It’s widely known that Covid-19 has brought economic challenges to peer-to-peer lending platforms. However, it has also created a myriad of opportunities, not just for platforms, but for investors too.
Here are just five of the ways in which P2P lenders have benefitted from Covid-19 and the economic lockdown…
- It has given the sector a chance to prove itself
For some investors and financial advisors, the largest barrier to P2P investments is the fact the sector hasn’t yet experienced a full economic cycle, including a downturn.
The Covid-19 induced recession presents the opportunity for the sector to prove its staying power and resilience and so far, it has done just that. Once it has proved it can survive and even thrive in the bad times as well as the good, more advisors and investors may see the sector in a new light.
- Bringing P2P into the mainstream
Many industry stakeholders and platforms have argued that P2P has really started to come to fruition during the crisis, not just by surviving but by playing a role in the economic recovery.
Platforms have been helping borrowers affected by the crisis, either via their own platforms or through the British Business Bank’s coronavirus business interruption loan scheme (CBILS) to provide much needed. So far Funding Circle and Assetz Capital are the only P2P platforms to be approved, but more approvals are expected soon.
For many business owners, this will be their first experience interacting with a P2P platform as a borrower, and platforms are hopeful that they may become repeat borrowers after this crisis has passed.
- Higher interest rates for lenders
P2P lending platforms have continued to produce market-beating returns for the most part, even as the base rate has been reduced to an all-time-low of 0.1 per cent.
Read more: Savings rates reach new all-time low
P2P has outpaced savings without the volatility that stocks and shares bring, making alternative lending one of the more robust and attractive products on the market for yield-seeking investors.
- Increased reliance on technology
P2P lending platforms are fintechs at their core, and they tend to have excellent technology and origination systems. Because of their technology, platforms are well-placed to adapt to working from home without any service interruption. For many investors, this is a crucial benefit during a time of unprecedented uncertainty.
- Chance to help borrower community
As well as focussing on borrowers affected from the pandemic, platforms have also helped essential workers.
Buy2LetCars has always aimed at simplifying the car leasing process by helping key and essential workers who otherwise could not access mainstream leasing companies. With the health crisis, this has now been more important than ever.
And just last month JustUs opened to loan applications from key workers while at the end of March Crowd2Fund announced it will offer NHS employees zero investor fees for six weeks.
The P2P sector is known for its efficiency and innovation and this crisis has given platforms the chance to truly show what they can do when the chips are down.