrow £500 to fuel a gambling habit.
myi: Do you see more alternative lenders entering the market over the next few years?
The lack of funding will continue to be an issue, investors have been burned badly in recent years but entrepreneurs will find a way around that
myi: You've recently rebranded from FLM Loans, why?
We had the idea for the product back in 2004 when we were a broker and we originally pitched it to London Scottish on a 'you fund it- we'll sell it' basis. They were interested but moved so slowly that eventually I got impatient and decided we would have to do it ourselves. Because we had been planning on the partnership we didn't have a company or a trading name set up to do it. OFT licensing can take months so we decided to temporarily use a dormant company we had earmarked for a mortgage brokerage start-up that never happened (Freshstart Loans and Mortgages. We couldn't use the full name because we weren't doing mortgages so that only left the initials FLM. The product was so popular in the first year and brought in so many word of mouth referrals that we didn't want to re-brand but eventually the number of people getting our name wrong (FLN, SLM, FML...) meant we had to.
myi: Amigo Loans is part of the Richmond Group, who are well known for innovative lending, what do you feel has been the company's biggest achievement so far?
People know us for our products but it's what we've achieved internally that I'm most proud of. We decided a long time ago to do whatever we had to fight to keep the feel of a start-up. I'm lucky to be able to work with a team of incredibly talented and motivated young people who are not tainted by preconceptions about how a finance company should operate. Our culture has been recognised externally too with regular appearances in the Sunday Times 100 best company to work for list.
James is the Managing Director of Amigo Loans, who are a guarantor loan company which began in 2005. A natural innovator, James has built from scratch a string of national businesses which have thrived through both boom and bust. Amigo Loans is part of the Richmond Group who are currently poised for international expansion and look to revolutionise banking for the millions of people excluded by mainstream banks.
