Marketplace (Peer-To-Peer) Lending Trends – UKAug 22, 2016 Blog Lending , marketplace , Peer-to-Peer
The combined market activity of the UK online alternative finance industry grew to £3.2 billion – an 84% increase compared to the £1.74 billion of 2014. 2015 saw increased participation from institutional investors. This is particularly significant within peer to peer lending where it is estimated that 32% of loans in peer to peer consumer lending, and 26% of peer to peer business loans, were funded by institutional investors. A number of peer to peer consumer platforms are now offering substantial volumes of business lending to both sole traders and SME’s. Peer to peer business lending remains the largest model by volume of the UK online alternative finance market. In total, nearly £1.49 billion was lent to SME’s. This represents a 99% year on year growth rate and 194% average growth rate between 2013-2015. A section of this amount came from the real estate sector. Nonetheless, even after excluding real estate lending, peer to peer business lending still recorded a considerable £881 million for the year 2015.
Peer to peer consumer lending reached £909 million in 2015, compared with £547 million in 2014. With a 66% year on year growth rate and a 78% average growth rate for the period 2013-2015, the peer to peer consumer lending sector is growing fast and continues to provide efficient consumer credit to UK borrowers. Several peer to peer consumer lending platforms are also expanding into business lending, driven by the influx of institutional and government funding. Online alternative business finance has become an increasingly important channel of financing for entrepreneurs, start-ups and SME’s in the UK, promoting economic growth, creating jobs and fostering innovation. In 2015, it is estimated that £2.2 billion of business finance was raised through online alternative finance platforms, providing venture, working, growth and expansion capital for around 20,000 SME’s in the UK. Year on year, the total online alternative business funding rose by 120% from 2014 and the total number of SME’s served increased by 185.71%.
Besides raising general awareness, alternative finance platforms are also utilising private and public sector partnerships to source both high-quality borrowers and institutional funding. A large number of regional or local authorities have either partnered with online alternative finance platforms to fund local SME’s or have raised alternative finance to fund community projects. Innovative corporate partnerships are being forged between alternative finance platforms, fusing the traditional corporate world with the disruptive models of alternative finance.
It is evident that the alternative finance industry in the UK is going through a transformation. Only with time will we be able to see what really sets the alternative finance industry apart from traditional finance. Click here to read the full report.