Growth Street announces new measures to protect its borrowers and investors
Growth Street has announced that it has initiated a liquidity event to protect its borrowers and investors. This is due to the unprecedented impact that the novel coronavirus (COVID-19) has had on the business finance industry and the wider economy.
Growth Street has taken this move to maintain stability within its loan book, helping to protect both borrowers and investors from any further disruption as a result of COVID-19.
Growth Street has already undertaken a number of measures to strengthen the business and decrease exposure to risk for its investors:
Borrower portfolio risk assessment
It has conducted an in-depth assessment of its borrowers and evaluated the risk that negative economic conditions would have on them. Furthermore, it will continue to monitor its portfolio as developments unfold with its industry-leading technology.
Rebalancing its loan book
In October 2019, prior to the outbreak of COVID-19, Growth Street began to re-evaluate the concentration of its loan book by both loan facility sizes and industry segmentation. It has made significant progress in managing down and off-boarding borrowers that no longer fit its improved credit risk and industry concentration appetite.
Additionally, it has implemented robust credit breach monitors to evaluate the on-going performance of our borrowers, which enables Growth Street to react much more quickly to any potentially adverse stumbling blocks.
This Liquidity Event will signal a period of time whereby investors will be unable to request the withdrawal of funds. This can last up to 90 days.
Thomas Hoegh, Growth Street founder, CEO of Arts Alliance, and single largest individual investor on the platform, said: “The uncertainty we are seeing as a result of COVID-19 has had a material impact on the UK’s economy, and has already led to investors across peer-to-peer and beyond to seek to liquify their investments. Growth Street is demonstrating its ability to always remain ahead of the curve in initiating a liquidity event early in the period of economic uncertainties associated with COVID-19, and I am confident that this move will protect its investors and borrowers from instability.
“It is crucial that, in these trying times, we continue to support those smaller businesses which form the beating heart of our economy. Though I am sure that my fellow investors in Growth Street will be frustrated and concerned with this decision to initiate a liquidity event, I hope that they too will recognise that these steps are being taken to protect both their investments and the SMEs that they support.”
Kim Goetzke, chief operations officer at Growth Street, said: “Our decision to initiate a liquidity event has not been taken lightly, and we recognise the frustration and concern that many of our investors and borrowers will be feeling. Though this decision was difficult, we are confident that it is the right decision to protect both our investors and our SME borrowers across the country.
“In order to ensure the stability of our portfolio, we are constantly and diligently monitoring the risk exposure of every single business on our loan book with our industry-leading credit assessment technology. Even before the outbreak of COVID-19 earlier this year, we had already undertaken a process of ‘rebalancing’ our portfolio, and so while we face a challenge in overcoming the risks associated with this current economic climate, we are well prepared to overcome them in the weeks and months to come.”
