The British Business Bank (BBB) is buying into RateSetter’s rapidly scaling SME lending programme.
The BBB first began pumping money through the RateSetter platform in July 2014, with the express purpose of providing funding to sole traders. £10m was then to be put to work, which would comprise 40% of any qualifying loan until £4m of the money was used up, after which point the remaining funds would make up 20% of all qualifying loans.
What classes as “qualifying” now includes SME loans. RateSetter recently revealed that a whopping 40% of its outstanding loans belong to businesses of some description. That’s £180m of RateSetter money that has been allocated to “commercial” loans (including £43m in property loans), as distinct from consumer loans. The platform has experienced a 60% year-on-year increase in SME lending over the past 3 months.
There isn’t a huge amount of the BBB’s initial £10m left – just £2m of the original amount, plus any repayments to date – but part of what there is will be allocated to SME loans. Though the Bank hasn’t publicly committed to lending further amounts via the platform, the inclusion of SME debt might well serve as a blueprint for future RateSetter cooperation. The BBB’s stamp of approval will likely also serve to quell any concerns over the “quality” of RateSetter's suddenly accelerated commercial lending activities.
Rhydian Lewis, Founder and CEO of the platform, offered his thoughts:
“In recent years banks have pulled the shutters down firmly on lending to small businesses. RateSetter is helping to reverse that trend and our book of loans to SMEs is growing strongly – business loans make up £137m of our outstanding loan book. We are very pleased that our partnership with British Business Bank Investments Ltd has delivered finance for almost 1000 creditworthy sole traders across the UK, and it is great news that this will now be extended to small businesses.”
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