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What Government Schemes Are Currently Open To P2P Lenders?

Posted 3 years ago

What Government Schemes Are Currently Open To P2P Lenders?
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It's been almost three months since the Chancellor unveiled the Coronavirus Business Interruption Loan Scheme (CBILS) - the first of a range of schemes designed to support small businesses struggling to survive the economic impact of coronavirus.

Since that time, NextFin, along with others has campaigned for the inclusion of peer-to-peer (P2P) lenders within the schemes to ensure that businesses can receive the maximum amount of support.

In this piece, we explore which SME funding schemes are open to P2P lenders.


So far, Funding Circle, Assetz Capital and MarketFinance are the only P2P lenders accredited to prove loans under the Coronavirus Business Interruption Loan Scheme. Funding Circle is currently preparing to provide Bounce Back Loans as well.

The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to smaller businesses (SMEs) across the UK that are losing revenue and seeing their cash flow disrupted, as a result of the COVID-19 outbreak.

The Bounce Back Loan Scheme provides loans of up to £50,000 with a 100 percent guarantee, for small businesses.

NextFin believes the government is making the right choice in beginning to recognise P2P lenders by allowing some of them to offer CBILS Loans which will encourage investors into this marketplace.

But as Sacha Bright, CEO of NextFin said: “It’s a very elitist strategy, as only the biggest P2P lenders seem to be getting the support.”

ENABLE Guarantee Scheme

ENABLE guarantee is a scheme administered by the British Business Bank that encourages participating banks and other financial institutions to lend more to small and medium-sized enterprises by either addressing the high capital consumption associated with such lending for banks or by reducing the cost of funding for other financial institutions in order to increase the supply and diversity of finance to SMEs.

Available to some P2P lenders, this scheme was extended last year to allow asset-based lending providers to sign up and offer support to smaller housebuilders and SMEs.

“I am aware that Funding Circle and some of the larger P2P sites have had help from the British Business Bank,” Sacha Bright said. 

“But the P2P community is vast and is regulated by the Financial Conduct Authority (FCA). The British Business Bank (BBB) needs to consider smaller lenders to create a level playing field, rather than just focusing on the upper echelons of the sector.”

Term Funding Scheme

Meanwhile, the Bank of England oversees the Term Funding Scheme for SMEs, which is currently not open to P2P lenders. The Term Funding Scheme was originally launched in 2016, but a modified version was unveiled earlier this year, with the aim of channelling up to £100bn of low-cost funding to SMEs in need.

The head of a lending trade body has urged the government to open up the Term Funding Scheme for small- and medium-sized enterprises (SMEs) to non-banks as a matter of urgency. 

Stephen Haddrill, director general of the Finance & Leasing Association (FLA), said that the non-bank lending sector relies heavily on capital markets and bank funding, two sources of finance which are currently closed, so these lenders will not be able to provide new lending as well as forbearance.

He said that opening up the Term Funding Scheme to non-bank lenders will help remedy the situation.

Sacha Bright added: “In the last financial crash the banks overspent and abused the leverage system. It is good that the Bank of England recognises that the economy needs banks to have capital to lend.

“But once again, the government is focusing on the elite lenders, which obviously have the most impact on the economy.

“However, in doing so, they create an unlevel playing field, and far greater attention needs to be paid to the smaller lenders. The P2P market, which delivers interest payments directly to retail investors, struggles with cash flow and could do with a facility provided to them by the Bank of England such as the Term Funding Scheme.

“Focusing on smaller, alternative lenders not only delivers choice for the consumer but introduces competition and eradicates complacency amongst the banking elite, not to mention providing an equal playing field for all lenders.”

Author: Sacha Bright & Oliver Murphy


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.

Tagged: News CBILS Covid-19 Funding Circle Assetz Capital Market Finance P2P

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