Assetz Capital chief executive Stuart Law said that he predicted the economic downturn earlier in the year and took measures to shore up his peer-to-peer lending platform.
Law (pictured) told Peer2Peer Finance News that he saw the effect of the pandemic in China in February. He spoke to a friend who has factories there and said they could no longer ship goods to the rest of the world. Law predicted that the economic effect would spread elsewhere, although he did not anticipate the scale of the impact.
As a result, he said Assetz paused lending temporarily, brought its average loan-to-values down to below 65 per cent, prioritised investor protection and worked with borrowers offering forbearance.
“It was the economic impact I saw in February which I knew 100 per cent would hit the UK, but just didn’t know how badly, that became clear in March,” said Law.
“It was huge and impacted the whole world.
“We had some understanding of what we’d do in the next recession and cycle. I suppose the only problem was we thought it would be modest compared to the last financial crisis, but it looks set to be worse.
“The crisis is unfortunate on a health basis but on the economy side we can very much help and that’s where been developing the business over the past couple of months and now everything is being put into place.”
At the beginning of May, Assetz announced that it had been approved by the British Business Bank to participate in the coronavirus business interruption loan scheme (CBILS), which offers loans with a government guarantee of 80 per cent of the value to support small- and medium-sized enterprises (SMEs) impacted by Covid-19.
Law said Assetz will start to deliver the scheme later this month and expects his platform to gain market share as a result. He said Assetz will serve new borrowers as well as existing customers with CBILS.
Before starting to fund CBILS loans, Assetz has been partnering with institutional lenders for the scheme, Law said.
The firm has also launched its latest equity funding round, where it aims to raise £500,000 through private investors and to have this matched by the government under its future fund.