expects the successor in February to

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Peer2Peer Finance News has been prepared solely for informational purposes, and is not a solicitation of an offer to buy or sell any peer-to-peer finance product, or any other security, product, service or investment. This publication does not purport to contain all relevant information which you may need to take into account before making a decision on any finance or investment matter. The opinions expressed in this publication do not constitute investment advice and independent advice should be sought where appropriate. Neither the information in this publication, nor any opinion contained in this publication constitutes a solicitation or offer to provide any investment advice or service. The government’s emergency loan schemes have played a key role in shaping the lending industry this year.

These programmes were undeniably needed to support businesses of all sizes during the Covid-19 crisis, but they have also attracted criticism due to risks of fraud, slow roll-out, their distortion of the lending market and a lack of inclusion for fintechs.

Just a handful of peer-to-peer lending platforms are among the 100 or so providers that are accredited to deliver the coronavirus business interruption loan scheme (CBILS), while only Funding Circle is approved for the bounce back loan scheme.

Most industry stakeholders agree that it is a shame the government did not act more quickly to utilise the country’s nimble and tech-savvy fintech lenders.

As we head towards 2021, and the eventual tapering of these programmes, the question arises of what will take their place.

Our front page story shows that the P2P sector is gearing up for the successor to CBILS and this time around, it is part of the conversation.

Will the replacement scheme be more inclusive? And will non-bank lenders, including P2P, finally get access to the Bank of England’s term funding scheme to put them on a level playing field with high street banks?

These are questions that are yet to be answered, as we head towards what is likely to be a February launch for the successor scheme.

SUZIE NEUWIRTH EDITOR-IN-CHIEF

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boost the UK economy.

“Next year we have a very deep recession to come out of and that means it’s incredibly important there is a successor scheme to CBILS that is perhaps not as generous,” he said.

“The provision of government guarantees is what will keep lending flowing in 2021 and we are fully expecting another scheme to immediately follow CBILS that will be ready for applications at the start of February.

“That’s our recommendation, a replacement scheme without the first year of the government paying the fees.”

Roy Warren, managing director of CBILS accredited lender Folk2Folk, said the current JUSTUS founder Lee Birkett said that he does not expect demand for his platform’s Small Business Interruption Loan Service (SBILS) to rise to higher levels until government support schemes come to a close.

The peer-to-peer lending platform launched SBILS to provide funding for businesses that missed out on finance under the coronavirus business extension and possibility of a successor scheme gives it more time to fund loans under its accreditation providing it finds suitable institutional funders.

There are, however, some fears that providing further government support could harm other types of lending.

Katrin Herrling, founder of business finance aggregator Funding Xchange, said the number of lenders funding deals through the platform returned to pre-pandemic levels in September.

“The problem for lenders is their balance sheets have reduced significantly,” Herrling said.

“If you don’t have money out the door then the new threat is from loss of income.

“Extending CBILS interruption loan scheme (CBILS).

Prospective borrowers can download and apply for the scheme on the Moneybrain app, a sister brand of JustUs. They can then list their business and raise money through crowdfunding, which the company starts repaying a year later.

Birkett opened SBILS up for applications in September, expecting to see increased demand beyond January risks killing off other lending activity by those actively looking to put money out as they can’t compete on the funding costs.”

She said any replacement scheme needs to focus on real gaps in the market and not undermine lenders trying to return.

“A new scheme should close the gap where there isn’t lending and use the alternative finance sector to give them access to subsidised funding,” she added.

“There is a good case once government support schemes closed for applications at the end of that month.

However, the government schemes were since extended until 30 November 2020 and then until 31 January 2021.

“We were expecting SBILS to come into its own when the government schemes were due to end, but now they are not closing until the end of January so to make to see how the market bounces back after CBILS and to be ready if a new scheme is needed.”

“We are now having discussions with the government, trade associations, lenders and other stakeholders on the future design of the new scheme, which is expected to become operational in early 2021,” said the British Business Bank. “We are unable to comment further on these commercial discussions.”

