Which government-backed SME funding schemes are open to P2P lenders?
There are a number of government-backed channels to support small- and medium-sized enterprises (SMEs) and housebuilders. Some are already open to peer-to-peer lenders, and some are facing mounting pressure to extend their eligibility criteria.
The British Business Bank (BBB) works with a vast range of lenders, including a number of P2P platforms, in a number of ways. As well as direct funding lines, it also offers several schemes which P2P lenders can apply for.
The state development lender’s latest measures to support SMEs include the coronavirus business interruption loan scheme (CBILS) and the bounce back loan (BBL) scheme.
CBILS provides an 80 per cent government guarantee on loans to firms with turnover of up to £45m. P2P lenders are eligible to apply for accreditation to the BBB to participate in CBILS.
The BBL scheme provides business loans of up to £50,000 with a 100 per cent guarantee, for small businesses.
So far, Funding Circle and Assetz Capital are the only P2P lenders accredited to provide coronavirus business interruption loans, and Funding Circle is preparing to provide BBL funding as well.
The coronavirus large business interruption loan scheme (CLBILS) provides loans of up to £25m to firms with an annual turnover of between £45m and £250m, and facilities of up to £50m for those businesses with a turnover of more than £250m.
The BBB also offers the ENABLE Guarantee Scheme. Available to some P2P lenders, this years-old scheme was extended last year to allow asset-based lending providers to sign up and offer support to smaller housebuilders and SMEs.
It is administered by the BBB and like CBILS, lenders are offered a government guarantee to encourage them to lend to as many businesses as possible.
Meanwhile, the Bank of England oversees the Term Funding Scheme for SMEs, which is currently not open to P2P lenders. The Term Funding Scheme was originally launched in 2016, but a modified version was unveiled earlier this year, with the aim of channelling up to £100bn of low-cost funding to SMEs in need.
Data released by the BBB this week found that its emergency support schemes have collectively channelled more than £14bn in loans to more than 300,000 smaller firms.
The state development lender said that this includes 36,000 loans worth over £6bn through CBILS, 268,000 through the BBL scheme worth £8.3bn and 59 loans worth £359m through the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
