News Briefing - Crowdfunding, SME And Alternative Finance

crowd at an airport

1. UK – FinTech

AltFi reports:

“The drum-beat of banking concern over the weight of debt being placed on UK small businesses is reaching a crescendo.

This week TheCityUK Recapitalisation Group (RCG), led by Aviva chairman Sir Adrian Montague, warned that by March 2021 more than £123bn of government-backed loans will have been distributed via the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS).

Of these, RCG predicts as much as £36bn of loans will have gone bad, overwhelmingly led by BBLS lending (£23bn) which, due to the affordability concerns that we’ve warned about before, will come back to bite.

And especially come back to bite for fintech lenders like Starling Bank and Tide, which will be forced into the expensive process of recoveries (their conduct during this time closely scrutinised) on a huge volume of only moderately profitable loans.”

2. UK – FinTech

The British Business Bank has today announced a raft of new lenders being added to its various coronavirus lending schemes. AltFi reports:

“Joining the Coronavirus Large Business Interruption Loan Scheme (CLBILS), the lending programme which offers government-backed loans to businesses with turnovers in excess of £45m, are Greensill, Metro Bank, OakNorth Bank and Secure Trust Bank.

There are now 16 CLBILS-accredited lenders, which will hopefully help boost the just £1.57bn which has so far been lent out by the scheme.

Meanwhile several lenders also joined the regular Coronavirus Business Interruption Loan Scheme (CBILS) including Growth Lending, inFund, Invocap, NEL Fund Managers and Triple Point, putting the total at now 86.

And Paragon Bank became the 20th Bounce Back Loan provider, still the most popular of the lending schemes with £23.7bn of 100 per cent government-backed loans being distributed.”

 

3. UK – FinTech

Portfolio Adviser on a fund that will lend and convert credit to equity.

“The £500m Future Fund, which launched on 20 May, will issue convertible loans to start-ups that are facing financial difficulties in the current Covid-19 environment.

The convertible loans will be provided by the government through the British Business Bank to eligible UK-based companies and these will be matched by funding from private third-party investors. The loans can range from £125,000 to £5m and the scheme is currently open until September 2020.

What is the application process?

Investors have to initiate the application process for start-ups via an online portal. Start-ups cannot apply.

If they have multiple investors, they will need to appoint a lead investor to submit the application for them. The lead investor will also need to have details of any other investors and on the company itself.

The lead investor must be investing at least £12,500 – however, they do not necessarily have to be investing the largest amount. According to the British Business Bank, once applications are submitted, they are assessed and funding is allocated on a ‘first come, first served’ basis.”

4. UK – AltFi

 

Last year's surge in private-equity backed public-to-private (P2P) takeovers looks set to accelerate after lockdown, according to a new report from Addleshaw Goddard in Private Equity Wire. 

“Research by the corporate law firm suggests the effects of coronavirus will exacerbate the reasons behind the recent increase in P2Ps – leading to even more in the second half of 2020

To P2P or not P2P: Private Equity and Public Takeovers in the Aftermath of Covid-19, released today, has been compiled from a survey of leading mid-market UK private equity firms and their corporate finance advisers. It looks at the reasons for the 2019 resurgence in take-private activity to gauge how the market may react following the easing of lockdown measures.

The report identifies three key factors for P2P activity, being increased competition for private assets among PE houses, a lack of opportunity to acquire privately-held businesses, and the better value proposition provided by listed targets. These interlinked drivers have been exacerbated by the Covid-19 crisis and look set to remain a feature of the deal landscape.”

5. US – FinTech

News of the former (and probably mightily relieved) Lending Club CEO. Crowdfundinsider reports:

“Last month, Upgrade, Inc., a Fintech providing consumers access to credit, was named a “Best Place to Work in the Bay Area” by the San Francisco Business Times and Silicon Valley Business Journal.

Upgrade was founded by well known Fintech entrepreneur CEO Renaud Laplanche. He founded LendingClub (NYSE: LC) and ran the marketplace lending platform for 10 years taking the company public in 2014 before being pushed out. Laplanche was soon back in the game with Upgrade – a new online lender that did not involve retail money. Formed in August of 2016, Upgrade quickly completed a Series A funding round raising $60 million in both equity and convertible securities. At that time, the funding was described as “the largest Series A in Fintech ever and probably one of the largest in the history of technology financing.”