THE weak value of the pound could spell good news for the UK’s P2P sector, a leading economist has told Peer-to-Peer Finance News.
Professor Vicky Pryce has predicted a P2P boost as small- and medium-sized enterprises (SMEs) seek to borrow money to fund new growth opportunities.
“For P2P and banks there are some areas of domestic demand that are doing well,” she said. “Exports are going well because of the weak pound so SMEs in that area will probably want the finance and find it easier to get from P2P.”
She added that many firms are cutting back on their investments and hiring in the wake of the Brexit vote, and if the business environment gets any tougher they will have to borrow for capital expansion.
“What everyone is talking about is the inherent risk that hasn’t been realised yet,” said Pryce. “SMEs are quite risky and there is not a lot of lending going to them.”
Most of the UK’s P2P platforms actively lend to SMEs as well as retail clients, allowing businesses to gain access to rates and terms that the banks cannot currently offer.
Earlier this month, Ben Baruch, policy advisor for finance, tax and economy at the Federation of Small Businesses, told Peer-to-Peer Finance News that he had seen a spike in members looking at P2P loans, and a recent study from C2FO found that 18 per cent of US and Europe-based SMEs were already using P2P lending.