Over the past decade, the small to medium-sized enterprise (SME) finance landscape has changed beyond recognition. In the aftermath of the global financial crisis, the slow recovery of traditional bank lending created the perfect conditions for the peer-to-peer (P2P) lending sector to grow and flourish. In its short history, the sector has proven its resilience to adverse market movements, but the economic repercussions of the Coronavirus (COVID-19) pandemic pose its greatest challenge yet.
Tighter controls on new lending and loan sales
Some platforms have put both new lending and loan sales on hold over fears that they could suffer hefty additional defaults on repayments. Across the board, platforms have moved swiftly to tighten their lending criteria and risk controls - not just to protect investors, but also to protect their borrowers – with some offering them ‘breathing space’ arrangements to keep their loans going. Investors, too, have been rattled by the financial fallout of the crisis, with many seeking to sell their loans early.
As the UK moves out of full lockdown, the P2P sector will be presented with attractive opportunities for growth. We also anticipate a significant dash for cash from corporates as the UK government withdraws the extensive support measures that have so far provided an effective buffer against the impact of the pandemic. Once this financial support comes to an end, many businesses are likely to be left with varying levels of debt: with customer demand likely to rebound sharply, these businesses may face an immediate – and significant – need for working capital and general funding. At the same time, the high numbers of borrowers looking for funding lines will inevitably drive up the price of credit offered by the traditional lenders, prompting many of these borrowers to turn to alternative lending sources such as P2P platforms.
Driven by this shift in the lending landscape, the post-COVID world will present potential opportunities for P2P platforms that are both well-capitalised and robust enough to grow their market share. To ensure that they can take full advantage of those opportunities, platforms must be primed and ready to put in place the operational capacity as well as systems to manage the higher borrower volumes they will see in future.
How we can help
Our P2P sector team brings together the right combination of expertise, allowing us to work successfully alongside businesses and their financial stakeholders. This enables us to offer specialist advice and deliver the best outcomes for clients. Together with our combined experience, collective insight as well as deep sector knowledge, our offering is unrivalled and we pride ourselves on acting quickly and independently. This means that directors and their stakeholders gain the right advice when it is needed, receiving partner attention throughout the course of the assignment.
Our work with P2P platforms spans our broad range of services. We work together to support and advise platforms on a variety of strategic, operational and regulatory issues and work with platforms at every phase of development, from fledgling start-up businesses to more established players moving towards a more institutional identity.
We are thrilled to announce that both Quantuma has made the Power 50 list in the Peer2Peer Finance News Firm of Influence 2020.
Power 50 list recognises the remarkable achievements of the individuals leading the growth of this sector during an extraordinary year. This list highlights the people/businesses at the top of the UK’s largest and fastest growing platforms as well as the government officials and regulators who have helped shape the sector into what it is today.