The government is being urged to make better use of alternative finance providers such as peer-to-peer lending platforms during the pandemic.
Katrin Herrling (pictured), chief executive of business finance aggregator Funding Xchange, said alternative lenders have been at a disadvantage as they haven’t had the same access to liquidity as banks, due to their exclusion from the Bank of England’s term funding scheme.
“A large proportion of small businesses aren’t funded by the banks,” she said. “I would support creating stronger balance sheets for businesses such as debt forgiveness that will help their ability to survive and make them more attractive to alternative lenders. “It would be useful if there was a form of liquidity support for the alternative finance sector as well, to help it develop and provide competitive lending solutions to businesses now that the government schemes are being withdrawn.”
Herrling’s comments come as Peer2Peer Finance News has been calling for the government to recognise the vital role peer-to-peer lending platforms can play in supporting the country’s small businesses. The Treasury has extended the application deadline for four of its government support schemes until 30 November, and lenders will have until the end of the year to consider and process loans.
Herrling also said that the pandemic has helped speed up the adoption of digital technology in lending. “Initially it was about bridging the gap to reach those who were displaced,” she said. “Now it is about using technology to assess a customer’s ability to repay and understand cashflow issues in real time.”