News Briefing - Crowdfunding, SME And Alternative Finance

three women and a man discuss reports

1.UK – AltFi

GB Investments on tighter EIS controls:

“HMRC has reduced the number of approvals it gives for the funding of small businesses through the Government’s flagship Enterprise Investment Scheme (EIS).

HMRC approved only 62% of the total of 3,270 requests from SMEs to raise money through the EIS submitted in 2018/19, down from 75% in 2017/18, says Growthdeck, the private investor network.

Over the last 10 years HMRC had been approving an average of 85% of applications under the EIS scheme.”

2. UK – P2P

The Mirror runs a piece by Martin Lewis, who invests in P2P himself, and explains the risks.

  • “There's NO savings safety back-up if firms go bust, unlike with normal savings.
  • Individual borrowers may be unable to repay, so how big your lending chunk is to each individual matters.
  • Getting money out quickly can be difficult, especially if others are trying to 'sell' their loans on at the same time.
  • Legally the loan is usually between you and the borrower, so if a platform goes bust, you're still owed. They should have policies to keep collections going after they go bust, but it's mostly untested. Investors in collapsed firm Lendy are still waiting to see if they'll get back their share of the £150m invested.
  • Those are the known unknowns, but as it's a new industry, I've always warned, and still do, of potential unknown unknowns, ie, risks that no one has thought of yet.”

3. UK - Alt Fi

AltFi reports:

“A group of fintechs which are "revolutionising money management" have each been awarded £50,000 with a further £250,000 up for grabs, in the Open Up 2020 Challenge.

The competition, run by Nesta Challenges in partnership with Open Banking Limited, has announced the 15 finalists. The competition aims to address common issues facing consumers from the challenge of saving, budgeting and mortgage affordability.

The finalists have each secured £50,000 to "develop innovative solutions" which use open banking to transform how people manage their finances.

Three of the fintechs will receive a further £50,000 based on their "solution's emphasis on financial inclusion", for example addressing financial wellbeing for the vulnerable and elderly.”

4. UK – AltFi

Jim Armitage in the Evening Standard looks at Blackmore, which sold unregulated mini-bonds, with the same high commmision as LCF, and through the same marketing company. Very little seems to changed at Blackmore since we reported in August that the FCA had ordered them to stop taking deposits. 

The property investment firm is struggling with huge delays on many of its construction sites.  "Several that should have been finished by now have not even started.

"Blackmore Bonds has had to delay paying its 2500 investors last month’s interest instalment and was also late paying out in the previous quarter.

"Analysis of its portfolio gives rise to further alarm amid heightened worries among investors and regulators about such high-risk bond firms. Many Blackmore bondholders lost money on LCF.

"Blackmore insists there is nothing amiss in its business. "

5. International – FinTech

Mondaq runs a comparative analysis of FinTech locations, with Malta to the fore.