It may seem premature to discuss the future of crowdlending when the concept is relatively new but the alternative finance market is evolving and growing rapidly.
Early adopters, whether borrowers or investors, are already seeing the benefits of peer-to-business lending, which offers swifter access to borrowing at lower rates while investors have the potential to earn higher returns on their investment. However, many in financial services remain unaware of developments in crowdlending.
For instance, the government’s Lending ISAs, expected to be introduced in spring 2016, will transform crowdlending into a mass market investment product. This tax wrapper will require intermediaries, such as wealth managers, to understand that crowdlending is a viable option for high-net worth clients. Even the mainstream banks are beginning to get involved.
The Scottish Government’s intention to establish a Scottish Business Development Bank (SBDB) to support small high-growth businesses is an exciting initiative and LendingCrowd is well-placed to work in partnership with the government. We would also expect to see the public sector becoming more involved in lending money across P2B platforms.
In England, the British Business Bank was the first to move into this area and there at least ten councils in England lending money out into local communities. Councils in Scotland are just watching for now but there could be a role for Scottish Enterprise to distribute cash to Scottish businesses via the platform. This would encourage Scottish local authorities to take this option seriously. As well as getting a better return on their money, they could also be helping organisations in their local area.
Whatever happens in the future, one thing is clear, if you have an interest in finance and investment sooner or later you will have to join the crowd.
Stuart Lunn is CEO of the LendingCrowd