Peer2Peer Finance News has issued a rallying call for the industry to be utilised amid the coronavirus pandemic, as peer-to-peer lenders urge the government to recognise the vital role platforms can play in deploying much needed funds to small- and medium-sized enterprises (SMEs) and housebuilders.
The ongoing pandemic and prospect of a prolonged lockdown has put greater urgency on this issue, with many small firms and housebuilders struggling to stay afloat as the economy nosedives.
Peer2Peer Finance News is therefore calling on the government to back our industry and use P2P platforms more within the coronavirus business interruption loan scheme (CBILS), and other state and Bank of England schemes, to support the UK economy. Several P2P lenders have applied for accreditation for CBILS but Funding Circle is the only such firm that has been approved.
Platform bosses have urged the British Business Bank to speed up the accreditation process for CBILS, arguing that their technology offerings and good customer service make the industry better placed than banks to provide this funding as well as state support through other schemes. There have also been calls for the Bank of England’s Term Funding Scheme – a measure to channel funds to SMEs at cheaper rates – to be opened up to non-bank lenders. Stephen Haddrill, director general of the Finance & Leasing Association (FLA), last month called for the scheme to be extended “as a matter of urgency”.
A RateSetter spokesperson has also called for the government to give P2P platforms access to the Term Funding Scheme, adding that while the government is listening, it tends to look to the banks first, “which can be behind the times in certain areas.”
The Bank of England declined to comment on extending the Term Funding Scheme to non-bank lenders. The scheme is currently only open to members of the Sterling Monetary Framework (SMF).
However, it is understood that the Bank will be consulting late in the year about eligibility for some aspects of the SMF and P2P lenders are encouraged to get in touch if they have views on how they might be able to support the scheme.
City superwoman Nicola Horlick, founder of Money&Co, has backed our campaign and said more platforms should be accredited under CBILS. “The emphasis seems to be on banks,” she told Peer2Peer Finance News.
“We have capital to deploy and if there was a government guarantee we could divert it to helping viable small businesses. “We would only want to lend to viable businesses that have a real future after the pandemic.”
Read more: CBILS approvals by banks remain below 50pc
Mike Bristow, chief executive of P2P property lender CrowdProperty, said the online lending sector has built a “highly efficient and highly effective distribution and underwriting/ credit management infrastructure to lend to consumers, small businesses and the property sector.”
“This is a real opportunity for the government to leverage this fintech innovation for the good of the economy, especially given the strategic, world-leading position of the alternative finance and fintech sectors in the UK,” he added. “Housebuilding is critical for the economy – both right now given that it can be economically productive as the building and construction sector is sanctioned to continue if it can do so safely, and as we inevitably look to build our way out of this major economic challenge.”#
This was echoed by Brian Bartaby, chief executive of Proplend. “P2P lending platforms were designed to deploy funds where the banks struggled, this is exactly what they were designed for,” he said. “The government has actively encouraged financial services innovation, the Financial Conduct Authority has created a robust regulatory framework, the UK is home to some of the most inventive fintechs in the world, it’s now time for the government to mobilise them.”
A British Business Bank spokesperson said the government-backed lender supports diversity and choice for businesses and is very supportive of the P2P lending industry’s growth.
The spokesperson also said that the bank is fast-tracking the accreditation process for CBILS and is keen to get more lenders approved.
“Amongst other British Business Bank programmes, marketplace lenders can apply for the Bank’s ENABLE Guarantee Scheme, which is designed to encourage additional lending to SMEs and has previously been used to support smaller housebuilders in finding the finance they need,” the spokesperson said. “CBILS provides financial support to smaller businesses in virtually all sectors that are losing revenue and seeing their cashflow disrupted, as a result of the coronavirus outbreak, including those in the housebuilding sector.”