Small business lending has been one of many areas to have suffered since the financial crash of 2008 – the banks are simply less than enthusiastic about lending to SMEs. Over the years since the financial crash however, bank lending to small business has risen slightly. This has been encouraged by Government schemes such as the ‘Funding for Lending Scheme’ (FLS) which was designed to boost mainstream banks and building societies, thereby enhancing their lending to all sections of the UK economy.
The FLS was launched in 2013 and has been extended to run until January 2016. Although its intentions are sound, the FLS has come under fire for not actually delivering substantial funding to small firms. Figures released by the Bank of England showed net lending under the scheme slumped by £810m in the final quarter of last year. This followed falls in the previous three quarters and took the total decline over 2014 to just under £2bn.
Recent statistics show lending to small, non-financial businesses in the UK fell dramatically in June 2015 to its lowest point in the last four years.
Small business lending is considered to be one of the key drivers of the UK economy. The Bank of England’s Financial Policy Committee was recently given a new remit by the Chancellor, George Osborne, to stress the importance of lending to small businesses, which make up 99% of companies in the UK.
Alternative finance options
Alternative financers such as peer-to-peer (P2P) lending platforms are rapidly expanding to fill the void where traditional lenders are absent, and illustrates the on-going demand for funding. Over £500m of new consumer and small business loans have been provided by peer-to-peer platforms since April, the fastest rate of growth yet, with the most rapid growth being in the business lending sector.
Peer-to-peer platforms work by matching borrowers in need of finance to individuals willing to lend their funds. The terms offered by P2P lending platforms are sensible and tend to be more flexible for borrowers than those offered by traditional lenders. A key advantage to investors is that they can receive higher than average rates of return on their funds.
An innovative solution
Wellesley & Co is an asset backed P2P lending platform that offers investors up to 6.32% rate of return per annum on their funds and borrowers access to competitive rates of finance. Our company ethos is straightforward: we invest with you and for you, by lending to trusted borrowers.
If you would like further information on how Wellesley can suit your investment criteria, please contact [email protected] , and if you would like to know more about borrowing with Wellesley, please contact [email protected] Alternatively please call us on 0800 888 6001.