JustUs suspends secondary market as it awaits coronavirus loan scheme clarity
JustUs has suspended its secondary market as it awaits clarity on the coronavirus business interruption loans scheme.
It comes as Lee Birkett, founder of the peer-to-peer lender, accuses the government of selling small – and medium-sized enterprises (SMEs) a ‘red herring’ after it emerged that banks may be applying their own rules to the scheme.
Barclays is reported to be insisting on personal guarantees across the whole loan despite 80 per cent of it being underwritten by the government.
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“With the current uncertainty surrounding SMEs’ chances to recover, the wider economic consequences will be so severe for unemployment and the nations future economic wellbeing, we feel it is prudent and fair to protect all our investors interests by pausing our secondary market trading for 14 days until the SME situation is resolved,” he said.
“I am cautiously optimistic that a workable government coronavirus loan package will be put into place and we can re-commence secondary market trading.”
Birkett said in a note to investors that there have been no liquidity issues on the platform so far.
“Since the basics of the scheme were announced, Barclays have advised me this that they will only offer any business an application to this scheme, if the directors provide personal guarantees and a debenture on the companies assets for the full £250,000, so not unsecured it appears,” he said.
“The government has sold us a red herring with its 80 per cent, which only comes into play to cover the bank’s losses after they call on the business owners personal and company assets if the company fails in the returning 12 months.
“In this climate no sane person would agree to that.”
Read more: P2P lenders seeking clarity on coronavirus loans