The 22nd June saw the release of the Bank of England’s Agents’ summary of business conditions for Q2. The quarterly publication is a summary of monthly reports, compiled by the Bank of England’s agents, following discussions with 700 businesses. The document provides information on the state of business conditions from firms across all sectors of the economy.
Q2 witnessed a moderate annual rate of activity growth. The business sector in particular noticed a small stall in growth due to client decision delays ahead of the EU referendum. Positively, employment growth and recruitment difficulties eased in Q2, however, total labour costs per employee had increased due to the introduction of the National Living Wage.
Despite a decline in capital market insurance and corporate finance activity, bank credit availability has stabilised and peer-to-peer lending continues to expand.
The Bank of England’s agents were interested as to how peer-to-peer lending was being harnessed amongst corporate borrowers. After gathering information, the intelligence suggested that growth in P2P lending had been strong throughout 2015, and this trend has continued into 2016.
Receiving an institutional cash injection into the sector, the supply of P2P funding was supported, allowing P2P lenders to offer larger loans. This escalated loans offer pricked the ears of many borrowers, with property investors finding P2P particularly attractive. Unsurprisingly, “property-related lending had accounted for a large part of the recent growth in lending for some P2P platforms.”
As an overview, the number of P2P lending platforms has continued to grow, and the range of financing options has expanded, including for working capital, such as new types of invoice finance. Furthermore, reports did surface of a myriad of plans to introduce further P2P lending platforms in the future.
Generally, those investigated viewed P2P lending as a useful and growing source of finance, particularly suited to smaller businesses. Those questioned reported that the reason P2P loans skyrocketed in popularity was due to smaller borrowers struggling, or perceiving there to be barriers, with regard to the availability of bank funding. P2P lending has been championed amongst start-ups and micro firms who have not been able to access bank finance, or more generally amongst borrowers whose projects and concepts fall outside of a bank’s lending criteria. In some circumstances, banks themselves were openly referring clients to P2P lenders as a solution. However, in the majority of scenarios, borrowers were contacting P2P lenders directly.