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Households and businesses seek alternative forms of finance as Coronavirus hits

The coronavirus has not only had a major impact on the health and wellbeing of the nation, but also their purse strings.

Financially, the coronavirus has forced thousands of Britons to lose their jobs or stop working and subsequently a huge loss of income.

Whilst the UK government has set aside reimbursements for up to 80% of staff wages and a self-employed grant of up to £2,500 – this does not cover a large volume of the population and comes with a number of restrictions.

At the same time, a number of high street banks and mainstream lenders have tightened up their lending criteria and getting a typical personal loan is far less accessible. Subsequently, a number of UK households are seeking alternative forms of finance to tide them over the unpredictable coronavirus period.


Credit card and bank overdrafts

With 50% of Britons owning a credit card, this typically comes with an overdraft facility that allows you to borrow up to a certain amount, with fees applying.

Your overdraft limit is based on various factors including your income, credit limit, repayment history and credit status – however, this is something that you can request to extend.

Most UK banks have committed to no overdraft charges for the next month, but it is worth asking your bank or credit card provider what options are available.



Most of the UK banks have committed to offering mortgage holidays for a period of three months, giving fledging homeowners an opportunity to put off payment and have this added to their mortgage agreement later on.

Whilst one-month mortgage holidays are common, a three-month holiday has been offered to accommodate any difficulties during the coronavirus period.

This offer is subject to each bank and individual circumstances, but beyond this, other financial options available through your mortgage provider include using second charge mortgages and releasing equity from your home, known as equity release.


Peer-to-peer borrowing

Peer-to-peer loans involve borrowing money through a platform such as Ratesetter, Zopa or Fund Ourselves and the loans are offered by other individual investors who are looking to earn a return on investment, ranging from around 3% to 15% per annum.

Whilst a lot of mainstream short term lenders are not offering finance at the moment, those investing with peer-to-peer loans have a greater incentive, since they may only earn their maximum investment if they do not withdraw during a certain period – and some peer-to-peer platforms do not let you access your money at all.


Asset-backed finance

Whilst unsecured lending remains limited, having a strong asset may offer a better chance of approval.

This includes borrowing money against commercial properties or securing a loan against valuable items of art, jewellery or vehicles.

The role of invoice financing is very useful for businesses, allowing you to borrow money against any pending invoices and if they are placed with strong and large companies, there is a low risk for lenders and a strong likelihood of repayment on-time.