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After the banks were bailed out by the government they were instructed to re-capitalise. Unfortunately, this meant the withdrawal of credit lines to many UK businesses, who found that overnight their overdraft facilities were removed and loans were being called in.
Simultaneously, the suppression of record low interest rates with the stimulation of inflation (through quantitative easing) has essentially taxed savers and those with a pension who struggle to fight the attrition of their savings.
Banks serve their own interest, they create money out of accounting entries (read how banks create money here) and do little to help the economy.
When the UK lost its triple A credit rating back in February, there were varying degrees of reaction from traders and economists, from gravely concerned to not bothered one iota, as most people recognised that things hadn’t improved substantially in the UK (or global) economy to merit the same level of optimism that was justifiable pre-crunch.
Subsequently, only two G7 countries in the world still have Triple-A ratings; Canada and Germany, and as recent data shows, their immediate prospects are far from wonderful.
A rebuildingsociety.com lender, JL, shares his story of how he became a peer-to-business lender and his tips for building a portfolio in this emerging asset class.
“I heard about peer-to-business lending though a newspaper article in July last year and to be honest, I was a bit annoyed that I didn’t discover it earlier, such has been my enthusiasm for it since. It has added valuable diversity to my portfolio and provided a gross return of 11 per cent.