HMRC changes set to boost growth in P2P business lending
TIGHTER credit terms and new insolvency rules will lead to a spike in peer-to-peer business lending next year, Purbeck Insurance Services has predicted.
As part of its trend report for the year ahead, Purbeck – the UK’s only dedicated personal guarantee insurance solution – has highlighted P2P as having “a valuable role” to play in providing access to credit for small businesses. The company added that it expects P2P lending to full the funding gaps for underserved business, as well as helping to launch many new start-ups in the year ahead.
Todd Davison, managing director at Purbeck Insurance Services, revealed out that in 2019, 25 per cent of directors who secured personal guarantee insurance from Purbeck in the past year, had done so for a loan personal guarantee backed loan with a P2P lender.
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He also pointed towards the new regulations around insolvency practices, which could also support the growth of P2P lending.
In April 2020, HMRC will become a preferred creditor in business insolvency for some tax debts – a development which may lead traditional lenders to consider their risk exposures. Any tightening in the mainstream credit market could result in an uptick of support for P2P services.
“Small businesses have reason to be optimistic for the year ahead,” said Davison.
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“While new insolvency rules could make traditional lenders more risk averse, technology has made the process of securing credit much more swift and there is now a good choice of alternative finance options that we know small businesses are exploiting.
“With innovations such as personal guarantee insurance to consider, owners and directors can build their business without putting their personal assets at risk if things go wrong.”
Purbeck also predicted that technology will continue to drive innovation in the year ahead, and there will be an ongoing reliance on financial intermediaries such as accountants and finance brokers.
Collaboration between banks, alternative finance providers and policymakers is also expected to ramp up in 2020, particularly if the UK leaves the EU without a deal.
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