The Government-owned SME finance provider will lend £10 million through the platform. This may seem an initially confusing step for RateSetter – which typically operates as a consumer lender. But the borders between consumer lending and business lending within the peer-to-peer sector are rather hazy. RateSetter might, for example, make a “personal” loan to somebody wanting to purchase a van – but that van may then be used as part of the recipient’s business activity. The British Business Bank has stated that it will focus its lending through the platform exclusively upon sole traders and owner-managers who are borrowing for business purposes.
Rhydian Lewis, CEO of the platform, said:
“We have been talking to the British Business Bank for over 18 months. The Bank does thorough due diligence before making any commitment and we, too, wanted to make sure we were ready – as a business and as a marketplace.”
“Over the last year we have seen more and more sole traders and business owners come to RateSetter to borrow and this is the lending that the Bank wishes to support. We are getting to the parts of the economy that others aren’t.”
“I believe in the power of government to catalyse change. The government is not propping up peer-to-peer lending or underwriting any loans; it is lending, on commercial terms, to stimulate lending to the real economy and to catalyse the emergence of peer-to-peer lending as a competitive force in finance.”
“This is welcome – whilst other national governments have dragged their feet (or worse), the UK has recognised the innovation and potential of peer-to-peer lending. It is sending a message to borrowers that there are now alternatives.”
The £10m will comprise 40% of any qualifying loan until the first £4m has been lent, after which time the Bank’s money will make up 20% of loans until it is exhausted. In this way the £10m should facilitate a total of £40m of lending.
Today the platform has announced yet another innovation – this time in an effort to increase access to borrowers. RateSetter is partnering up with point of sale credit provider Pay4Later. The partnership will allow businesses to increase their sales by offering RateSetter-style credit options to their customers.
"We are passionate about providing innovative consumer finance solutions that give businesses and customers more choice. Our partnership is another example of the strength of the UK's FinTech industry and will further accelerate growth in the point of sale finance market."
The overriding goal, of course, is to drive increased volume through the platform. And based on AltFi Data's continued monitoring of the industry - the plan seems to be working - with RateSetter boasting a sector-leading 19.96% 3 month market share on July 1st.