The council will no longer lend funds to small businesses through a crowdfunding initiative.
Since 2015 Herefordshire Council has been in a partnership with crowdfunding group Funding Circle to help boost lending in the county.
The peer to peer lending initiative enables large investors to part or fully fund small businesses loans.
The council has contributed to seven business loans since January 2015, lending a total initial principle of £15,560, towards loans with a total value of £ 29,500.
During this time, another 41 Herefordshire businesses have been successful in obtaining loans from Funding Circle with a value over £2,000,000.
The council decided at their meeting earlier this month to ceases lending to Herefordshire businesses on the Funding Circle platform and withdraws its liquid funds.
A statement said: “The council’s intervention on the Funding Circle platform has now served its purpose.
“Funding Circle has sufficient liquidity to guarantee that all business loans placed on the market will be funded.
“Consequently, the liquidity that the council provides serves no purpose, as Herefordshire businesses, eligible for a Funding Circle loan would be funded by private investors.
“If the council sells its loan parts, it will have no impact on businesses and it reduces potential risk to council funds.”
