UK peer-to-peer lending sector now worth over £2.1bn

Lending to British firms exceeded £1.2bn in 2014 with 90% increase in companies and consumers borrowing through P2P providers

Peer-to-peer (P2P) lending to UK businesses and consumers reached a staggering £1.2bn in 2014, taking total lending by the industry to £2.18bn – more than double the figure at the end of 2013.

The new data, published on Friday by the P2P Finance Association (P2PFA), reported a 90% increase in the number of British firms using P2P lenders in 2014; rising from 73,700 at the start of the year to 139,749.

Similarly, the findings also showed an increase in the number of P2P providers with the number of lenders growing from 86,000 to 114, 697 across 2014.

The P2PFA gathered the data from its member companies which includes MarketInvoice, Funding Circle, Ratesetter, Zopa, LendInvest, ThinCats, Lending Works, Landbay and Madiston LendLoanInvest.

The news marks yet another boost for the alternative finance industry and follows  Santander and RBS’ recent commitment to refer businesses rejected for a bank loan to alternative providers such as Funding Circle and Assetz Capital.

RBS previously estimated that the P2P market contributed 1% of total lending to small businesses but said it was growing by 200% year on year.

The milestone figure also coincides with news from small business finance portal Alternativebusinessfunding.co.uk, a site launched in 2014 by leading alternative funders, that an estimated 2,500 small and medium-sized business have found funding through its platform to date – representing strong demand for alternative finance solutions.

Christine Farnish, chair of the P2PFA, commented:

“These figures demonstrate the growing impact peer-to-peer lending is having on the market. Last year showed continued and solid growth in the consumer market and a significant increase in lending flow to businesses. Invoice finance and peer-to-peer finance within the property market are also growing.

“2015 will be another important year for our industry. The government has agreed that peer-to-peer lending should become part of the ISA tax-wrapper, a decision we warmly welcome. Our strong view is that government should establish a new ‘Lending ISA’ category to enable consumers to understand the difference between peer-to-peer lending, cash savings and stocks and shares investments.”

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