Peer-to-peer platforms should be approved to offer the government’s new Bounce Back Loan Scheme (BBLS) for small businesses hit by Covid-19, industry sources have claimed.
The scheme, which provides loans of up to £50,000 with a 100 per cent guarantee, for small businesses, opened for applications today.
This followed calls for the government to raise its guarantee from 80 per cent in the Coronavirus Business Interruption Loan Scheme (CBILS), to ensure a faster roll-out of funds to struggling businesses.
“The problem is a there’s a huge number of small businesses in this country, so if they all go online the banks’ systems may crash,” said Nicola Horlick, chief executive of Money&Co.
“The government needs to come up with a better idea of how to get the money to these businesses quickly. They can’t wait any longer. If you run a restaurant or a bar how are you meant to survive?
“Allowing P2P platforms to offer the BBLS would be a perfectly good sensible thing to do.
“We don’t do loans of £50,000 but Funding Circle does and maybe its systems would prove better than the banks.”
This coincides with Peer2Peer Finance News’s ‘Back Our Industry’ campaign, which calls for the P2P industry to be better utilised during the Covid-19 pandemic.
Mike Bristow, co-founder and chief executive of CrowdProperty, said that platforms could offer the scheme very effectively, but they’d need to come up with the capital for the loans.
“P2P platforms could offer it because they have very good technology systems to cope with high levels of demand and would be able to process applications very efficiently and effectively,” he said.
“But the problem is where would their capital come from and is there a fair margin in this for the platforms?
“In this way banks have a competitive advantage over platforms because they can access Bank of England liquidity whereas platforms can’t.”
P2P platforms have previously praised the BBLS for helping smaller businesses during this time as well as voicing criticism about the scheme.
Some have claimed that it could threaten P2P lenders that offer business loans worth £50,000 or less, because they won’t be able to compete with the government’s 100 per cent guarantee.