Could local councils play a bigger role in P2P funding?

Most institutional support for peer-to-peer lenders may come from government-backed or private sector banks, but local authorities are playing an increasing role.

Several partnerships between councils and P2P platforms have cropped up in recent years as local authorities look to fund projects amid tight budgets.

Abundance last week revealed its first Community Municipal Investment product that will be issued by West Berkshire Council through the crowd bonds platform.

Further details are still due to be released.

It will allow the local authority to finance green infrastructure projects alongside retail investors.

The first projects to be funded will be installing rooftop solar panels on a building at Greenham Common, on local schools, and at the council’s office in Market Street, Newbury.

Abundance has previously said it is in talks with Leeds City and Warrington Councils about similar initiatives.

There are plenty of ways local authorities can work with P2P lenders.

Herefordshire Council launched a partnership with Funding Circle in 2014 to lend £50,000 to local businesses through the platform.

The agreement ended in January 2017.

Rebuildingsociety secured an agreement with Leeds City Council in 2018 whereby the local authority funds loans through its platform.

The council reviewed business loan requests from companies with an LS postcode prefix, considered the industry and location of the company, and contributed to the loan amounts required by suitable applicants.

More recently, Folk2Folk received funding for loans from Cheltenham Borough Council last year and said it has more local authority partnerships lined up.

P2P lenders may be focusing on getting central government and the Treasury to let platforms help facilitate financial support for coronavirus-hit firms, but it could well be that some of the funding solutions can be found more locally with councils wanting to fund causes closer to home.