News Briefing - Crowdfunding, SME And Alternative Finance

Construction workers eat lunch 200 feet up in the air.

1.UK - FinTech 


“Lending to SMEs in the UK was more than double the 2019 total, according to figures released by UK Finance, reaching £54bn. 

Gross lending increased by £36bn in the period, boosted by over 1.5 million businesses borrowing with government-guaranteed facilities totalling over £68bn. 

Across the UK lenders have issued 229 Bounce Back Loans Scheme (BBLS) and 10 Coronavirus Business Interruption Loan Scheme (CBILS) facilities for every thousand businesses, dwarfing loan approval volumes seen in previous years. 

Stephen Pegge, Managing Director of Commercial Finance at UK Finance, says SME financing was particularly in demand in the service industries, which were amongst the hardest hit by the pandemic.”

2. UK – FinTech 

 

Finextra reports: 


“The UK's Financial Conduct Authority has identified four thousand regulated firms at low financial resilience and at heightened risk of failure as a result of the economic downturn caused by the coronavirus pandemic. 

As many as 19,000 solo regulated firms responded to an FCA survey designed to assess the impact of Covid-19 on their financial resilience. The watchdog also used existing regulatory reporting data, enhanced data purchased from a third-party provider and in-depth analysis of liquidity for a number of the most significant firms in determing solvency.

Of the four thousand firms identified as a at risk, Sheldon Mills, executive director of consumers and competition says: "These are predominantly small and medium sized firms and approximately 30% have the potential to cause harm in failure.

The survey results show that between February (pre-lockdown) and May/June (during the impact of the first lockdown), firms across the sectors experienced significant change in their total amount of liquidity. This was defined as cash, committed facilities and other high-quality liquid assets.

Three sectors saw an increase in liquidity between the two reporting periods: Retail Investments (8%), Retail Lending (8%) and Wholesale Financial Markets (83%), the latter seeing the greatest increase. The other 3 sectors saw a decrease in available liquidity: Insurance Intermediaries & Brokers (30%), Payments & E-Money (11%) and Investment Management (2%).” 

  

3. UK – FinTech 


Crowdfundinsider reports: 


“Fintech companies such as Revolut and Luno are experiencing a dramatic surge in demand from customers who are rushing to invest in Bitcoin (BTC) and other digital currencies amid record-breaking and unprecedented cryptocurrency price increases. 

Fintech app providers that offer crypto trading, like Revolut, eToro, and Luno, are witnessing a sharp rise in demand for virtual currencies on their platforms, following a rise in the Bitcoin and Ethereum (ETH) price (along with other altcoins). 

Revolut’s management revealed that they’ve been able to attract 300,000 new digital currency enthusiasts during the past month. 

In statements shared with Business Insider, Luno’s CEO Marcus Swanepoel noted: 

 “A number of forward-thinking Fintech companies have already introduced crypto offerings over the past 2 years as an addition to their existing features.” 

Online trading and banking app providers that also provide digital asset trading options have been able to take advantage of the increased interest in cryptocurrencies. 

Money management app Revolut, which provides crypto trading as part of its wide range of services, stated that it has seen around 300,000 new digital asset customers during the past 30 days. These new traders are trying to take advantage of the increase in the Bitcoin (BTC) price which is currently trading at just under $37,000 (another all-time high). Around 100,000 of these new signups have come since the start of this year, Revolut claims. 

As reported recently, digital bank Revolut’s app was downloaded 5.8 million times in 2020, which is more than Monzo and Starling Bank combined. 

Revolut’s relatively high number of downloads (5.8 million) may be attributed to its steady global expansion efforts, with its app now available in 36 different countries. Meanwhile UK-based digital bank Monzo has only expanded its business operations to the US, and Starling is focused on establishing operations across Europe this year. 

As covered, digital banks and Fintech challengers are now under a lot of pressure to demonstrate that they can generate profits, because investors are expecting returns. 

Although these new challengers have struggled to achieve profitability, the demand for digital banking services and online platforms has increased during the COVID-19 pandemic. Fintech Unicorn Revolut’s customers spent 2.6x more on online e-commerce than on in-store purchases.” 

 

4. UK – FinTech 

 

Alternative lender ThinCats facilitated £289m worth of loans to mid-sized businesses last year, according to AltFi. 


“The fintech was one of the first to be accredited to the government-backed Coronavirus Business Interruption Loan Scheme (CBILS) in April 2020. It was also one of the few alternative lenders accredited to the Coronavirus Large Business Interruption Loan Scheme (CLBILS). 

Amany Attia, CEO of ThinCats, said: “The economic impact of Covid-19 will be long felt so it’s vital that businesses can access the funding they require. Alternative lenders like ThinCats have demonstrated that there is an important role for non-bank lenders dedicated to support growth businesses that will drive much of the post-pandemic economic recovery.”  

“Looking into 2021 there will be further funding requirements for many businesses as they look to invest, acquire and grow. We have substantial amounts of lending capital to deploy and look forward to supporting many more mid-sized businesses with their specific needs over the next 12 months.”  

ThinCats also revealed that it had another record-breaking year, dishing out 45 per cent more funding in 2020 than it did in 2019, smashing the record it set the year before.” 

 

5. US – FinTech 


Crowdfundinider reports: 


“The year of COVID-19 was a difficult time for all. 2020 saw government-mandated lockdowns, a shift to virtual offices, and a health crisis that has not been experienced in many decades. While all industries had to adapt, some thrived – typically tech-centric firms that have benefitted from the ongoing digital transformation taking place. Investment crowdfunding is one of the industries that has not only survived but in some aspects has thrived. Anecdotal reports indicate that after an initial slowdown, investors and issuers returned to investment platforms in droves. 

Today, Crowdfund Capital Advisors (CCA) has shared data pertaining to Regulation Crowdfunding or Reg CF in the US.  The smallest exemption facilitating online capital formation, Reg CF allows issuers to raise up to $1.07 million from both accredited or non-accredited investors. An issuer must use the services of a FiNRA regulated funding portal or broker-dealer. But things are posed to change as beginning next month, issuers will be able to raise up to $5 million – a material update – that will benefit both issuers, platforms as well as investors. 

According to CCA’s numbers, in 2020 capital commitments to Reg CF issuers rose by 77.6% from $134.8 million in 2019 to $239.4 million in 2020. The average raise increased from $298,331 in 2019 to $308,978 in 2020.”