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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

If you invest through LendingCrowd you should understand that your capital is at risk.

LendingCrowd is the trading name of Edinburgh Alternative Finance Limited, Company Number SC468392, authorised and regulated by the Financial Conduct Authority (Firm reference number 670991). LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.

Read more about the risk involved when investing and borrowing.

The company's registered office is 23 Manor Place, Edinburgh, EH3 7DX.

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