We have spoken in the past about the dearth of financing options for Small and Medium Enterprises in Ireland following the recession. Recently, there seems to be a push towards recognising the importance of SMEs as the backbone of our economy and as such, the need for available funding to ensure their continued success.
One such form of funding of which Ireland has seen very little in recent years is ‘Peer to Peer’ (P2P) lending. The term might bring flashbacks of desperately attempting to download your favourite songs on a dial-up connection but rest assured this is a far more functional process. Peer to Peer lending is now one of the most popular methods of funding a business or idea (think Kickstarter, IndieGoGo etc. these options are also known as ‘crowdfunding’). The process allows ordinary individuals with cash to invest be ‘matched’ with a business seeking finance. The entire process is done online which reduces overhead costs and generally makes for a smoother and cheaper lending process for both parties.
One such Irish Peer-to-Peer lender, Linked Finance has recently received full authorisation by the UK’s Financial Conduct Authority (FCA) to allow the company to enter into the UK Market. Linked Finance’s CEO Niall Dorrian was quoted as saying the following about the authorisation:
“I am very pleased that we have secured full FCA approval. It puts us ahead of the curve in terms of preparing for any regulation of the sector in Ireland. It also demonstrates to lenders and borrowers here at home that Linked Finance operates to the highest standards.”
The authorisation is well timed for Linked Finance as our own Department of Finance has initiated a public consultation process with the view of imposing some regulations on Peer-to-Peer lending in Ireland, aiming to make this a safer process for all parties. The UK already has a comprehensive regulatory procedure with regard to P2P lending, and it is thought that Irish practises will begin to follow suit as P2P lending grows in popularity here. The UK also already has many options in place for funding SMEs which Ireland may eventually follow suit on given that these enterprises make up such a large chunk of our business.
Linked Finance have already facilitated more than €25m in loans to Irish SMEs and it is hoped that in the future there will be a marked increase in lending options for SMEs as they continue to be the backbone of our economy. Linked Finance in particular hope that any kind of regulation will be a help to the sector rather than a hindrance as CEO Dorrian has said:
“Any regulation of the sector in Ireland should seek to encourage, rather than inhibit, further diversification within the financial landscape.”
For now, at least, times seem to be changing positively for Irish SMEs and long may this last.