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A Leading source of news and resources from uk companies - Published each thursday at 10am


Posted on Aug the 15th
By James Kwan


Posted In: SME's

The Future Of Lending?

In the chaotic aftermath of the banking crisis where economies are still struggling to balance their books and recapitalise, non-bank lending is emerging strongly.

Peer-to-peer lending, a concept whereby a group of individuals back companies who need a loan, is now starting to catch on in a big way.

One organisation is ThinCats, a peer-to-peer lender that increased its funds under management from 1.5m to £10m in fewer than 12 months and is predicting to triple this in the following twelve months. ThinCats are also celebrating a UK record for a peer-to-peer loan by lending £600k in a single deal, all funded by its members.

Kevin Caley, Managing Director a self confessed pessimist about the economy believes despite the growth in his sector they need government backing to be able to make any significant difference to the £190billion a year funding gap in the SME market left by the banks.

Kevin said: “What we have seen is a serious market failure in the small business banking sector and whilst orgnisations like ourselves are growing rapidly it would be unrealistic to expect the peer to peer market to fill the huge gap left by UK banks entirely.  The government has provided £100m to encourage the growth of innovative non-bank lending schemes and this is a great start but if the sector is going to fill the gap left by the banks in a reasonable timescale much more support and encouragement will be needed.”

As you would expect Kevin is a realist and he believes the challenges for the UK economy will be tough.

Kevin continues: “In previous years our government has spent a lot of money on supporting the growth of small businesses, increased further by accessing various EU grants. Almost all of this has now dried up as a result of the spending cuts and like many European economies, there doesn’t seem to be anything innovative or different happening at a strategic level. This can only result in continuing pressure on small businesses and damage to the economy”

Kevin points out that UK government support for new organisations like ThinCats will make a huge difference to their credibility in the market place and allow an acceleration of growth: “the government are going to undertake a lot of due diligence before handing over £100m of public money and that should demonstrate to private investors and their advisors that this is a legitimate new investment class, worthy of consideration for any investment portfolio.

Emergence of the wise crowd

The shift in the peer-to-peer lending market could be as revolutionary as the shift in the way we communicate. In the modern economy this cultural shift and speed at which we exchange ideas is unprecedented. The success of twitter and other social media platforms has not only transformed the way we interact it has also changed governments. Twitter was instrumental in bringing down the Egypt regime.  Google is seen as such a threat that its access is limited in countries such as China to prevent it’s people having uncensored content.

One organisation that has proved that it can utilize a ‘wise crowd’ to author the largest online encyclopedia is Wikipedia.

Could the banking crisis be a sign that big as this industry is, it too is going through a natural innovation cycle? The banking failure could be an opportunity for new types of funding like ThinCats to successfully emerge.


Company ThinCats

Website ThinCats

Founded 2009

Employees3 (ThinCats) which provides an online market for secured business loans, has opened an office in the heart of the UK (Tamworth, Staffs) as the popularity of its approach soars amongst the investment community and with that, frustrated SMEs.

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