Growth Street confirm they are winding down operations
After five years of trading, the commercial finance lender Growth Street has begun a solvent wind down of the business. The decision to cease trading was taken by the board on the 21st of July due to increasing losses.
Over the past five years, the business has made more than £500 million worth of small business loans but will cease to operate when the Resolution Event comes to an end. Initially, Growth Street reviews on sites such as TrustPilot from both lenders and borrowers were glowing, but over recent months they’ve begun to reflect growing unease about the direction of the company. Concerned customers report that they’ve not had any response to their email and telephone enquiries over the last few weeks.
The Growth Street Credit Facility
Growth Street was founded to try and help plug the gap in bank funding for smaller businesses. Growth Street research identified that between 2008 and 2018, overdraft lending to small businesses was reduced radically as a result of the financial crisis.
Their flagship GrowthLine product was created as a revolving credit facility that allowed businesses to access funds that were tied up in unpaid invoices, work in progress or stock.
It worked in a similar way to an overdraft, allowing business owners to draw down funds, and make as many flexible repayments as they liked.
Growth Streets Mounting difficulties
Problems have been developing for some time at Growth Street. The company filed its 2019 accounts in May, which indicated that the platform had seen its losses increase to a substantial £1.86bn at the end of a particularly turbulent financial year.
The challenges presented by the Covid-19 pandemic have compounded those problems, ultimately resulting in the board’s decision. In June, Growth Street Chief Operating Officer Kim Goetzke had issued a more optimistic outlook, outlining his hope that Growth Street would be able to launch an entirely new working capital finance product as soon as its existing loans were wrapped up.
Over the course of the intervening weeks, it became apparent that there was little chance of rebooting the business and reopening the loan book. A range of different options was explored that would enable them to carry on trading with a new product, but the board came to the conclusion that none of the proposed ways forward were viable.
A core team will remain at the business to oversee the wind-down and closure. This team will continue to support their borrowers in finding new sources of finance while attempting to maximise returns to their P2P investors.
What Should Concerned Growth Street Borrowers Do?
Borrowers who have used funds from Growth Street to help finance their businesses, expand their operations and move into new markets have been understandably concerned about the situation at the lender. At the end of June, Growth Street recalled its loan book, asking borrowers to pay back their outstanding loans or seek alternative sources of finance.
Business analysis of Growth Street’s loan book has discovered that for 51% of borrowers, it was their only source of credit. This has fuelled concerns that a large number of Growth Street borrowers will be unable to find an affordable way to refinance their borrowing in the current climate. This is expected to be made even more difficult as the Covid-19 prompted economic crisis deepens.
The average Growth Street borrower has used 80% of their credit facility, with an average of £148,122 of credit outstanding. The regions of the UK most affected are Yorkshire and the North East, where 80% of borrowers have no other credit facility.
Alternatives are available
If you have been given a 3-month ultimatum to pay back or refinance your Growth Street loan you may well be wondering where to turn. These are challenging times for businesses seeking finance, and it may feel as if there are few easy options.
The large numbers of business borrowers who have been placed in an incredibly difficult position as a result of Growth Street’s closure are of real concern to the team at Enable Finance. We understand just how difficult it can be for business borrowers to find reliable and competitive sources of finance.
How Enable Finance can help access the funding you need
At Enable Finance, we’re experienced at matching business borrowers to lenders. We provide a comprehensive and professional service, built on the back of years of experience.
We’ve seen how the market has developed over the years, and have always kept pace with the change. It’s the smart use of technology that really gives Enable Finance the edge.
What makes Enable Finance different?
As a licensed finance and credit broker, Enable Finance is authorised and regulated by the Financial Conduct Authority. We have a distinct and straightforward approach;
- We keep it simple – we stick to plain, straightforward English and keep the financial jargon to a minimum.
- We stop at nothing – we leave no stone unturned when we’re exploring funding solutions. We work tirelessly to find the best solution for your needs.
- The client is always our focus – we don’t sell products for the sake of it, instead, we make the client’s needs our priority and try and seek out bespoke solutions to your borrowing needs.
- A step-by-step approach – we don’t rush things and work hard to ensure that your options are fully explained and understood. We don’t bounce anyone into a decision that they may regret. We listen to your needs and move at your pace.
We get to know your business
Enable Finance works with over 225 lenders, ensuring our clients have the very best access to the lending market.
All lenders are different, with differing eligibility criteria, fees, costs, application processes, preferred borrowers and interest rates.
We take the time to get to know your business, so we can match your requirements to the most appropriate lender.
We aim to save you time, find you a competitive source of borrowing and help your business to flourish.
If you’ve been hit by the Growth Street closure, we’re keen to help. Why not get in touch with our professional and experienced team today?