Peer-to-peer lenders are preparing for another year of record levels of funding for SMEs (Small and medium-sized enterprises) in 2018. January has seen a profusion of announcements from lenders about new products, platforms and some lenders are revamping their brand in a bid to become the go-to lender for SMEs seeking loans as competition in the sector increases.
Many online lenders are also building out their teams with key personnel and developing new partnerships with brokers and introducers as awareness of alternative finance grows and more small businesses are turning to alternative lenders for funding.
While commercial lenders have high hopes for 2018, the Bank of England’s latest credit conditions survey reports that consumer lenders are forecasting significantly lower levels of unsecured consumer credit in the first quarter of 2018. According to the latest report, unsecured lending to households fell in the fourth quarter of 2017, meaning reductions for all four quarters of the year. Figures published at the start of January revealed the annual growth rate of consumer lending slowed to 9.1 per cent in November, the lowest rate since December 2015.
The Bank of England has previously expressed concerns about the rise in personal debt in the UK and it appears lenders were listening as credit scoring criteria tightened and lenders said they expect to tighten their criteria significantly further.
The Bank’s Financial Policy Committee warned last year that UK lenders were underestimating their potential losses on credit cards and other unsecured loans to customers. It compelled them to hold an extra £10 billion of capital to protect their balance sheets in the event of an economic shock.