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Have we Bounced Back?

Our analysis on the economy as restrictions ease in the UK.

17th August 2021

Momentum in entrepreneurs

According to some forecasters, the UK economy is growing the fastest it has in 80 years. With the size of the economy now comparable with 2018 figures, the recovery is well underway with some estimates saying the economy is only 3% smaller than before the pandemic. The question is, can the momentum be sustained?

We believe it can, even if economic growth does begin to slow slightly. And we think this for several reasons:

  • There is a less saturated market with fewer competitors who sadly didn’t make it through the lockdowns
  • The drag of Brexit has gone, and businesses and investors are no longer on hold
  • There has been a tremendous capital injection into the market through government stimulus
  • Business owners have invested their time correctly to restrategise, prepare to grow their businesses
  • New trading opportunities are becoming apparent within the international landscape
  • The success of the vaccine programme has opened up the UK faster than many other countries 

We think, if GDP can be sustained at around 4% annual growth then this would place the UK in a fantastic position for the remainder of the decade. 

Post COVID-19 trading

Post pandemic business methods have changed. For many businesses, the new revenue streams they created to help them navigate and survive the pandemic are still in play, while original revenue streams have now been able to resume. 

Let’s take restaurant businesses as an example. Many made investments into outdoor seating to increase their capacity while abiding by government regulations. Now they are able to host customers inside their venues too, they have higher capacity and therefore are able to achieve higher revenues. 

This expansion of revenue stream is something we’re seeing across many businesses. Many who were on-premise only, have gone online, and now the country is opening up again, they have kept their online offering to support their on-premise sales. 



A key challenge is maintaining the additional debt capital that has been injected into the economy. If a significant portion of this capital has been used as investment rather than working capital then the theory says businesses should also increase their profitability and be able to maintain the loans. 

For others, there needs to be an ability to raise equity or to convert the debt into equity to allow businesses to flourish.  We are already seeing these mechanisms being developed, and innovations within financial services play a huge part in this.


Post government stimulus landscape

As the government continues to pull back on the level of stimulus and loans offered to businesses, non-government backed finance platforms will continue to accelerate growth now that there is a much less competitive market. The government stimulus has largely done what it intended to, which was to preserve businesses and stabilise the economic shock. Financial innovation can continue to develop and new products and services can be offered to SMEs to help them grow. This, in turn, will provide more jobs and therefore help to stimulate the economy even further.

With Crowd2Fund we offered a revenue loan during the crisis which allowed businesses to access capital where the repayments are tied to the revenue of the business. So as the economy returns to normal and the revenue of a business increases so then do the repayments back to investors – thus providing much needed flexibility.


The future of SME finance

The funding landscape for small businesses looks good - with more sources of finance available for SMEs than ever before. Be that through debt or equity there are new and more modern techniques to assess the credit worthiness of SMEs and thus reduce rejection rates and preserve investor earnings. Crucially, these modern techniques can be used to help assess businesses in markets where there may not be the infrastructure or underlying data readily available (for example in more developing countries).

We also think it’s likely that interest rates will rise. Therefore Crowd2Fund is currently researching an even higher interest rate bracket and understanding how loans could be offered to businesses potentially with an 18% APR return.

The use of big data and AI will continue to develop using 3rd party data sources such as social media profiles and open banking, to build a better understanding of the business. A new trend we are seeing is the development of credit policies driven through big data. At Crowd2Fund though we still feel the human element of making the investment decision is crucial – but can Artificial Intelligence be developed to be a better judge of a business’s ability to repay a loan?


Growth at Crowd2Fund

Having made it through the pandemic we have seen steady growth during the first half of this year with 20% month on month. We will continue to open up features on the platform and deliver our Reboot Britain plan.

We have already commenced with development of our enhanced international platform which we hope to have fully live later in the year. We are continuing to expand our team with new hires in business development and credit management. Our default rate remains low and our average interest rate this year on the platform has been offered at around 13%. We will continue to grow the team, improve the technology and list more great businesses for you to invest in.

If you’d like to get involved we invite you to join now for free. 

Via the government’s Innovative Finance ISA scheme you can invest up to £20k per year, tax free, as you help UK businesses grow.




Risk warning:

Past performance and forecasts are not reliable indicators of future results. Tax treatment of any of the investment offers will depend on the individual circumstances of each investor and may be subject to change in the future. If you are unsure about any aspect of the information provided by the company, you should seek advice from an independent financial adviser. Do not invest more than you can afford to lose. Investing in start-ups and early stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Investing in start-ups may expose the individual concerned to a significant risk of losing all of the money or other assets invested. Peer-to-business lending through Crowd2Fund is not the same as holding a bank or building society savings account. When making a peer-to-business loan, your capital lent to a borrower is not covered for compensation in the event of a loss by the Financial Services Compensation Scheme. It may prove impossible to recover all or part of the loan by calling in the business assets held as security on that loan. Reward and Donation funding types are not regulated by the Financial Conduct Authority Crowd2Fund Limited is authorised and regulated by the Financial Conduct Authority (FRN 623683). Crowd2Fund Limited is registered in England and Wales. Registered No. 08472687 Registered Address: 242 Acklam Road, London, W10 5JJ.

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Risk warning

Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change. Please see our Risk section before making an investment decision.