A revolution called circle lending has hit the finance industry and at the forefront is Virgin Money. Students and Small Business owners breaking into the market place are often intimidated by the idea of having to go to a formal lending institution and apply for a loan.
This hesitation comes at a greater percentage when the applicant comes from a creative institution that teaches them to think outside of the box to achieve success. With a name like Virgin, this lending company breeds the idea of innovation and seeing dreams become reality. Speaking with Asheesh Adram, creator, Nolcha got the scoop on the friendly way to loan money.
Nolcha: Given the above description what do you feel makes Virgin Money the perfect fit for a fashion designer starting their own line?
Asheesh Adram: The vast majority of entrepreneurs draw on their own savings, and the financial resources of friends and family, to start their businesses. Private financing allows the entrepreneur to define the terms of the loan, (e.g. the interest rate, payment schedule, grace period) to make sure that the loan suits their unique financing and repayment needs. Especially when you have limited business experience and an unconventional business plan or idea Sometimes friends and family are the only ones who will believe you can succeed.
N: How do you reward people for being creative and thinking outside of the box when it comes to their own emerging business?
AA: Creative entrepreneurs reward themselves with affordable and flexible financing when they
1. Identify potential lenders in their own circles and present their idea well enough to secure a friends and family loan at a rate less than credit cards and banks would charge
2. Use features like deferment periods and graduated schedules to create a repayment plan that matches the business’s projected cash flow
N: Does Virgin money take a percentage of that interest or charge a fee for managing the loan?
AA: Virgin Money charges a loan set-up fee of $199 for business loans, and an additional $100 to complete a UCC filing on collateral, if required. There is a servicing fee of $9 per payment for the life of the loan, debited from the borrower’s bank account with each payment.
N: The Student Payback Management program is new for Virgin Money; can you elaborate on the benefits for both parents and students of applying for this program?
AA: Student Payback is a way for students to repay parents or other relatives helping with education financing. Repayment terms are set by the family, typically to parallel debt that family has incurred to pay education costs. Flexible and creative repayment terms can be used, such as deferral until graduation, and graduated payment schedules. It is often cheaper for parents to borrow to pay education costs, than it is for students to do it themselves. This way the total cost of capital is as low as it can be for the family unit, and the burden is shared with the student, offering a lesson called Credit 101.
N: You use friendly words like Handshake and Handshake Plus. How does adding a bit of humor to market your product work in your favor?
AA: We think that people should be able to talk about money. We also think they should be able to share their money, and expect to get it back. We offer a process that helps people do these things in a way that is very non-bank-like. After all, lending is as much about relationships and dreams, as it is about money and terms. When friends and family help out, the money stays where it belongs, in the family.
N: Where is the next market to which you envision Virgin Money expanding?
AA: In addition to managing loans between individuals, Virgin Money is headed down the path of becoming a lender itself. A new student loan product launched this spring will be just the first in a line of products where borrowers only need apply.
N: With the ever evolving innovation storm that is Virgin, where do you see Virgin Money going in the next five years?
AA: Virgin Money intends to change the face of money in the financial services industry in the US. Always with a friends and family twist, the company will introduce products and services that get the customer a good deal, while having a little fun along the way. Whatever your fashion dreams, go fund yourself. And give us a call to take care of the dirty work. 
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