What’s next for our ‘Back Our Industry’ campaign?
When Peer2Peer Finance News launched the ‘Back Our Industry’ campaign at the start of May, the aim was to encourage the government to include more peer-to-peer lending platforms and alternative lenders in government-backed lending schemes.
Two months on, and five alternative lenders have now been accredited by the British Business Bank (BBB) to offer the coronavirus business interruption loan scheme (CBILS), and one platform – Funding Circle – has been given the green light to offer bounce back loans.
Already, P2P lenders have made their mark. It was recently revealed that Funding Circle has represented a 16 per cent share of the number of CBILS loans approved since the platform joined the scheme in April. By the end of June, Funding Circle had approved approximately £460m of applications through the CBILS programme and originated approximately £300m.
Assetz Capital was the second P2P lending platform to be authorised to offer CBILS loans, although the amount that the platform has loaned under the scheme has yet to be released. Meanwhile, Folk2Folk and LendingCrowd were officially authorised by the BBB last week, and Crowd2Fund has been approved to offer CBILS products, but it is still finalising its institutional credit lines.
Within the wider alternative funding space, both ThinCats and MarketFinance have also been accredited by the BBB to offer CBILS loans, while Nucleus Commercial Finance is set to launch its CBILS offering next week.
This is a huge step forward for the P2P sector, and for alternative lending in general. The inclusion of P2P lending platforms in government-backed lending schemes raises the profile of the sector and gives accredited platforms a stamp of approval in the eyes of potential borrowers and investors.
Speaking to Peer2Peer Finance News, a spokesperson for the BBB reaffirmed its support for alternative lenders and said that more P2P lending platforms and alternative lenders could be accredited to offer CBILS loans soon.
“The British Business Bank has a strong track record in supporting fintech and alternative lenders,” the BBB spokesperson said.
“At end of December 2019, 92.6 per cent of our funding was being distributed through smaller banks, non-bank lenders, alternative lenders and equity providers, demonstrating how important we believe alternatives to traditional lending to be in providing diversity and choice for smaller businesses.
“It is unsurprising, therefore, to see that many alternative providers have been successful in delivering schemes forming part of the government’s Covid-19 response.
“We are continuing to accredit new lenders, and many of those already announced have been alternative and fintech-based providers. We continue to consider applications from a wide range of lenders for these and other schemes from across the finance market.”
But while the government’s growing acceptance of P2P lenders is certainly positive, there is a long way still to go.
The ‘Back Our Industry’ campaign does not begin and end with coronavirus lending schemes. Peer2Peer Finance News believes that the government can go much further, by making P2P lending platforms a consistent element of any state-backed lending schemes.
The success of the P2P CBILS offerings highlights the very real need for accessible funding options for housebuilders and business owners. In many cases, P2P lending platforms can offer more competitive rates to borrowers, while also targeting inflation-beating returns to investors. What’s more, as fintech brands, these platforms have the technology to perform quick and rigorous credit checks and enhanced due diligence, meaning that prospective borrowers don’t have to endure a lengthy wait before their application is accepted.
This type of efficient, affordable funding is only going to become more necessary as the economy starts to recover from the effects of the pandemic and the months-long lockdown.
It has never been more important to offer borrowers a choice.
Innovate Finance is currently representing P2P lending platforms in talks about non-bank lenders receiving access to cheap funding from the Bank of England, and this would help to secure P2P lending as a viable – and often preferable – alternative to big banks.
Until P2P lending platforms are recognised for the huge value that they add to the wider financial services sector, Peer2Peer Finance News will continue to lobby for the government to back our industry – for the benefit of borrowers, lenders, and the overall economy.