UK govt to lend £55m through P2P sites

UK govt to lend £55m through P2P sites

Frustrated by high street banks' unwillingness to lend to small and medium sized businesses, the UK government is handing over millions of pounds to peer-to-peer lenders to distribute.

Business Secretary Vince Cable has earmarked £55 million in taxpayer funds, which will be split between four P2P players; Funding Circle, Zopa, Boost and Credit Asset Management. The money will be matched by the private sector.

Explaining the thinking behind the scheme in May, Cable said: "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."

Funding Circle, which has helped small businesses secure over £65 million in loans since launching, has been given £20 million to distribute.

Samir Desai CEO, Funding Circle, says: "Not only is this a huge vote of confidence for peer-to-peer lending, it's a defining moment for the future of small business finance."

Zopa, which has facilitated more than £250 million in loans (although mainly between people, rather than businesses), and has just secured investment from Jacob Rothschild, has been entrusted with another £10 million.

"We hope that the additional money being lent through Zopa will help thousands of sole traders to further their business and help build the economy," says Giles Andrews, co-founder, Zopa.

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 14 December, 2012, 16:41Be the first to give this comment the thumbs up 0 likes

When I casually glanced the footer of this page, I noticed a Related Story dated 31 May 2012, according to which the size of funding for P2P players was GBP 100M. Now, it's GBP 55M. Compared to the tens of billions of GBP spent / invested on bailing out banks, how much diversity will this 55 million bring about in financial infrastructure to better serve the needs of SMEs?

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