Crowd for Angels has applied to the British Business Bank to become an accredited lender for the coronavirus business interruption loan scheme (CBILS), arguing that it can provide funding to smaller firms underserved by banks.
It it is successful in its application for CBILS, the crowdfunding platform is planning to provide loans of between £75,000 and a maximum of £250,000 for small and medium-enterprises (SMEs), usually secured on the fixed asset or floating charge of the company, with no personal guarantee as in accordance with government guidelines.
However, it expects the CBILS loans to be at the smaller end of this range. Andrew Adcock, chief executive of Crowd for Angels, said the platform could provide 80 to 100 loans of around £75,000 in the next 12 months.
CBILS was unveiled as an emergency measure to support SMEs during the pandemic, with the government guaranteeing 80 per cent of the value of each loan.
“Funding needs to reach smaller businesses,” said Adcock.
“It’s good Funding Circle has been approved and let’s hope that sometime next week we get a response from the British Business Bank.
“We focus on the SME sector with companies which have fewer than five employees and we believe it’s one of the areas missed by the larger banks because of the lack of credit and financial history of some of these companies.
“For smaller companies it’s difficult to get finance and this is where we think there’s the market to be assisted with.”
Adcock said that Covid-19 has caused some upheaval in adapting to working from home but added that being a technology company made the switch easier.
He said the platform is in a good position and updating investors regularly, as well as supporting the Save Our Start-ups campaign, alongside other crowdfunding platforms like Simple Crowdfunding.
“I think alternative finance as a whole can provide solutions to current problems we’re facing,” Adcock said.
“I think there’s a great opportunity if the government supports and works with fintech ecosystems like us.”
Adcock has said during this period of uncertainty there has been a slowdown in investors signing up for Crowd for Angels’ Innovative Finance ISA.
“People are unsure and don’t want to commit,” he said.
“Like any investor I am not gung-ho at this time, I’m more cautious, making sure I have enough liquidity before making decisions.
“It’s a case of time will make the market settle.”