Assetz Capital has confirmed that it is tapering off its lender fee from February 2021 and expects new retail lending to restart fully in a few months.
The peer-to-peer business lender introduced the temporary lender fee of 0.9 per cent per annum in May 2020, after experiencing a substantial drop in its income as a result of the pandemic.
It has been reviewed each month since then, but chief executive Stuart Law (pictured) has previously said that it would not be removed until lending under the coronavirus business interruption loan scheme (CBILS) and other lending earnings have risen to more normal levels again.
“We are expecting that new retail lending will restart fully in a few months and that our government backed CBILS lending will also be a great success,” said Law in an emailed customer update on Friday.
“On that basis and assuming a sensible Brexit outcome is achieved, we are working to have a staged reduction in the temporary lender fee over a period of four months, starting in February we’ll reduce it by 25 per cent, 50 per cent in March, 75 per cent in April and 100 per cent reduction down to zero again in May onwards.”
Assetz Capital was accredited to deliver CBILS in May, which provides government-backed loans to small businesses struggling during the pandemic, through approved lenders.
CBILS loans can only be funded by institutional investors, but Law said that Assetz Capital has been able to use CBILS to fund the remaining tranches of a number of retail development loans, “further improving the health of the retail loan book by allowing those developments to continue to receive vital funding”.
Law said that he expects to see the volume of new retail lending through his platform to grow next year, although borrower and lender interest rates are likely to stay the same.
“Access Account interest rates might rise slightly, but any increase in borrower rates will contribute towards the provision funds, improving protection of investor capital,” he said.
£29.9m of income has been earned by Assetz Capital’s investors this year, despite challenging conditions.
Law also outlined plans to improve liquidity for investors, at a time of increased redemption requests.
“As a result of now being able to fund the remaining tranches of some of the existing development loans through the CBILS scheme and also from cash from redemptions of other loans, we have reduced the future loan funding requirements of the Access Accounts,” he said.
“Therefore, in January, when this process is expected to have been finalised, we will also begin to distribute a greater proportion of loan redemptions from the Access Account cash balance to further speed up withdrawals. With over £30m of Access Account withdrawals fulfilled already, and the marketplace discount today being around two per cent or so, we are making progress towards returning to normal market conditions.”