The Treasury declined to

JustUs expects SBILS demand to pick up after government schemes end

comment. we’re not expecting much demand until the second quarter of next year,” Birkett said.

“We’ve started seeing an increase in the number of applications again but we’re not really doing any marketing.

“We’re telling people to try and get their CBILS loans and bounce back loans and to come to SBILS when the schemes end and there’s no other choice.”

Augmentum Fintech chief: Retail-only P2P “one dimensional”

OPERATING a peer-topeer lending platform that purely focuses on retail investors is too “one dimensional,” according to a prominent fintech investor.

Tim Levene is chief executive of London-listed fintech investment fund Augmentum Fintech, which has a stake in P2P lender Zopa.

Levene said Zopa’s recent launch of a digital bank to complement its P2P business gives the firm extra options and is good for retail investors.

“Being a pure marketplace is too one dimensional as we have seen with businesses not John Goodall said the property market has benefited from the stamp duty holiday and he would not be surprised if the tax break were extended past its 31 March deadline.

In July, Chancellor Rishi Sunak cut stamp duty on the purchases of homes up to £500,000 in England and Wales for both residential and buy-to-let.

Goodall said the stamp duty holiday has boosted the housing market and he thinks it could be extended like other types of government support such as furlough. attracting the premiums they were three or four years ago,” he told Peer2Peer Finance News.

“Propositions come in and out of fashion both in the US and the UK.

“We have had some high-profile businesses list and not perform as investors would have hoped, that casts a shadow across the sector, which is unfair.

“The P2P umbrella was always too generic, the real question is, what is the underlying lending proposition?”

“We are more focused on the tech and risk capabilities.”

Augmentum also

“The stamp duty holiday has definitely helped, bringing some business forward as well as the incentive to purchase now,” Goodall said in an interview with brokerage Goodbody.

“It equates to about a £15,000 saving depending on the value of the invests in alternative lender Iwoca, which is an accredited lender under the coronavirus business interruption loan scheme (CBILS). Levene said the government’s initial financial response to the pandemic was an “opportunity missed” due to how long it took for fintech firms to get approved.

“CBILS and bounce back loans were a great opportunity to leverage fintech,” Levene said.

“The government got there in the end but ultimately quite late in the day.

“It has been difficult for existing financial institutions who have not property. It was applied to the buy-to-let sector and has been having an effect. Most areas of the mortgage market are busy right now.

“In terms of whether we expect it will be extended we have no insight but everything else the government has implemented built scalable platforms to sustain demand so hopefully now there will be more collaboration.”

Levene added that the fund is not looking to add any more lenders to its portfolio currently but is interested in digital wealth management, crypto platforms and payment infrastructure.

Augmentum Fintech raised £28m through an oversubscribed share placing in October, which, Levene suggested, was helped by the pandemic.

“The pandemic has put us on the radar of more prospective investors who have been looking at

Landbay boss moots stamp duty holiday extension

LANDBAY chief executive

diversification,” he said. has been extended, such as furlough.

“If other measures were extended beyond March and a lot will depend on the vaccine programme and what happens with the virus, I wouldn’t be surprised if the stamp duty holiday would be extended in some way even if it becomes different to what it is now.”

Last month Landbay agreed a new funding line with an asset manager, to help it meet the increasingly high demand for its buy-to-let mortgages ahead of the end of the stamp duty holiday.

2020 in numbers: Another year of change for the P2P sector

In the last issue of Peer2Peer Finance News in 2020, we take a look back at the biggest events in an eventful year for the peer-to-peer lending industry…

2Platform acquisitions Lending Works announced in July that it had been bought by Intriva Capital, while RateSetter confirmed in August that it had been acquired by Metro Bank.

15 Years of P2P

The industry celebrated its 15th birthday this year, when the world’s oldest P2P lender Zopa marked its 15th anniversary in March.

4P2P lenders accredited to CBILS

Funding Circle was the first P2P firm to be accredited for the government-backed coronavirus business interruption loan scheme, followed by Assetz Capital, then Folk2Folk and LendingCrowd.

