Nine in ten of Funding Circle’s business borrowers have resumed their monthly repayments as the peer-to-peer lending platform introduces a formal renewal plan for borrowers who have paused payments due to Covid-19.
In a notice to investors, Funding Circle revealed that “more than 90 percent of UK borrowers are now making their monthly repayments,” approximately eight months after the pandemic forced a number of companies on payment holidays.
The lender also announced to investors that it has begun offering companies the option to formally extend the term of the loan to account for any defaulted payments over the year to date.
“For example, if a company takes three months of payment leave, the loan term increases by three months,” says Funding Circle.
“The renewal means that a company is in arrears with these missed payments to get back on track. If you fail to make a repayment at a later date, you will be in default again. “
That follows current guidelines from the Financial Conduct Authority this means that borrowers should be offered a grace period of up to six months if necessary.
Earlier this month Zopa announced that it is expanding its support to borrowers Affected by the pandemic as England prepared for a second lockdown.
However, Funding Circle has predicted that the second lockdown will not have the same economic impact as the first lockdown.
“In light of additional national restrictions, we continue to monitor the impact this could have on the loan book,” Funding Circle said.
“While it’s early days and there is still a lot of uncertainty, initial indicators are suggesting that the second lockdown will not have the same immediate impact as it did in the early days of the first lockdown in March.
“With this in mind, we are constantly reviewing how we can adapt to best protect your portfolio, and we will continue to do so in the weeks and months to come.”