JustUs Update On COVID-19
By Lee Birkett, CEO & Founder of JustUs.
A calm head in troubled waters
I never believed in my lifetime that I would be writing to a locked down nation, but we are where we are, and I believe we will all get through this crisis if we stick together.
“Let us therefore brace ourselves to our duties, and so bear ourselves that, if the British Empire and its Commonwealth last for a thousand years, men will still say: “This was their finest hour.” Winston Churchill
As many of you know, I went through the credit crunch in 2008/9 and nearly lost everything. Through that harrowing experience I built our online people-to-people savings-to-loan business and vowed that I would never be reliant on the banks, venture capitalists or the money markets ever again.
Well thank God we did, JustUs is today in a sound position, operating entirely in the cloud with an unrivalled team and exciting prospects.
I believe that as we sit here today, the banks are now state-owned in most countries and will never be the same again after the bail outs last week.
I would like to share the four emergency funding recipients that Government are intending to deliver relief for and is planned to have a positive and stabilising financial impact both for JustUs and the wider economy. These four pillars of our economy need support to get the economy back on an even keel following the current and any extended lock down period.
1. Employees
We have a number of homeowner personal loans on the platform. The Govt have committed to ensure that during the lock down period, 80% of wages will be covered for up to 3 months and extended if required.
The reduction in personal spending during lock down will mean that these borrowers should comfortably be able to maintain their day to day finances, including our loans, so repayments should be continuing subject to the Govt scheme taking effect as planned.
2. Self-employed
Sub contractors and the gig economy. The Govt announced earlier today that the self employed will enjoy the same 80% of net-income financial support during lock down, so as above, we expect loans to continue to be serviced.
3. Property developers
The majority of our loans are secured against either property or land, with an average exposure of roughly 50% Open Market Value. We have spoken to our surveyors and as we stand today, all security is still deemed sound.
The strength of our loan book to the three types of borrowers we deal with above means that we are still operating in a ‘business as usual’ capacity. Lenders are free to deposit and withdraw un-lent funds via the platform as normal.
4. Small and medium size businesses (SME's)
The Government have yet to disclose the full details of the major support package – The Coronavirus Business Interruption Loan Scheme (CBILS), early correspondence from the Govt was for a 12 month interest free loan for up to £250,000 for SME's deemed “Good businesses” operating before the Coronavirus hit.
The businesses could access the loans “Unsecured” via their Banks to cover their contracted overheads and return to their business without any economic shocks after lock down. This was very welcome and would have meant all sectors of the society could breathe a little better.
Since the basics of the scheme were announced yesterday, Barclays have advised me this afternoon that they will only offer any business an application to this scheme, if the Directors provide Personal Guarantees and a Debenture on the companies assets for the full £250,000; so not unsecured it appears.
Govt have sold us a red herring with their “80% Govt guarantee”, which only comes into play to cover the banks losses after they call on the business owners personal and company assets if the company fails in the returning 12 months. In this climate no sane person would agree to that.
With the current uncertainty surrounding SME's chance to recover today, the wider economic consequences will be so severe for unemployment and the nations future economic well being, we feel it is prudent and fair to protect all our investors interests by pausing our secondary market trading for 14 days, until the SME situation is resolved.
I am cautiously optimistic that a workable Govt SME Coronavirus loan package will be put into place and we can re-commence secondary market trading.
To provide you all with a level of comfort, we can confirm to date that we have had no liquidity issues, all secondary market trades have completed within seconds or minutes and unlike the majority of other platforms we have not received any ISA transfer enquiries.
I am truly humbled by the support from all our great staff, shareholders, lenders and borrowers.
I will keep you updated once we know the outcome of the Govt SME loan package.
Stay safe.
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