Demystifying platform lending

'Forging' its place

The number of alternative finance vehicles available has increased in recent years. Small and medium-sized businesses have looked to them for funding, as high street banks have withdrawn from this sector. Their relatively high yields and low correlation to other asset classes have attracted investors.

However, there is a lack of clarity regarding different formats, credit competency and risk levels. It is important to demystify this still-nascent sector, and I would argue the platform market is now at a stage of maturity where regulation is required.   For some time, these companies have been able to write business and sell into the retail and professional market via loan notes without the full protection of regulator oversight. The associated risks are increasing as the market becomes larger and the products enter into a more mature phase. A ‘platform' is a mechanism by which an a...