Coronavirus

Peer-To-Peer Lenders Seek BoE Bailout

Peer-to-peer Lenders Seek BoE Bailout

Peer-to-peer (P2P) lending platforms in the U.K. are asking the government for help to continue lending after the coronavirus has ravaged markets around the world, according to a report by the Financial Times.

One of the biggest P2P lenders in the U.K., RateSetter, has over 800 million pounds ($924 million) on its loan book. It’s asking the Bank of England (BoE), as well as the country’s treasury, to give it access to stimulus funds so that it has liquidity for banks.

P2P lenders link up borrowers with companies looking to lend money and get interest.

“There are established schemes run by the BoE that pump liquidity into the system in the event of these situations,” said Rhydian Lewis, CEO of RateSetter. “Now that P2P lending is fully regulated, this is a conversation we need to have.”

There are plans for the 36H Group, the industry body for the P2P space, to try to figure out how to move forward.

P2P companies don’t generally get protections from the country, but Lewis said that because the industry is now regulated by the government, they should.

“There is no precedent, but these are unprecedented times,” he said. “We are being urgent because it is in times of crisis that people listen.”

Because of the coronavirus, small businesses have been sapped, and there are reports of an increased demand in lending, but there may not be enough liquidity to go around.

One platform that makes loans against secured property, Assetz Capital, has gotten funding from British Business Investments, which is an arm of the British Business Bank. Assetz said it would be able to make over 100 million pounds ($115.4 million) in loans with the new capital.

“We’re looking for that to be expanded dramatically,” said Stuart Law, CEO of Assetz. “The government needs to step up and support not just the banks but the lenders.”

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