There’s nothing like 20:20 hindsight. In five years’ time what’s seen as “alternative” in financial terms will be the mainstream. And all today’s doubters and naysayers will claim that they always knew that crowdfunding was the coming thing.
We believe that bringing individuals together with businesses looking to borrow money to grow – otherwise known as peer-to-peer (P2P) business lending, is the future of finance. Moreover, everybody can win.
Our lenders can get excellent return on their capital – though of course they should be mindful that capital loaned is at a degree of risk (reading the warnings and explanations on the Lend, Home and FAQ pages is helpful here).
And our borrowing businesses can get the capital they need to grow. The government has provided a boost by allowing P2P loans to be part of the Innovative Finance Individual Savings Accounts, available in April 2016, at the start of the new tax year.
But it seems that we have some work to do in getting the P2P message across. Recent research from Intelligent Partnership indicates that some financial advisers have difficulty seeing the advantages of the P2P asset class. Here are some excerpts from an article in Money Marketing.
“Intelligent Partnership research director Daniel Kiernan says: ‘It’s estimated that there is £500bn in Isas, split 50:50 between cash and stocks and shares. If peer-to-peer lenders can capture just a small percentage of this market, it would provide a huge boost to their volumes, and signal mainstream acceptance for this new industry.’
“The research found advisers are aware of the crowdfunding and P2P space, with two-thirds having heard of P2P lending and 60 per cent having heard about equity crowdfunding.
Despite that, the research of 130 advisers showed just 9 per cent expect the P2P sector will form part of their advice process in the next 12 months.
“Advisers lack knowledge of the P2P space, the report suggests, with only 7 per cent of those questioned aware alternative finance platforms are now regulated by the FCA.
“Hargreaves Lansdown chartered financial planner Danny Cox says: ‘P2P loans and crowdfunding debt securities becoming qualifying for Isa from April adds credibility to the industry and you would expect to see their popularity increase.’”