A Growth Street borrower action group has been assembled to help businesses who have been asked to repay loans in full after the firm exited the peer-to-peer lending space.
Earlier this month, business lender Growth Street announced that it was closing its platform to retail investors, in favour of institutional funding. It has recalled its loanbook, asking borrowers to either pay their loans in full or seek refinancing.
Business finance specialist Rangewell, who founded the action group, analysed Growth Street’s debentures. It learned that more than half (51 per cent) of borrowers being asked to repay Growth Street loans do not have a relationship with another lender.
This has led to concerns that many borrowers may be unable to refinance their loans in an affordable manner, particularly in the current economic climate.
Rangewell’s analysis found that the average Growth Street borrower is using 80 per cent of their agreed facility, and has approximately £148,122 of current borrowing.
The worst affected areas are in the North East of England and Yorkshire, where 80 per cent of borrowers are without a back-up facility.
“I’ve spent the lockdown helping hundreds of businesses find finance,” said Paolo Lepore, who is heading up Rangewell’s project to help Growth Street clients find an alternative lender. “I can tell you, it’s not been easy. Growth Street’s clients will need time to find appropriate alternative lenders – that’s why Rangewell have set up the Growth Street Borrower Action Group.
“In some cases Growth Street borrowers may be eligible for the CBIL scheme – but borrowers need to think carefully about which lenders they approach.
“It won’t be a case that Growth Street’s clients will be able to simply just move to another lender en masse as there is no direct match to what Growth Street offered but also because of the range of sectors that are affected by Growth Street’s closure.
“Rangewell are already working with a number of Growth Street borrowers and, although it’s not going to be easy, we’ve had a good response from our lender panel to date – we’ve spoken to over 15 lenders from the high street banks to niche lenders who have expressed interest in the proposals we’ve discussed to date.”