Peer-to-peer lender Funding Circle said today it had received accreditation from the British Business Bank (BBB) to take part in the government’s coronavirus business interruption loan scheme (CBILS).
It is the first alternative lender to receive accreditation to lend to customers via the emergency scheme which is designed to help small and medium-sized businesses stay afloat during the coronavirus crisis.
Funding Circle said it would fund the loans itself alongside new and institutional investors.
Under the scheme the government underwrites 80 per cent of the value of the loan, with loans of up to £5m available to businesses with revenue below £45m.
Funding Circle said it expects to start lending in a week when it has completed legal and operational set up with the BBB which is administering the scheme.
The lender said it would focus all its attention on the CBILS scheme as well as the equivalent scheme in the US which is 100 per cent government-backed.
Chief executive Samir Desai said: “Small businesses are the heartbeat of our economy but many find themselves in need of financial support during this time of crisis.
“Funding Circle is uniquely positioned to use its advanced technology, risk and data analytics platform to help distribute funds to small businesses during this time of crisis.
“We stand ready to play our part now we have been accredited to both the UK and US government SME lending programmes.”
BBB chief executive Keith Morgan said: “Our accredited lenders have seen an incredible demand for CBILS since the scheme became available.
“As the first newly accredited marketplace lending platform to be accredited under CBILS, Funding Circle will be able to provide more capacity, more choice and most importantly, vital funding for smaller businesses across the UK.
The CBILS has attracted controversy with worries that the slow rate of lending and strict eligibility criteria could lead to a large number of cash-starved small businesses collapsing.
Former Tory chancellors Sajid Javid and George Osborne have said 100 per cent government-backed loans may be a good idea.
Shadow business minister Ed Miliband has also called on the government to fully underwrite the loans.