The UK's leading alternative finance research outfit, The Cambridge Centre for Alternative Finance based at Judge Business School, has found that peer-to-peer business lending is becoming an increasingly mainstream source of finance for smaller companies.
Launching its fifth annual UK Alternative Finance Industry Report, the CCAF said that the UK's online alternative finance market saw volumes grow 35 per cent in 2017, reaching £6.2bn, up from £4.6 bn the year before.
Small business lending remained the biggest segment of the P2P market, with £2bn of transactions in 2017, a 65 per cent year-on-year increase. The CCAF researchers suggest that this means P2P business lending represented 29.2 per cent of all new loans to small businesses in 2017 – nearly double the 15.3 per cent figure in 2016.
The market is also becoming increasingly institutional. Some 40 per cent of funding for P2P business lending came from institutions in 2017 including mutual funds, pension funds, asset managers, banks, family offices and other financial institutions. This compares with 28 per cent in 2016.
"P2P Business Lending is becoming an increasingly important contributor to overall SME financing in the UK," the report says. Lending to consumers via P2P platforms reached £1.4bn in 2017, followed by P2P property lending at £1.2bn and invoice trading at £787m.
The report also found that equity crowdfunding grew by 22 per cent year-on-year to reach £333m, but debt-based securities stayed constant at £79m.
Bryan Zhang, executive director of the CCAF, said: "This report reflects an industry that is playing an increasingly important role in helping consumers and businesses access finance, whilst growing to become more diversified, sophisticated and institutionalised."
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