6Members of the 36H Group

The industry’s new trade body launched in January, replacing the now-defunct Peer-to-Peer Finance Association. Its founding members comprise Funding Circle, Zopa, More than

RateSetter, Lending Works, Assetz Capital and CrowdProperty. £2.7M

spent on Lendy administration so far

A progress report in June said that 34.9 the administrators of the collapsed P2P platform have incurred time costs totalling per cent £2,766,824.

The representative variable annual percentage rate of Zopa’s new credit card

Funding Circle has facilitated more than £800M of CBILS loans

Last month, UK managing director Lisa Jacobs revealed there had been strong uptake of the scheme and said that two thirds of its CBILS borrowers are new to the platform.

For even more peer-to-peer finance news, go to our website at www.p2pfinancenews.co.uk. With real-time news and exclusive insights, www.p2pfinancenews.co.uk is your indispensable portal into the world of peer-to-peer lending. Go online to sign up to our e-newsletters, for a comprehensive digest of the latest peer-to-peer finance news sent straight to your inbox. You can choose our weekday e-newsletter, which comes out by 7am Monday to Friday, or sign up for our once-a-week version that is sent out at noon on Wednesdays.

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P2P lenders are going green

INVESTORS do not have to wait for a government bond to go green with their money, thanks to a raft of alternative finance opportunities supporting renewable energy projects.

Chancellor Rishi Sunak unveiled plans last month to issue the UK’s first ever sovereign green bond to help the UK meet its 2050 net zero target and other environmental objectives.

It will not be launched until next year but there are already ways to support clean energy projects in the peer-to-peer lending and crowdfunding space.

Abundance has worked with councils this year to provide community municipal bonds that support renewable energy projects in a local area.

More than £2m has been raised so far for West Berkshire and Warrington councils.

Bruce Davis, managing director of the ethical crowd bonds platform, said there are more council projects in the pipeline.

“We are expecting four or more raises next year including Leeds City Council,” he told Peer2Peer Finance News.

“We are aware of around 15 councils who are actively considering issuing green bonds.”

He said all P2P lenders should consider how their lending is aligned with the goal the UK has set to become net zero by 2050.

“It would be remiss for a sector which is driven by a desire to change finance for the better not to set an example to the traditional lending institutions as to how that goal can be a central part of a business strategy,” Davis added.

Some alternative lenders such as Downing Crowd, Folk2Folk and Crowdstacker already offer green energy investment opportunities.

Crowdstacker raised £1m last year for a project with Prime Agri, which provides funding for agricultural, horticultural and rural small businesses with a focus on renewable energy.

Chief executive Karteek Patel said its green investments typically attract higher sums and Crowdstacker has more in the pipeline for next year. "Environmental and social governance is such as buzzword in the investment industry at the moment that it would be easy for it to be just a box ticking exercise rather than a fundamental guiding principle,” Patel said.

“But it needs to be a fundamental guiding principle.”

Bounce back loan fraud impacts car finance industry CAR finance brokers customers eschew themselves to a car but to “We’ve sold cars and providers are seeing his in-house finance someone who is slightly to these people and decreased business due to brokerage in favour of better off than the average absolutely loads of people consumers fraudulently bounce back loans. household and is able to with business loans have using bounce back loans Bounce back loans qualify for it and buy it,” just bought cars and to purchase cars outright, come with a 100 per cent Choudhri said. this has generally according to a broker government guarantee “But now we’ve sold so affected car finance in the space. on the value of the many on direct payment. brokers and providers.

Zac Choudhri founded loan and have a 2.5 per We promote and “Car prices have gone car finance brokerage cent interest rate, with recommend our in-house up as a result of these Prime Personal Finance nothing payable for the car finance brokerage and loans. No one was in January and has since first 12 months. show the benefits of it, getting finance, so they diversified into selling “When you sell a Range but some people said ‘no, raised prices on cars. It cars as well. He said Rover it’s not normally we already have a 2.5 per has had a massive knockthat he has seen someone treating cent loan’. on effect.”