Forest of Dean District Council has become the latest institutional investor to commit to back peer-to-peer loans through Folk2Folk.
It is the second local authority registered with the platform after a partnership was launched with Cheltenham Borough Council last year.
Through this partnership, the council will contribute capital to fund loans for businesses in the Forest of Dean area who are unable to access finance via the banks.
By receiving a monthly interest rate in return, the council will also be building up its public cash reserves.
“Our unique local lending model means we’re the perfect investment vehicle for councils. By investing via our platform, the council will be using their cash reserves to lend to local businesses, enabling them to access the finance they might need to as they emerge from the pandemic lock down,” Roy Warren (pictured), managing director of Folk2Folk, said.
”In general, we’re seeing businesses seeking loans to invest in the adaptation of their business.
“Re-opening in a new operating environment and remaining competitive by diversifying into new products and services comes at a cost. It’s a good thing to see local authorities helping their constituents in this way, by investing their funds.”
Councillor Richard Leppington, cabinet member for finance, said the partnership would help support local businesses.
“The economic recovery following Covid-19 requires local authorities to dig deep and support their local businesses as best they can,” he said.
“One of the ways we can do this is by making funding available to our local businesses over the short and medium term, and we’re excited to be working with Folk2Folk to deliver this.”