Folkonomics – the local lending movement

Written by Giles Cross on 15th Feb 2018


“We’ve always talked about creating a national community of lenders and borrowers to dynamise the rural economy, but ‘Folkonomics’ goes way beyond that. This is about creating ecosystems on a local level that facilitate rural business growth on the ground.

“It involves the participation and support, not only from peer-2-peer lenders and borrowers, but also other interested parties: legal and accountancy professionals, local authorities, MPs, Chambers of Commerce, Local Enterprise Partnerships, surveyors and land agents, local cooperatives, leisure and tourism platforms, interest groups, community associations, charities, business groups and banks. 

“By engaging all parties we hope to collectively facilitate the long-term prosperity of our rural and local communities. The local lending movement is local, focused, social activism for positive outcomes. 

Folk2Folk believes that simple and efficient access to finance is a major factor in enabling business success. Since its inception in 2013, the company has helped hundreds of rural and local businesses with appropriate security to grow, develop and diversify by introducing local lenders looking for attractive interest rates: creating local jobs, increasing tourism, employing local contractors and incorporating the services of local professionals. By lending locally through Folk2Folk’s secured loans, lenders on the platform provide a financial lifeline to rural and local UK businesses where banks may not lend.

“In recent months and years we have repeatedly been told that trickle-down economics doesn’t work; that those ordinary, everyday people who were supposed to benefit from the financial interaction of the wealthy have lost out and been left behind. And that may be the case on the macro level, where the institutions traditionally required to facilitate the easy flow of capital are no longing playing and behaving as before.

“However, we see it working perfectly on the local, micro level, where the transactions between borrowers and lenders have an impact that is felt far beyond a peer-to-peer relationship on a platform. By accessing the finance for growth, development and diversification, borrowers benefit their local economy and community: they are creating and sustaining jobs, they are retaining talent in non-urban areas, and stemming its tide to the cities.

“The more this happens, the greater the impact: vibrant rural and local economies attract people into those areas, new homes are built, house prices are stabilised, other local businesses benefit as a result and from being part of the inevitable supply chain; the demand for better communication and connectivity increases, local bus routes retain their relevance, local schools and services are maintained and issues of social deprivation are better tackled.

“On the other side of the equation, lenders on platforms such as ours can earn around 6.5 per cent per annum interest on the capital they lend, often adding to their retirement income, and thereby increasing their spend into the economy.

We like to think this is one answer to securing long-term economic prosperity for rural Britain.

Giles Cross, Folk2folk

“Our aim for the Folk2folk model is to disrupt the traditional lending model, removing the need for traditional institutions to fund and facilitate the financing of business loans. In many cases, platforms such as Folk2folk are able to assist businesses in sectors where traditional institutions are sometimes unable to lend.”

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