Let’s tackle the elephant in the room: peer-to-peer (P2P) property lending had a bumpy 2019. While some platforms did very well and delivered great returns to lenders, some others had negative press and unfortunately had to close.

Many people, lenders and borrowers alike, saw P2P property lending as a great tool that enabled borrowers unlock funding while allowing lenders access a wide variety of deals that delivered higher returns than cash deposits and lower volatility than equity investments.

But many people argued that P2P property lending was yet to face its first test that would enable the market to assess the strength of its business model.

When Covid-19 hit at the start of 2020, it quickly started to become apparent the pandemic would test the industry and provide it with a unique opportunity to prove its worth.

Fast forward six months since the start of the lockdown, we can now say that this was indeed a challenging test for the industry, one that allowed some P2P property lending platforms emerge stronger while many other platforms had to scale back their operations or shut down.

At Blend Network, we saw our largest lending volumes in June and July. Our underwriting team originated on average close to £100 million of loans per month between May and August.

Ability to lend

There is a simple reason for the strength witnessed that goes back to the purpose for which P2P property lending platforms were created in the first instance: traditional lenders had neither the capacity nor the appetite to lend and their absence was quickly filled by dynamic lenders willing to step in and lend.

According to P2PMarketData, 14 UK P2P lending platforms have so far founded £16 billion and close to £700 million in the past 90 days.

According to this data, P2P property lending platform Blend Network was the UK platform with the largest growth in lending on a 90-days comparison, an astonishing 503% increase. Seven out of the 14 UK platforms tracked saw growth rates above 100% over the past 90 days.

Covid-19 was an unprecedented time that saw many lenders pull out of the market but provided an opportunity for P2P property lending platforms, which stayed open to increase their lending.

Not only was this an opportunity to help new borrowers who were left in the cold by their lenders pulling out, it was also an opportunity to build relationships with new borrowers who appreciated the platforms that stayed stuck by them in hard times.

It illustrated a key strength of P2P property lending platforms: the unparalleled quality of their customer relationships.

As a young and dynamic company that is on track to deliver 100% year-on-year growth in lending this year, we strongly believe that in a crisis, it is paramount to be aware of the dangers but to also recognize the available opportunities.

In summary, Covid-19 provided a test for P2P lending and illustrated how the sector can and must be part of the solution and sowed the seeds for larger portfolio allocations towards the asset class.

The pandemic allowed P2P lending be part of the solution and help the government deploy capital to SMEs.

Roxana Mohammadian-Molina is chief strategy officer at London-based property lending company Blend Network and sits on the Board of Women in Finance 2020