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Peer2Peer Finance News | August 18, 2019

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P2PFA data does not reflect ThinCats’ total loanbook

P2PFA data does not reflect ThinCats’ total loanbook
Marc Shoffman

THE LATEST release of Peer-to-Peer Finance Association (P2PFA) data has shone a light on the diversity of P2P lenders’ business models.

Peer2Peer Finance News was informed last month that ThinCats’ overall loanbook is understated by the P2PFA due to the way its loans are allocated to retail and institutional investors.

Most of the P2PFA’s members, including Funding Circle, Landbay and Zopa, let retail and institutional lenders fund loans through their P2P platform.

But ThinCats enables institutional investors to fund some loans separately from its P2P platform.

A spokesperson for the West Midlands-based business lender said the platform operates three strands of lending: retail; a mix of retail and institutional; and purely institutional.

Only the first two strands go through its P2P platform, with the rest of the funds understood to be channelled to businesses via ThinCats’ parent company ESF Capital.

The spokesperson added that this sometimes means institutional investors access different loans than their retail counterparts, but insisted there is no priority given.

Read more: ThinCats secures first funding line from British Business Bank

Only the money coming through its P2P platform is submitted to the P2PFA.

This means the data ThinCats presents to the P2PFA – reported as £310m of lending at the end of 2018 – is lower than its actual overall loanbook as it only includes funding from retail investors.

A P2PFA spokesperson confirmed that its data only contains lending volumes that come directly through P2P platforms.

“Looking at alternative finance through the lens of P2P can actually be quite misleading,” Ravi Anand, managing director of ThinCats, said.

“It is better to think of the sector as comprising a number of lending markets, be that SME, property or consumer; before segmenting further by size of loan. From here, it is possible to gain a truer understanding of the extent to which alternative finance has penetrated a given market.

Read more: ThinCats unveils £100m funding programme for UK SMEs

“In our market, which is small- and medium-sized enterprises (SMEs) looking to borrow between £500,000 and £15m, there is £15bn of known demand, as well as a further £5bn to £10bn of unsatisfied demand.

“Alternative finance could easily be five to 10 per cent of this, or in monetary terms, anywhere up to £2.5bn – and that is only in the SME lending market.”

This article featured in the April issue of Peer2Peer Finance News, now available to read online