Leeds City Council will begin lending to regional businesses through peer-to-business lending platform rebuildingsociety.com. Over recent years, the council has been involved in proactively promoting the northern FinTech sector, and now sponsor the weekly Friday seminars. This new initiative is designed to form part of a wider, ongoing regional industrial development strategy.
By lending alongside the crowd, Leeds City Council (LCC) intends to demonstrate its support of SMEs in the region. They will review business loan requests from companies with an LS postcode prefix, and pledge funds to contribute to the loan amounts required. LCC will take into account the industry and location of the company, and plan to also consider lending at discounted rates to key industries. Interest earned will be reinvested, and council representatives will review the performance of their portfolio on a quarterly basis in order to evaluate the efficacy of the committed capital as part of the council’s broader, macroeconomic objectives.
Much of the traditional finance sector is oriented around maximising short-term returns, without consideration of positive externalities. This often leads to a misallocation of financial resource, and means that central government must allocate funding for specific initiatives of economic stimulation, while simultaneously committing to deliver a return. Daniel Rajkumar, rebuildingsociety.com Founder and Managing Director, believes the proposal will provide great financial support to the area. “There is no need to rely on London for local funding needs. By arranging finance online and locally, regions can prosper and go on to further support local communities.”
Simon Brereton, Acting Head of Economic Policy and Sector Development at Leeds City Council, commented: “This is the first public sector organisation to be investing through rebuildingsociety.com. We hope it will attract the interest of other public-sector lenders, as well as prospective borrowers.”