In March of 2013, frustrated by the unwillingness of banks to lend to SMEs, the government injected £55m into four major p2p players: Zopa,Funding Circle, Boost and Credit Asset Management. Funding Circle have since distributed their £20m share, making loans to over 2000 businesses and creating over 6500 jobs. Now the p2b lender is getting £40m – this time through the government’s new British Business Bank. The arrangement specifies that this taxpayer money will be used to fund 10% of each successful borrower request made via the platform, with the remaining 90% coming from private investors.
The Secretary for Business, Innovation and Skills, Vince Cable, commented:
“Too much business lending is concentrated in the big banks. If we’re to have a properly functioning business lending market, they need to be challenged by new banks, peer-to-peer lenders and other alternative providers.”
Mr. Cable will be delivering a much-anticipated keynote speech at the fast-approaching AltFi Summit 2014, on March 11th at Vinopolis. It will be fascinating to hear his thoughts on this rapidly maturing sector. With institutional money steadily beginning to pour into the space, the news of increased government involvement serves as a further endorsement of AltFinance forms.