There was once a time when peer to peer, Investor market and Crowd Funding loans were once considered to be the last chance saloon. Unchartered waters only the bravest would explore when all other options had failed.
Then the crisis in 2008 set in motion a gigantic financial shift that caused customers to venture away from Tier 1 banks on the High-street and move their banking to cyber-street.
High-street banks no longer wanted to increase their debt position on what was seen as high risk/ low profit margins and an ever decreasing real estate book. They retreated to higher ground, waiting for the tidal wave to subside with the mind set of ‘this will all be over shortly and then we’ll be open for business.’
Where were all the borrowers to go?
Crowd funding and peer 2 peer lending presented many businesses with feasible options and were ready to fill this gap. Credit worthy SME’s could apply for a loan and within 72 hours (this can be done within 2-4hrs) the money would be in the account.
Customers were no longer being asked for reams and reams of paperwork consisting of Management information, Business Plans and forecasts.
The questions were simplified.
* What’s it for?
* How much do you want?
* How long do you want it for?
* Can you demonstrate the ability to repay? If you answered yes to this in most cases the loan was provided, with minimum effort and with little or no security.
Fast forward to 2017 and the Peer to Peer market still remains.
To date the sector has loaned to the value of £7.3Bn with more and more new P2P companies entering the market and gaining there bank license. This sector is no longer the last chance saloon but in most cases the first point of call.
Innovation in any sector often leads to uncertainty as customers continue to seek out the right deal for them. Meandering through the hundreds of providers can be tough and in most cases customers still rely on experience from sector professionals. In my next article I will be examining this theme in more detail and discussing the shifting role of professionals within the Broker Market.
If you are currently exploring loan options and would like advice on what deals are available to you then don’t hesitate to get in touch with one of our expert Advisors.