Home > Uncategorized > Difficult times for p2p lenders?

Difficult times for p2p lenders?

The recent collapse of Funding Knight will have caused a few tremors within the peer to peer lending market and whilst the “savers” funds have been rescued by GTI there will naturally be questions raised in the minds of potential investors regarding the security of such finance.

I was certainly aware of Funding Knight’s presence in the market but cannot really comment on their diligence when lending. However they will not be the last casualty and I’m I’m conscious that a couple of smaller single invoice lenders are currently struggling with poor business models.

These developments were inevitable. There was always going to be a rush of new entrants in this growing market and to put it gently, many will be ill prepared. However some will seize upon the failure of Funding Knight as proof that the sector is shaky.

Established lenders and their cohorts frequently dislike competition and innovation. A natural enough reaction but not one that will garner much goodwill from those who’s memories stretch back to 2008.

I frequently meet and offer some advice to a number of P2p lenders. Whether they listen is a different matter but it is noticeable that they have rightly sought feedback from brokers.

My feeling is that their judgements are still too frequently based on raw data rather than understanding businesses but I suspect this will develop in time. Especially when they encounter the strong balance sheet being decimated by a rather useless owner.I also believe that the market will mature with dominant parties in both the straightforward loan and also the invoice financing sectors.

For brokers and small to medium businesses, the opening up of the market for lending is great news



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