Lender update – December 2021



Since the outbreak of the Covid-19 pandemic, the
LendingCrowd team has been focused on carefully managing the platform and doing
the right thing by lenders and borrowers alike. As a responsible lending
platform that is regulated by the Financial Conduct Authority, our objective is
always to deliver the best long-term outcomes for our lenders and borrowers.

LendingCrowd has a regulatory requirement to ensure
that the valuation of loans parts for sale on our Loan Market is fair and
appropriate. Based on the uncertainty of borrowers’ performance amid the
economic shock caused by the pandemic, we felt that the most responsible course
of action was to suspend trading on our secondary Loan Market. This suspension
took effect on 21 January 2021.

This means that individual lenders are not able to
buy or sell loan parts on the LendingCrowd platform. We have also stopped
accepting new cash deposits from existing lenders, and new lenders are not able
to register with us.

Economic conditions remain challenging for SMEs. Some of the Government support measures introduced to support them through these difficult times – such as the Coronavirus Job Retention Scheme and VAT reductions – have now ended. Meanwhile, staff shortages and global supply chain disruption are impacting businesses in a range of sectors and regions.

As a result of the continued economic uncertainty, we have decided that our Loan Market will remain closed to lenders for the time being. We are closely monitoring the performance of borrowers during this challenging period and if we identify an opportunity to re-open our Loan Market this will be considered in the context of treating our customers fairly.

The availability of government-backed
lending schemes has altered the lending landscape, with approximately 80
financial services providers accredited to offer Recovery Loan Scheme (RLS)
loans. We will continue to communicate updates on the situation and when we
will be likely to resume offering loans that individual lenders are permitted
to fund.

In the Budget on 27 October 2021, it was announced that the RLS will be extended until 30 June 2022. The RLS provides SME lending with a government-backed guarantee, designed to give financial institutions the confidence to lend to small and medium-sized businesses. RLS loans can only be funded by institutional lenders – individuals are not allowed to fund these loans.

Important information for lenders
For lenders with a cash balance in their LendingCrowd account, they should strongly consider moving these funds into an alternative interest-bearing account, such as a bank account, as per guidance provided by the Financial Conduct Authority. Interest repaid into a LendingCrowd account and not lent out does not earn interest.

When lending to businesses, it is important to
remember that your capital is at risk. LendingCrowd and its products are not covered
by the Financial Services Compensation Scheme.

Article author

Gareth Mackie

Gareth Mackie