SIB Targets Alternative Lending Market with LendingCrowd Initiative

25/10/2016 - Scottish Enterprise has today announced that its investment arm, the Scottish Investment Bank (SIB), has agreed to provide funding of £2.75m to LendingCrowd, an innovative Edinburgh-based peer-to-peer lending platform which provides affordable loans to SMEs.

This is the first initiative to be delivered by SIB under its expanded remit and is expected to stimulate loans of up to £35m to Scottish SMEs, leveraging significant private sector investment and substantially increasing the supply of finance for a broad range of SMEs.

The agreement will allow SMEs to access loans of between £5k and £250k over terms ranging from six months to five years. Applicants will apply directly to LendingCrowd which will undertake the appropriate due diligence on each investment case and provide funding on commercial terms.

The move represents SIB’s first venture into the alternative funding market, as it seeks to increase and broaden the variety of funding available to SMEs in Scotland.

Commenting on the announcement, Kerry Sharp, head of the Scottish Investment Bank, said:

“We recognise that many Scottish companies continue to struggle to raise the funding they need to grow, and evidence points to substantial gaps in the supply and demand for finance within the Scottish market.

“Under our expanded remit, we are increasing the diversity of finance provision in Scotland, and this new initiative with LendingCrowd is the first example of how we are opening up innovative sources of alternative funding to Scottish SMEs.

“Peer-to-peer lending is one of the fastest growing areas of alternative finance and this initiative with LendingCrowd will increase competition in the marketplace and provide greater diversity and choice for Scottish SMEs.”

Stuart Lunn, CEO and co-founder of LendingCrowd, added: “Our groundbreaking agreement with Scottish Enterprise, one of the first initiatives of its kind in Europe, will help to fund the next stage of growth for some of Scotland's most exciting SMEs. This recognises the increasing importance of peer-to-peer access to finance and, in practical terms, will allow a significant number of small to medium-sized businesses the chance to pursue their ambitions to expand and compete in the UK and internationally.”

Alternative and innovative new sources of funding have emerged over recent years in response to changing market dynamics. The UK Alternative Finance sector provided £3.2bn worth of loans, investments and donations in 2015, up 84% compared to 2014.

Since launching in 2014, LendingCrowd has facilitated loans totalling over £7m and has over 2000 investors signed up to its platform. Deals range in size from £20,000 to over £1m, and in 2015 LendingCrowd helped Diet Chef complete one of the biggest ever peer-to-business deals seen in the UK in a £1.5m debt finance transaction.

Companies seeking to raise growth finance can access support to identify the most appropriate sources of finance for their needs, and help them to prepare to successfully secure finance from the SIB team of Financial Readiness specialists.

Source: Scottish Enterprise