A big month for peer-to-peer lending: October industry news
October has been a bumper month for media coverage of the peer-to-peer lending industry. What with the Financial Conduct Authority announcing plans to regulate the industry from April 2014, and our move into the US, peer-to-peer lending has been across the papers, radio and even TV. Martin Lewis has also been blowing the industry’s trumpet after revealing the great returns he has made by investing in three of the UK’s biggest peer-to-peer lenders.
It’s great to see the Daily Telegraph welcoming news of peer-to-peer regulation. We certainly agree that “it’s unusual to hear senior executives pining for increased regulatory control”, but that really is how we and the Peer-to-Peer Finance Association feel. Proportionate regulation will ensure the industry is cemented in the wider financial services industry.
Jeff Prestridge at the Mail on Sunday highlights how the regulatory emphasis will be on ensuring those prepared to lend via peer-to-peer platforms are not misled in any way, shape or form. He says all of the risks will have to be spelt out in black and white, and any interest rate calculations will have to be fair and clear. Quite right too, and you’ll be pleased to know transparency has always been the name of our game.
Christine Farnish, chair of the Peer-to-Peer Finance Association, wrote an interesting piece for Money Marketing encouraging the FCA to better distinguish between peer-to-peer lending and crowdfunding. She argues that businesses taking a peer-to-peer loan go through a full credit check, similar to a traditional bank loan, therefore making it lower risk than crowdfunding, where some investors might see total capital loss.
Funding Circle raises $37M and heads across the pond
On 24 October we announced that we had raised $37 million and were joining forces with San Francisco-based business lender Endurance Lending Network (now known as Funding Circle) to help millions of businesses across America sidestep the broken banking system and access finance. Our very own Samir Desai kicked the day off in style on the BBC Radio 4’s Today programme – take a listen. Other highlights include Reuters, Daily Telegraph, New York Times and Forbes.
The go-to site for peer-to-peer lending news in the US, Lend Academy, also covered the news. Peter Renton wrote he first met with Samir back in November 2012 when they discussed the US market generally. At the time he said the peer-to-business market in the US was wide open with no established player, but in Peter’s own words: “that officially ends today with the launch of Funding Circle USA.” Thanks Peter! We’ll certainly be working very hard to help make sure that’s the case.
Martin Lewis reveals all
Having invested money in three of the biggest peer-to-peer lenders in the UK, Martin revealed the various returns on his money and personal highlights of investing in each platform. He also reminds potential investors how important it is to diversify something we believe in at Funding Circle as well.
Martin was also on BBC Radio 2 earlier this week explaining to presenter Vanessa Feltz how it all works, and how investors can make a much better return on their money.
Lending to small businesses: banks vs. peer-to-peer
The Financial Times reported that non-bank lending to small businesses has hit a five-year high. The UK’s commercial finance brokers have arranged £10.5bn of credit for small and medium-sized enterprises in the last year. This marks the highest figure since 2008 and an annual rise of 17 per cent. Andrew Bounds argues that the data highlights the shift away from traditional bank lending to small business, which has shrunk by a quarter since 2011.
Mortgage Introducer picks up on similar news that high street banking figures from the British Bankers’ Association show that net lending to businesses has fallen in 8 of the last 12 months, despite growth of £2.5bn between August and September. Adam Tyler, CEO of the National Association of Commercial Finance Brokers commented: “High-street lenders remain very selective in granting finance which is stifling small businesses and slamming the brakes on economic growth, particularly jobs and wages”.