With small and medium sized firms still complaining that banks are unwilling to lend to them, the government hopes the £100 million injection into the P2P market will help it emerge as a serious alternative.

According to the BBC, Funding Circle - which has lent just under £34 million since launching in August 2010 - is applying for £30 million, which will be put into a government account, joining money from thousands of normal lenders. MarketInvoice, which lets firms sell invoices, is also expected to apply for £30 million.

Business Secretary Vince Cable says: "As businesses are continuing to struggle to get credit from their banks, developing alternative lending channels is essential so firms are less reliant on banks. Our aim is to create a more diverse financial infrastructure which better serves the needs of our small and medium-sized companies."