Queen’s Speech promises focus on access to finance. May industry news
There was much speculation in May as to whether the Queen’s Speech would include more detail on whether the government are going to make banks refer small businesses to alternative finance providers. Although the speech was light on detail, it did mention a focus on access to finance as part of the Small Business Bill. More information on this proposed bill is due to be published next week and we also expect to see the government’s response to the consultation announced in the Budget very soon. The Evening Standard said the potential legislation “might actually make a real difference in tackling the problem of funding for small businesses”.
Also in the news last month were details of a new fund set up to invest in peer-to-peer loans. This growing interest from bigger investors is a sign that the industry is maturing, and will mean that thousands more small businesses will be able to access finance. At Funding Circle, we believe there is a need for a diverse mix of investors in order to create a sustainable marketplace for the long term. This doesn’t mean our individual investors will become any less important to us over time and if you have any questions about this, then please don’t hesitate to get in touch. This story was also covered in The Times.
May’s Funding for Lending figures showed yet another decline in bank lending to small businesses via this scheme. This was surprising given the refocusing of the scheme away from consumer lending and towards business lending at the end of 2013. A great opportunity for the alternative finance industry however, and this BBC article mentions www.alternativebusinessfunding.co.uk as a good place to start if you’re a small business looking for finance. James Meekings, one of our co-founders, was also on CNBC and Bloomberg responding to the figures.
This Economist article discusses the rise of peer-to-peer lending. Whilst banks are often still sceptical, peer-to-peer lending firms believe that traditional means of finance are outdated with expensive branch networks and cumbersome technology.
Peer-to-peer lending continues to grow rapidly across the globe. In May, Prosper, a leading US peer-to-peer lender, announced they had completed a $70 million investment round to aid their growth. Exciting times for the entire industry.