Folk2Folk has exceeded its own financial guidance after breaking the £1m profit barrier for the first time, despite describing 2020 as a challenging year.
The rural peer-to-peer lender’s annual report for the 12 months to January 2021 showed the platform posted a profit of £1.1m.
That is up 460 per cent from £198,043 the previous year and came as the lender surpassed £400m of lending during the year.
Folk2Folk, which is in the process of repositioning itself as a national marketplace lender, said in March that it was on course to hit £1m profit for 2020.
The platform was also accredited under the coronavirus business interruption loan scheme but Folk2Folk director Louis Mathers said in the report that it was unable to fund finance on competitive terms.
Mathers described 2020 as a “challenging year.”
“It was our intent to keep our doors open during this difficult time and maintain stability and confidence with our borrowers and investors,” he said.
He said the platform’s investor reinvestment rate fell at the start of the pandemic in March 2020 from 90 per cent to 60 per cent but has since increased.
Fewer than 10 borrowers sought forbearance and default rates are below industry standards, Mathers said.
He said accessing institutional funding continues to be a challenge that “needs to be resolved in the short term” to meet Folk2Folk’s growth goals.
“Most institutional funding has been gravitating towards government-backed loans, however, it is our view that this position will change over the coming months,” Mathers said.
“We bucked the trend in 2020 in terms of profitability and came in more or less on target, despite the obstacles.
“2021 is starting with great optimism and the initial trading is looking promising.”
Folk2Folk revealed in March that it was seeking to attract between £50m and £100m in institutional investment as it shifts its lender base towards a hybrid model of both retail and institutional investors.
As a result, the company will no longer identify as a P2P lending platform, but will describe itself as a marketplace lender instead.