Funding Circle (LSE:FCH) Global Chief Risk Officer Jerome Le Luel has posted on update on the impact of the COVID-19 pandemic on platform operations.
Le Luel said that while the full economic impact of the virus remains unknown and it is too early to predict the full economic impact the UK is likely to enter an economic downturn.
That being said, Le Luel strikes are more positive tone stating:
“While no one knows exactly how the coming months will play out, a short, sharp recession followed by a quick recovery as the economy reopens is likely to see many of these businesses get back on their feet and start repaying their loans.”
Funding Circle has taken multiple measures to try and safeguard investors. This includes offering short-term payment plans to impacted borrowers. It was recently reported that immediate loan defaults lead to more borrowers not paying back the money and providing some leniency creates a higher probability the borrower will make good on any debt.
Le Luel states that Funding Circle has always priced loans so that even if defaults rise their loan books will still likely deliver overall positive returns:
” we are confident investors’ portfolios are well-positioned to weather this period of uncertainty.”
Additionally, Funding Circle has apparently “significantly increased” the capacity to their Collections and Recoveries team. Staff has been redeployed to answer calls, set up payment plans, and to work with borrowers during challenging times.
As the UK moves to re-open the economy, Funding Circle hopes that the short term pain will diminish as the country moves to the other side of the Coronavirus.