Ireland’s P2P Lending Platform, Linked Finance, Asks Government to Extend Nation’s €2 Billion Credit Guarantee Scheme to Non-Bank Lenders

Ireland-based Linked Finance, a peer to peer (P2P) lender, has asked the Irish government to extend the nation’s €2 billion (appr. $2.35 billion) credit guarantee scheme to P2P and non-banking lending platforms.

The UK has introduced the COVID-19 loan scheme, however, Ireland’s alternative lending solution providers have been critical of the government’s decision to make the SME credit guarantee scheme accessible mostly to traditional banks.

Niall Dorrian, CEO at Dublin-based Linked Finance, noted that the non-bank sector should play a key role in the disbursement of loans during the pandemic.

Dorrian revealed that the UK has approved 96 lenders to help with emergency lending and emergency funding. He argues that the country can’t depend on a few banks to provide loans or financing and that it would be “foolhardy” to do so.

The Irish government has set aside €2 billion to assist SMEs during the Coronavirus crisis. The nation’s government said it would guarantee 80% of each loan provided by banks to local businesses.

Most of these loans will most likely be issued through traditional banks, while alternative lenders might not get a chance to help out as much with loan disbursement or other types of funding.

Linked Finance has provided payment breaks or freezes and has also been deferring start loans to its SME clients since the COVID-19 pandemic began.

In January 2020, Linked Finance launched five-year unsecured business loans for Irish SMEs.

The P2P lender had been offering unsecured loans of up to €300,000 to Irish companies “with more complex funding requirements.” The company describes the loan product as “providing an attractive alternative to asset financing when companies are looking to invest in new machinery, equipment, vehicles and other capital projects.”

In March 2020, Linked Finance reported that it would be providing a “Deferred Start Loan” that includes no payments for the first three months of the security.

The 15-month loan allows businesses to borrow up to €100,000, with repayments due in 12 monthly installments after the first 3 months. The goal is to provide access to working capital to firms experiencing a reduced cash flow due to the Coronavirus pandemic. The loan is also described as an option for SMEs moving fast to adapt to the new normal.

In May 2020, the Irish government outlined additional plans to help support the economy during the COVID-19 pandemic.

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