Ronan Horgan watched on with envy as all his friends caught the triathlon buzz. He wanted to join them in both the events and also the accompanying afterparties, but there was one crucial problem: he couldn’t swim. So, as he approached his fortieth birthday, Horgan literally took the plunge with swimming lessons. Since then, he has “completed, not competed” in more than 25 events.

Given Horgan has advanced €550 million in loans to Irish businesses though his non-bank lender Capitalflow, learning how to swim might seem trivial. Yet the process taught the Dublin banker-turned-entrepreneur some valuable life lessons.

“You always break down the challenge for a triathlon into parts,” he says. “That way it is easier to get over each hurdle – this is similar in business. It takes time to make progress and to meet your full potential.”


In the aftermath of the last crash, while the banks were triaging their wounds and attempting to shore up their balance sheets, a new type of lender appeared in Ireland. Mostly based in New York or London, the new lenders started out as a way for private equity funds to elbow the banks out of deals. They were willing to find slightly riskier deals for a higher coupon, stepping into the place of the mainstream lenders.

As he watched the banking landscape shift, Ronan Horgan had an idea. Having worked at Bank of Scotland (Ireland) for 25 years, he felt there was room in the market for a domestic non-bank lender specialising in Irish SMEs. In 2015, he convinced Pollen Street Capital, an alternative investment management company, to back his vision.

Launched in 2016, Capitalflow has now advanced more than €550 million to Irish businesses. and if everything goes to plan, the lender will extend a further €250 million this year. The plan, according to Horgan, is to “double or triple” the size of Capitalflow over the coming years, with the company looking at potentially expanding into the European market.

Before Europe, however, Horgan wants to shore up its position in Ireland, where alternative lenders have a 10 per cent market share. This compares with a 50/50 split in Europe and 80/20 split in the United States.

“We think there is a real opportunity to create a credible business lender for SMEs in Ireland and we will add to our products as we grow,” Horgan says.

This will put his business in direct competition with the mainstream banks, who are also feeling pressure from digital disrupters such as Revolut and N26 on the deposit side. A decade after breaking the economy, the country’s banks are now facing increased competition on all sides.

“The financial crisis disrupted a lot of things,” Horgan says. “The big thing for us in Capitalflow was how we could create a business lender that can actually relate to the SMEs out there. You will often find in the banks that the big corporate entities and corporations will get well looked after, while consumers will get looked after in terms of mortgages. We felt that post the financial crisis, the SME had been left out in the cold.”

Over the course of our interview, Horgan talks about:

IK: I want to look to that period when you were setting up Capitalflow. Take me back to the genesis of the business.

RH: The genesis occurred post-Bank of Scotland exiting. I had worked with Bank of Scotland for 20-odd years. When they left in 2010, I spent a couple of years working on a loan portfolio that they had left behind. I had an opportunity then to reflect on the previous ten years – on the good stuff we had done and also the mistakes. I felt there was a great opportunity to create a business lender. That was 2012 and 2013. Obviously, there was not a lot of funding around, and not a lot of opportunities.

Around the middle of 2015, I was lucky enough to be introduced to Pollen Street Capital and Lindsey McMurray, who is the managing partner. They had already established a challenger bank in the UK called Shawbrook Bank and they had a number of different financial services investments. They were all ex-RBS, so they knew a lot about the Irish market. They were very interested in the plan to set up the specialist lender. It took us the guts of six months to get the business up and running before we did our first loan.

IK: What was the pitch to Pollen Street Capital? We have had so many banks who came here and were scarred. Bank of Scotland left and even took their ATM machines with them. What was your pitch, your unique selling point?

RH: The big thing for us was the ability to create a brand and a business that was going to be sustainable. There were a number of non-bank lenders in the market – or credit funds. These funds are mostly US- or UK-based; that is where their balance sheet is held. And they come in and fund various different portfolios and various different businesses. They could be here for a couple of years and then they could be gone again.

The pitch to Pollen Street was to create an infrastructure and a business that could relate to the smaller end of the SME market. It was about bringing a product where you could do a lot of transactions with that product without taking a huge amount of risk initially to prove the concept. But the whole idea was to roll out a number of different products that business customers were looking for.

The banks had their own difficulties and were very much inward-looking. There was not a credible business lender that we could see that wanted to put down roots in Ireland. Pollen Street are slightly different in that they are specialists in private equity and financial services. They have a track record, and it was not a case of trying to turn a quick growth story and then sell it. We have been working together for six years. They are not in any rush to exit., that was really important – from both my perspective, but also from the perspective of building this from scratch because we were not put under any pressure to scale within a two-year period.

One of the lessons of the financial crisis was banks trying to scale too quickly or banks trying to get into areas of growth that they did not really understand. Our big thing is that we stick to the knitting. We don’t try to be elaborate or try to lend in areas where we have no expertise in.

IK: But has been a dearth of business lending expertise in Ireland. The banks went after the property market and forgot about business. There was a gap in that market to be serviced. And as you serve it, what sort of funds are you willing to lend?

