JustUs founder Lee Birkett is writing to ministers to urge the government to add a guarantee to his Small Business Interruption Loan Service (SBILS).
SBILS, which opened for applications last month, is aimed at businesses that missed funding under the coronavirus business interruption loan scheme (CBILS).
Firms create an account on the Moneybrain app, a sister brand of JustUs, list their business and then raise money through crowdfunding, which the company starts repaying a year later.
Birkett said he wants to launch an Innovative Finance ISA (IFISA) for SBILS, which would allow people to lend tax free, and is calling for the government to provide a one per cent guarantee in this IFISA.
Birkett called this the SBILS IFISA guarantee and said it would provide something JustUs can claim on in the event of a default, similar to how the guarantees work in the bounce back loan scheme, whilst providing a tax-free opportunity for people to invest in a business’s recovery.
“There’s £800bn worth of savings in UK banks earning nothing, which is just used to prop up the banking framework,” he said.
“But the banking framework isn’t working and fintechs should be utilised much more.”
Birkett said SBILS and an evolution of the future fund should provide the funding to mitigate a second wave of Covid-19.
The future fund launched in late May, offering convertible loans ranging from £125,000 to £5m from the government, subject to at least equal match funding from private investors.