Crowd2Fund has seen reduced deal flow, which it claims is a result of the coronavirus business interruption loan scheme (CBILS) distorting the business lending marketplace.
The peer-to-peer business lending platform said the government-backed loan scheme has encouraged institutions to lend to businesses but warned that it has also led to the interest of the loans being artificially discounted.
The lender said the scheme has therefore distorted the cost of credit for small- and medium-sized businesses.
Read more: Crowd2Fund secondary market set for relaunch
“This artificial discounting is having an impact on other lenders, like Crowd2Fund, who are not compatible with the CBILS scheme which is designed to support larger institutions and banks,” Crowd2Fund said in a blog on its website.
“This is the main reason why there is currently reduced deal flow – coupled with a strengthening of our credit policy which means it’s harder to find businesses to list on the platform.”
However, Crowd2Fund said that it is still able to compete because of its flexible revenue loan product which can run alongside any CBILS loan a business takes.
And the distortion to the marketplace is a short-term effect as the scheme is due to end on 31 March, the platform added.
Crowd2Fund said the permanent successor scheme looks set to continue to support the release of institutional capital through a taxpayer guarantee without artificially skewing the price offered to businesses.
Read more: Crowd2Fund reopens for loan applications
“When this new scheme comes into force, private credit markets and platforms that were not on the approved lender list generated by the British Business Bank will once again be able to attract businesses by offering a competitive interest rate,” Crowd2Fund said in the blog.
“Under the current circumstances, it would be unfair for Crowd2Fund to offer a discounted interest rate to investors given the level of risk they would have to undertake.
“Crowd2Fund has an exciting year ahead, as we aim to increase the number of businesses on our platform significantly, and any changes to the government stimulus offered will be reflected in the volume of deals listed.”