RH: Our range of loans will go from anything from €5,000, which is the minimum, all the way to €10 million. But it really depends on the different asset classes. We have a number of different products, and that is what distinguishes us from the other non-bank lenders who tend to offer one product and stick to that. Our whole ethos is to roll out products that are relevant to business owners. We started with leasing, covering all different asset types that you would imagine businesses to hold – be it in the construction sector where it is plant hire or JCBs or cranes to engineering equipment to IT. It is all different asset classes. That got us out there really quickly. We have more than 5,000 leasing agreements currently.

Then we moved into invoice discounting, which we felt was a niche product but one that resonated with SMEs and accountants who are looking at SMEs’ books all the time. This helped to make us more relevant, rather than being specialist on the leasing side.

Once we got to a certain level, we felt the time was right to look at commercial property. Again, we brought in expertise, people who had done lending in the past – not necessarily property development but buy-to-let and the commercial property market.

Digital disruption and non-bank lending

“We accept that the banks will always be there and will always offer a certain level of service.”

IK: You had lent out €550 million by the end of 2019. You have the potential to lend out €250 million this year. They are big numbers. But within the space of lending and financial institutions, you are still small. How do you keep scaling?

RH: If you are a business owner and you hear that we are going to lend €250 million, it sounds like an awful lot of money – and it is, and we have to mind it. But it is pretty small compared to what banks in general can lend and the liquidity they have. Having said that, because we are just a business-to-business lender, we think we can become more significant. We can probably double or treble that over the next few years as we scale up – and that is what we are planning to do.

We made a big investment in our digital platform during the first lockdown so that we could be really relevant and also able to scale right across the country without necessarily having to have a branch network or an office in every locality. Our people are spread right across the country, so they are local, but having the digital platform allows us to use things like DocuSign and new money laundering technology to allow people to upload their ID, bank statements and so on. It just makes life easier for the SME.

IK: Is that a move into the fintech space for you? We have seen N26 and Revolut, and they are eating the bank’s breakfast, lunch and dinner in terms of a younger generation of customer who are used to doing everything on your phone. Is that where you see this going?

RH: The model is an interesting one. They are getting the customer numbers. I don’t think they are charging yet.

IK: Well, they are not making any money, but they are on a land grab.

RH: There is a decent enough debate going on about the digital and when they are going to break even.  Inherently, that is the business model – they are doing it to make a margin. They can scale, but if they start charging a premium, will they hang on to their customers. For example, I know one digital bank that is charging €100 a year for the use of their card. It sounds very minimal. But I got my Bank of Ireland statement in recently, and they charged me €58. I think they are going to have a lot of competition, young people in particular – the twenty- and thirty-year-olds – are using digital banking and they know it like no other. I think the branch model with a branch network is something that is definitely going to change over the next couple of years.

We accept that the banks will always be there and will always offer a certain level of service. And they do some things well like mortgages and personal loans, very much on the retail space. But with a business head on, and talking to business owners, you really have to understand the nuances of the sectors they operate in, the type of assets that they need, the type of cashflows that they have. The banks can’t offer all of that to every single business in Ireland. Having 90 per cent of the market is not sustainable in the medium to long term.

For us, the big opportunity to scale up the business is to reach out to those business owners through digital and through human touch. I don’t think you can ever lose that human touch, to be honest. A lot of time what you are doing is cashflow or supporting a business that wants a new contract or wants to take on more people, so you need to take time to understand the customer and what they want. You can’t digitalise that completely.

IK: Do you think the banks have missed a generation of customers? I speak to a lot of young entrepreneurs setting up their own businesses. It often strikes that they very rarely talk about banks as a source of finance.

RH: If you recall the days of the bank manager – he was in your local community, the GAA club, the rugby club. They lived in the areas and they knew exactly what was going on. They were very focused on the business community. Then it became a property-driven growth strategy. Then banks stopped lending and started looking inward to try and resolve the liquidity issues that they had. Even an item like open banking, which is something that is coming down the tracks – we hope to launch that at the end of Q1. That means that as part of their application, a customer can give us permission to go to Bank of Ireland, AIB, PTSB or Ulster, gather all the banking statements in one place, and look at them and make a credit decision. That is massive. It is a game-changer. Up to that, a customer had to go through the hassle of getting the bank statements, uploading them and getting it into the application. All that hassle will put you off dealing with a non-bank lender. But because that is changing, that gives us a level playing field.

You see it in the States, where 80 per cent of lending to SMEs is done though non-bank lenders. Across Europe, it is 50/50. I think the banks need to make themselves relevant, but the expertise and the skills that you talked about is quite difficult to get back.


In an interview with The Currency last week, Central Bank Governor Gabriel Makhlouf spoke extensively about the rise of non-bank lending, and the issues this raises in terms of regulation. Non-bank lenders such as Capitalflow are not regulated. I ask Horgan what his views on the subject are.

