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In a previous article, we discussed four ways in which the government could stimulate the economy and protect jobs. One such way was to extend the government’s Coronavirus Business Interruption Loan Scheme to peer-to-peer (P2P) sites, all of which have witnessed significant growth in the last decade.
12 years after the first loan was originated on the Zopa platform, peer-to-peer lending has grown to a £9.6bn lending market.
But NextFin has learnt that P2P lenders JustUs and Assetz Capital have applied to the Scheme (CBILS), with Assetz Capital stating it already has confirmation from two banks who intend to channel funds through it.
This is in contrast to last week, when the British Business Bank announced the opening of new applications. The current application guidance to become an accredited BBB lender under the scheme is loosely based on enterprise guarantee loans which exclude P2P lenders.
Last week, the British Business Bank stated: “Our priority, at this stage, is to implement the scheme through existing Enterprise Finance Guarantee accredited lenders.”
Responding to the apparent exclusion, the Association of Alternative Business Finance wrote to Chancellor Rishi Sunak on March 24 calling for the government to “immediately include” its members. According to its Chairman John Davies: “without access to the Guarantee Scheme… new alternative lenders will simply not have the ability to lend.”
He added: “Failure to extend the new Guaranteed Loan Scheme to the very lenders who have backed hundreds of thousands of businesses that the high street banks have rejected will result in those businesses not now being supported with their urgent cash flow requirements, with the result that many will fail.”
Application forms for the Loan included eligibility criteria based on the Enterprise Finance Scheme, which excluded P2P lenders. However, the forms have been updated, with criteria that appears to have been expanded to take into account P2P lenders.
The current documents do not mention this exclusion and forms have now been sent out to a wider selection of lenders, including P2P platforms.
As the economic landscape shifts, small businesses must have access to fast and flexible funding. This is where the P2P market has stepped in. Over the last 8 years, it has witnessed extensive growth with platforms delivering quick and efficient lending processes.
This latest news is undoubtedly a positive step for P2P lenders. With the scope of the scheme expanded, we could well see large amounts of capital invested in enterprise via P2P platforms.
We’ve argued before that, if the government now provides lenders with a guarantee of 80% on each loan to give investors the confidence to invest in P2P platforms, they could continue to lend to small-to-medium-sized enterprises, which could save jobs and ultimately the economy.
Authors: Sacha Bright & Oliver Murphy
Disclaimer
To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed. Nextfin is not liable for any damages arising from the use of or inability to use this site or any material contained in it, or from any action taken as a result of using the site.
Tagged: News Peer-to-Peer
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