Money&Co chief Nicola Horlick (pictured) has said that the platform was lending with caution even before Covid-19, due to concerns of a Brexit-induced economic downturn.
The City superwoman said the peer-to-peer business lender had decided purely to offer secured loans even before the pandemic hit, focussing on music loans and litigation finance.
Money&Co’s music loans are secured on music rights. Its litigation loans are secured on the legal case, with an insurance policy to cover costs if the claimant does not win the case.
“We didn’t know there would be a pandemic, but we thought there would be a very sluggish economy and potentially a recession, so we were already prepared to an extent,” Horlick said.
“For the small- and medium-sized enterprises (SMEs) we’ve already lent to, we’ve extended their loans or made them interest-only. “We do everything we can to help our borrowers but at this moment we don’t want to take on new SME borrowers because of what could happen to their businesses.”
Horlick has argued that a V-shaped recovery will be impossible because many businesses will never reopen.
She said the government needs to be proactive to facilitate a recovery.
“We need to work hard to avoid there being a depression,” Horlick said.
“The government needs to make capital available to start-ups and growing small businesses that have survived. People who build small businesses need to be supported.
“The government should assess where skills shortages are, such as building, plastering and more computer-savvy sectors, and train unemployed people on public finances to fill these roles.”
Horlick added that many businesses will not be able to repay emergency loans, so the government will likely have to convert a lot of debt into equity in these businesses. She said this would need to be managed by an independent group of venture capital specialists.
“It’s going to be an interesting time, but we have to be incredibly proactive,” Horlick said.