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There’s lots of terrific independent research in the alternative finance market at the moment and the latest benchmark report comes from Knowledge Peers.
The good news for everyone is that growth continues to accelerate, here are the report highlights:
We’ve been crunching our data a bit recently and want to share some of our findings.
The locations of our borrowers
The Government is preparing to force high street banks to refer small businesses to alternative lenders in landmark legislation to be included in the Queen’s Speech next week (w/c 2 June).
George Osborne and Vince Cable are pushing ahead with plans to introduce the new laws, despite intense opposition from the banks. The rules, which would make it compulsory for banks to automatically pass on customers that they turned-down for credit to alternative lenders, are designed to break open the dominance of high street banks in the small business lending market.
The Treasury, which is concerned that a lack of credit is choking off the recovery and stunting growth among small businesses, is determined to boost the number of alternative lenders in the market.
In his Budget in March, the Chancellor said he was investigating the idea of imposing a mandatory demand on banks to recommend alternative funding providers to customers. The Treasury launched an investigation immediately which closed several weeks ago.
The banks have warned the Government that introducing legislation will be both complex and costly for them to implement. Insiders said they are still lobbying hard to get the proposals scrapped ahead of the Queen’s Speech on June 4.
Original article: https://www.telegraph.co.uk/finance/10856425/George-Osborne-to-force-banks-to-promote-alternative-lenders.html
Of course, you don’t need to wait to be referred… Apply for a loan with rebuildingsociety today
Entering the crowdfunding market almost anywhere in the world is an attractive proposition right now. In the scheme of things, we’re still only just getting started, even though big numbers might be being reported in the media more regularly now.
As AltFinance News recently reported, we’ve now passed £1.5bn of loans in the UK – all of this before the impact of ISAs (anticipated to be the end of 2014 at the earliest) institutional money and much larger loans for larger businesses, which will naturally occur as the market gains scale. In the US, the institutional market is well-developed so it’s more than conceivable for the UK market to double in size again by the end of 2014 or the early part of 2015 – a growth curve that demands attention.
rebuildingsociety.com is speaking to innovators from all over the world (the current sales pipeline covers 5 continents!) who are looking to take first-mover advantage in untapped markets. Being a UK platform certainly holds kudos, in a very young market there is a sense of ‘been there and done that’ which appeals to would-be platform operators. The recent FCA regulation also works in our favour by demonstrating that we can incorporate stringent legal requirements – I’m sure others in the market who speak abroad encounter similar sentiments.
Fragmentation
Although the strong growth of the market as a whole is a good story, what we’re starting to see as a provider of white-labelled software, is a number of people looking at specific niches in the market, resulting in a land grab there.
Record numbers of English small manufacturers are looking to take on staff as recruitment confidence hits a three-year high.
More than half of firms (54%) questioned by the Manufacturing Advisory Service’s Barometer are looking to create new jobs – a 14% increase on the same period last year. This is the highest level of recruitment confidence since the report began three years ago.
The figures are reinforced by sales growth stats – 61% of firms reported an increase in the previous six months and 73% expect to win more work between now and October – a 14% and 9% rise respectively from March 2013.
Responses also reveal a record appetite for investment in new plant and machinery (59%) and in developing new technologies (52%).
Produced by Buzzacott LLP, this brief guide to tax in equity and debt investments is a useful read for any investor unsure of his / her tax obligations.
Will I pay tax on my investment income and gains?
The tax implications will depend on the investor’s personal circumstances, but generally speaking unless the investment qualifies for one of the government approved shcemes such as the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS), investors will pay income tax and Capital Gains Tax (CGT) at their marginal rate on all income and gains realised.
Is tax relief available for losses on loans?
Unlike with equity investments, investors who make a loss on their loans will not always be eligible for tax relief on the loss.
Where tax relief is available for losses on loans, the loss may be offset against other capital gains of the same or future years in a similar way to losses on shares. It is not possible to use these losses against income. It is worth reiterating, however, that in many cases the loans will not meet the necessary conditions and as a result investors will not be entitled to tax relief.
Last week rebuildingsociety completed its 50th loan.
We set out to help UK businesses grow without help from the bank and so far 48 businesses (two have taken more than one loan through us) have received cash from individuals from around the UK to further their business ambitions, expanding their product ranges, purchasing machinery, winning tenders and employing more people.
Things look a lot different now than when we completed our first loan, with the industry now regulated and awareness of peer-to-peer lending greatly improved. We’re now talking about how the industry can capitalise on the ISA move, how the UK fits in a global peer-to-peer landscape and the potential of partnership arrangements with larger institutions – we see this as a sign that the core benefits of p2p have been recognised as the future of financial services.
We’re looking forward to racing towards our next milestone, helping UK businesses fulfil their potential along the way. On behalf of all the businesses that have been funded through our platform – many thanks.
Buy micro loans from previous auctions
Here is a chart that shows the different types of security that rebuildingsociety has taken on completed loans. The minimum we take is a Director Personal Guarantee on every loan, but we take security over property or business assets on 3 out of 5 loans. Read more in our FAQs
When buying loans on our Secondary Market, investors can choose the type of loan by security – we’ve found that some investors have preferences for loans secured on property, whereas others prefer personal guarantees as back-up because they tie the director to the business, emotionally.
Of course, no-one ever wants to get to the point where charges on security are enforced, but it gives a degree of comfort to lenders that there is recourse in the event of a default when making a p2p investment.
In April we funded another five businesses with funds totalling £187,000 advanced. We’re looking forward to catching up with these businesses a few months down the line to find out how the loan has made a difference to the business.
Loan size was smaller than the average throughout 2014, but the total loans and number of new lenders was broadly in line with the monthly average.
May is already set to be a bumper month though, with £330,000 worth of loans either completed or 100% funded. We’re hoping to beat February’s £550,000, which was our strongest month so far.
Don’t forget, one of these loans will be interest-free too! We’re running our competition throughout May, so feel free to tell any businesses you think should apply. If you introduce a successful borrower to us, we’ll pay you a fee of 0.5% of the loan value.
Mr Whitehead’s Cider was created by Angus Whitehead ten years ago “with £10k and some help from a couple of friends”, says Angus. Since then it has grown its turnover to nearly £1m and Angus employs experienced local people in a market he is very passionate about.
His company produces a range of ciders, vinegars and juices and is based near Alton, Hampshire. Now it is set to expand after securing a loan of £72,000 from the lenders of rebuildingsociety.com.
The loan will be used to complete the relocation of the business, which supplies cider to major supermarkets and national pub chains, from its current position where it operates from three sites, to one larger site where the business expects to make efficiency savings of £30,000 a year.
It will also allow the business to install machinery to produce carbonated ciders, beers and fruit juices, further increasing its range of products, all of which contain locally sourced ingredients.