App aims to arrange loans from family and friends on formal basis

An app that uses friends and family to borrow and lend money rather than banks or pay-day loan companies is the subject of a new crowdfunding campaign.

Flender said it wants to bring an added element of trust to money lending by enabling users of the service to source it from their social network accounts - engaging with contacts in peer-to-peer lending rather than using a loan company.

The people behind the app, who are currently seeking funding via crowdfunding site Seedrs, said that while the idea of peer-to-peer lending already exists, they want the app to become the first to "formalise and automate" the process.

The developers said the app will allow users to set their own interest rates when entering into loan deals, with both sides agreeing on the terms before proceeding.

The firm said this formal aspect will help to reduce or even remove any potential awkwardness over repayment between users.

Flender said the app is aimed at businesses as well as regular consumers, and claimed it could be used as a tool for small companies to build trust with customers. The service has already been registered with the Financial Conduct Authority's (FCA) Consumer Credit Register.

Kristjan Koik, managing director of Flender, said: "The social lending market among friends, family and business connections has never been formalised, which is crazy when you consider that this is a market worth just under £3 billion a year.

"Asking people you know for money - and lending to them - is awkward and is certainly an unreliable means of finance. Whether it's to grow your business, fund further study, or to fund home improvements, Flender will let you borrow from and lend reliably and easily via any device.

"For individuals, there is satisfaction of helping others while earning more interest than a standard savings account, while businesses can have access to funds faster and at their preferred rate. Everyone wins."