Former Dragons’ Den investor and entrepreneur Piers Linney has said that the peer-to-peer lending sector has an “enormous opportunity” to help businesses create wealth, which will in turn level up the economy.
Linney (pictured) said that while serving on the board at the British Business Bank, he learned that many small companies do not understand their finance options.
Speaking at the P2P Investing Summit, a virtual event hosted by Peer2Peer Finance News and AngelNews, Linney said that access to finance should be democratised and that fintech and P2P platforms can help with this.
“Access to capital is the biggest blocker to people building businesses and creating wealth,” said Linney.
“You can talk about levelling up but the biggest way of levelling up is wealth creation and that’s by building businesses and employing people and you need finance to do that.
“Access to finance is key to growth, access to finance should not be limited to postcodes, where you were born or what your parents do or what you know, it’s just nonsense. Democratisation of access to finance is really important.
“That’s what decentralised finance does and to some extent P2P can do. It’s about using technology in P2P to lower the barriers to find that gap in the middle where you’re going to play and widening it through the use of technology and understanding and managing the risk.
“The opportunity is far bigger than the supply of products. What I learned at the BBB is that small companies do not understand their finance options. It’s about having innovation and supply and you have to work really hard, educating these business owners on opportunities of raising money.
“They need capital, and the traditional finance world is not delivering the goods. During Covid when there was some government guarantee behind it very quickly a lot of money was put to work, that’s coming to an end and furlough has ended.
“You have to use technology to reduce the barriers to entry, to understand the risks so you can put money to work in places where traditional players cannot and that’s your competitive advantage. Your opportunity and your market – P2P – is enormous.”
Linney also suggested that the government should create a tax break scheme similar to the Enterprise Investment Scheme (EIS) for debt finance.
Read more: What IFAs want from P2P platforms
“EIS is a great thing with equity, is there a similar thing to do in debt? It’s still a very important source of finance for lots of business,” he said.
“Is there some kind of scheme like that where if you do put money in through a P2P platform you do get some kind of a tax break of your income tax? The ability for EIS for debt would be huge.”