“First of all, we don’t have to be regulated, although the Central Bank regulates us for anti-money laundering by law,” he says. “To be honest, we have a team of 54, 55 people, and 90 per cent come from banks. We understand the regulations. Would it make any difference to us? I don’t think so. We are funded by quite a number of international banks, and they do audits on us. We have our own annual audit with KPMG. Regulation is not something that would concern us at all. Are we asking for the Central Bank to regulate us? I don’t think we are. I don’t they are looking to regulate us. I don’t think it would make a huge difference to our business model, because treating customers fairly, dealing with complaints – it is all common sense. We have no issue with it.”

The Covid effect

IK: I want to ask about Covid. I am interested in a number of different things. First, have you seen an increase in delinquent loans or issues emerging with the portfolio you have? And secondly, what trends are you starting to see from your customers?

RH: I think the big thing for us back in March was to get our head around what was actually happening. We did see a spike right across trading businesses for requests to go for par payments, moratoriums and all of that. The banks were also straight out offering it to their customers, so there was a natural inquisitiveness from our own customers, particularly on the SME side of things. The property side has gone extremely well and been extremely resilient.

Having said that, we have financed a number of hotels, pubs and restaurants, and their business has obviously fallen off a cliff. We have to support them through this. The vast majority – 80 to 90 per cent of our SME customers who looked for a break in April or May – are now back on full payments. There is a cohort of customers who are always on the edge anyway, and this has just driven them over the edge again. This new lockdown is obviously not helpful when you see the construction sector that is shut, and we are the only country in Europe where the construction sector is shut. This does not make sense. I have a really good customer who has a great operation in Ireland and exactly the same operation in the UK. He is full tilt in the UK and not in Ireland.

Our book has been very, very resilient. As a young business in operation five years, if you ever want to test resilience, throw in a pandemic. We might think we are great at lending to businesses and understanding businesses, but this has been a great test to us. Our underwriting and having that expertise at the front and understand what is a good lend from a poor lend is really, really important to us. It gives us more credibility with our funders and allows us to have a better relationship with them because we have shown that our internal processes are strong.

Ronan Horgan on SBCI-backed funding: “It is up to €31 million, and we hope to have that increased over time.”

IK: And the Strategic Banking Corporation of Ireland has come on board, with additional funding of €31 million for you under the credit guarantee scheme. What is behind that?

RH: We have a number of banks that we borrow from and then lend on to business owners. The Strategic Banking Corporation of Ireland is one of those. We have accessed funding from them for a year. We use the SBCI funding to fund some of our leasing products at the moment. When this crisis started in March, I started talking directly to the government ministers to make sure that non-banks would be included under the various schemes, that we would not make the same mistakes we made in the past where we did not include non-banks in the guarantee scheme.

The solution is not banks or non-banks. It is a wide range of different products for SMEs. We were keen to get included in that. The department approved us with that guarantee. And that allows us to lend €100,000 to a customer today, if in the future we make a loss on that, the state will guarantee up to 80 per cent of the loss. It is a considerable comfort to have. And we don’t change our credit appetite hugely because of that. We don’t start to do really stupid lending just to avail of the guarantee. It is up to €31 million, and we hope to have that increased over time.

The products – leasing, invoicing – are the type of products that are more attractive to that type of lending than perhaps overdrafts and term loans, which the banks have been trying to offer under the scheme up to now and it has not had a huge take-up. It is also down to the fact that SMEs have not been hugely focused on borrowing more in the last six to nine months. Hopefully, we will start to see that change as the vaccine gets rolled out and we get back to more activity in Q3 and Q4 this year.

Expansion and the future

IK: What is next for Capitalflow? Your book has grown nicely, and there is a nice curve there. Where do you see Capitalflow going?

RH: I think it depends on how the business community is doing. We see ourselves as being on the same page as them; understanding the risks that they take and homing in on the respect that we think went missed post the financial crisis for entrepreneurs and business powers. We want to go on a journey with them.

If there is a K-shaped recovery – and some economists are pointing to that – there are going to be businesses that will do better. We will align ourselves to businesses in the sectors doing well. and we have to support the businesses that we have who are experiencing the opposite effect.

I think we need to continue to expand. We could look at our model across Europe. That is one option. We need to scale the business in Ireland and become more relevant as a business lender. There may be opportunities once the pandemic becomes less of a focus that we will start to see more mergers and acquisitions happening in the Irish market.

We are coming through it. We feel strong and very positive towards the Irish market. We have put the digital pieces in place to give us that fintech option without losing the personal touch. We think we can take advantage of the fact that business owners are no longer wedded to their local bank, that they now see it is really important to have a choice.

That is what we are offering. We are not trying to take over the world or to become the largest lender or anything like that. We want to offer choice.

Before the financial crisis, you had ICC, you had ACC, you had Bank of Scotland, you had Anglo, you had a number of different providers. The big mistake was that everyone went down the property route, but I don’t think that will happen again. 


Investec is the sponsor of The Currency’s business podcast series. It provides a range of solutions, including specialist FX, Treasury, Corporate Finance and Lending services. To find out more about how Investec can help your business, click here.

Investec Europe Limited trading as Investec Europe is regulated by the Central Bank of Ireland. Investec Private Finance Ireland Limited trading as Investec is regulated by the Central Bank of Ireland.