UK Alternative finance sector breaks £1bn barrier

Figures show P2P lending, crowdfunding and invoice finance sectors in rude health

The UK alternative finance sector exceeded more than £1bn in total transactions in 2013, demonstrating the burgeoning growth of the sector, according to new figures.

Figures released this week by industry publication AltFinanceNews.com showed that the sector – which includes peer-to-peer (P2P) lending, crowdfunding and invoice lending platforms – hit £1,028,340,769 in total transactions on December 31st, 2013.

 

The statistics also showed that industry growth rates rebounded in December to 7.1%, after slipping to 6% from 8.5% the previous month.

AltFinanceNews’ figures demonstrate increasing confidence from borrowers in alternative finance, which has been spurred on by declining numbers of traditional bank loans to small business.

It comes shortly after City watchdog the Financial Services Authority put forward a number of proposals to regulate the fast-growing crowdfunding and peer-to-peer loan sectors in order to lend them greater legitimacy in the future.

Rhydian Lewis, founder and CEO of P2P lender Ratesetter, commented: “[The £1bn figure] is an exciting milestone which proves that peer-to-peer has moved beyond ‘alternative finance’ to become mainstream ‘modern finance’.

“We expect our sector to triple in size in 2014 with the introduction of a new regulatory framework acting as a major catalyst.”

AltFinanceNews included a breakdown of transactions per loan provider, with the providers split into those that have facilitated loans of £100m or over, such as Zopa, and the sub-£100m providers, including LendInvest and Crowdcube.

  Net Aggregate Flow January 1st (£) Growth rate (%)
Zopa 438,826,300 3.3
Ratesetter 150,730,298 12.5
Funding Circle 198,299,400 9.1
Thincats 48,364,000 11
MarketInvoice 102,357,032 12.6
TOTAL 941,906,029
Increase on month (%) 7.14
Crowdcube 16,488,270 2.4
Platform Black 35,000,000 11.1
Assetz Capital 11,617,335 25.4
Wellesley & Co 3,965,385
FundingKnight 3,453,000
LendInvest 15,910,750
TOTAL 1,028,340,769

 

The table shows that London-based P2P lending giant Zopa still dominates the alternative finance sector, with the provider alone responsible for almost half of total transactions.

Whilst the figures reveal considerable disparity in growth rates between companies, AltFinanceNews said that this could partly be attributed to the different models and target markets used by providers.

It argued Crowdcube’s comparatively modest 2.4% growth was largely down to its start-up focused market and resultant stringent vetting process, suggesting it is taking its time to only work with the right companies.

P2P lender Assetz Capital had the most impressive growth figures, expanding by more than a quarter, and CEO Stuart Law commented: “We’ve been able to grow so quickly thanks to two key things: firstly, the tangible security we take on every loan protects our lenders and gives them the confidence they need to invest.

“Secondly, we have the most experienced lending team in the P2P industry, which means that we’ve been able to source high-quality loans which are well-secured and provide a high rate of return.”

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