Business appetite for P2P loans has fallen, says NACFB chair
UK BUSINESSES are using less peer-to-peer funding as awareness of the sector has “started to plateau”, according to the head of the National Association of Commercial Finance Brokers (NACFB).
Data from the trade body found that business financing from P2P lenders and other alternative funders fell by 14.4 per cent between June 2015 and June 2016. NACFB chairman Paul Goodman told Peer-to-Peer Finance News that there had not been a noticeable uptick in this area over the past six months.
“The funders in the space have been inwardly focused over the last six months as they’ve been looking to attain their FCA authorisation – which seems like the right strategy to give longevity to the sector,” he said. “All funders in the area have spent an inordinate amount of money on their marketing machines in the last couple of years, meaning that market awareness of the sector has started to plateau.
“That is not to say we are at saturation point – the sector needs to develop and build its marketing strategy as any other business would in a developmental phase.”
*This figure represents P2P lenders, alternative funders, pension and cashflow funders
While the appetite for alternative finance has waned, bridging finance saw a huge increase of 74.6 per cent year on year, while development finance rose by 49.8 per cent and invoice finance saw a 22.8 per cent increase.
Goodman added that while alternative finance is still a good addition to the broker’s kit bag, it should only be used if appropriate to the customer’s needs.
“It seems unwise to have it as the fall-back option just because their bank has said no – as we have seen happening elsewhere in the market,” he said. “The providers are continually adapting to market conditions and developing new products, which is healthy for the market as a whole.”