How are P2P lenders responding to the coronavirus pandemic?

Peer-to-peer investments may be uncorrelated to the stock market slides caused by the coronavirus uncertainty, but platforms are not immune to the disruption caused by the pandemic.

Here is how P2P lenders are responding to the coronavirus outbreak.

Staffing

Like many business, P2P lenders have followed government advice and are letting staff work from home where possible.

Investors and borrowers can still contact platforms on email and by phone.

RateSetter has said it is focused on servicing Innovative Finance ISA (IFISA) demand despite the coronavirus outbreak.

The P2P lender said that although the pandemic coincides with the busiest time of year, its service levels will not be affected.

Crowd2Fund has warned that investors may experience minor disruptions as its staff are instructed to work from home to reduce the risk of catching coronavirus.

The platform said most team members are now working remotely, and emphasised that it will be doing all it can to protect employees from the virus. This includes additional security measures to protect personal data and new daily routines being set up between team members to ensure smooth operations.

Investor returns

P2P interest rates are unlikely to fall because of stock market uncertainty or the Bank of England’s base rate cut, but lenders have said they are monitoring their credit approach to ensure lenders can still get repaid.

Zopa has said it is monitoring key indicators closely and are set up to react quickly and make changes to our lending approach as and when we need to.

Funding Circle has also said protecting returns is a priority.

Payment holidays

The Financial Conduct Authority (FCA) has recommended banks and regulated firms take a more flexible approach to people struggling to repay loans.

P2P lenders are doing their best to follow suit.

Irish P2P lender Linked Finance has applied an automatic two-month payment break to all loans to hospitality trade and launched a new instant-access loan with no payments for first three months.

Zopa has told borrowers if they have any trouble making repayments, they can ask for a payment freeze, while RateSetter and Funding Circle have urged borrowers to get in touch if they are facing difficulties.

Borrower support

One issue with P2P platforms is that the money on loan isn’t technically theirs, making it harder to grant payment holidays.

Instead, Ablrate has told borrowers affected by the coronavirus outbreak that it will offer assistance in accessing the government support.

Crowd2Fund also said it will be referring distressed businesses to one of the many government schemes offering temporary credit solutions via the British Business Bank (BBB).

Transactions

It is all very well telling investors not to panic, but that can be hard with stock markets tumbling.

P2P lenders have taken steps to ensure their platforms remain liquid and that money can be accessed and lent.

Octopus Choice has stopped all new investments and withdrawals.

Growth Street has initiated a liquidity event on its platform, stopping P2P investors from accessing invested funds.

Meanwhile, RateSetter has notified investors that withdrawals are taking longer due to a spike in demand and Assetz Capital has queued withdrawals for its access accounts.

Platforms such as Ablrate and LandlordInvest have also asked investors not to panic sell on their secondary markets.