Impact of marketplace lending on SME’s

Jul 12, 2018 Blog  Marketplace Lending

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Oxford Economics recently did a study on the impact of marketplace (peer to peer) lending on small business loans in the UK, US, Germany and the Netherlands.  The report, which specifically looked at lending by Funding Circle, showed that from 2007 to 2017, they provided £3.9 billion in gross value-added contributions to the GDP of those four countries, and in the process enabled an estimated 75 000 jobs at the end of 2017.

This offers valuable opportunities for a crucial part of any economy – small to medium sized enterprises.  SME’s count for 99% of all firms globally and provide 70% of jobs, according to the Organisation for Economic Co-operation and Development.

Funding Circle managed to grow their platform in a very short period to over a billion dollars, which is the result of a shift in global financial practices.  Banks stopped lending to small businesses after the financial crisis of 2008 and marketplace lending platforms stepped in the fill the gap.

Of the companies who were surveyed as part of the study, 67% said that without funding there would have been an impact on profits,  26% said that it would have affected jobs and 22% said that their business would have failed.  According to a survey Funding Circle did, 50% of their customers first approached a bank and were rejected – 36% said that the process took long!

The report ultimately paints a very interesting picture of how marketplace lending is changing the lending landscape and contributing to economic and job growth.  Technological and financial innovation is giving businesses more options to choose from.

For the full report, click here.

 

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