Peer-to-peer lender Funding Circle has been handed another £40 million by the British government to distribute to businesses.
Last March, frustrated by high street banks' unwillingness to lend to small and medium sized businesses, the government gave £55 million in taxpayer funds to four P2P players: Funding Circle, Zopa, Boost and Credit Asset Management.
Funding Circle says that it has now distributed its £20 million slice, making loans to over 2000 businesses and helping to create 6500 jobs.
It is now getting another £40 million, this time through the government's new British Business Bank. Under the arrangement, the taxpayer money will be used to fund 10% of each borrower request, with the other 90% coming from private investors.
The British Business Bank money will be lent at the same rate as the private investors and the body says that its involvement in deals does not represent an endorsement, recommendation or any warranty, about the borrowers' creditworthiness.
Recent figures from the UK Peer to Peer Finance Association show that lending increased by 121% during 2013, with cumulative lending at the end of quarter four hitting £843 million compared to just £381 million at the end of 2012.
The industry is expected to receive a further boost in its efforts to crack the mainstream later this year when it comes under the watch of the Financial Conduct Authority. The government is also expected to soon allow the inclusion of P2P within Isas, giving lenders a tax-free return on their investments.Crowdfunding is on the agenda at the Finextra Future Money event in April, in a panel which brings together some of the most innovative companies in the peer-to-peer transaction space and assesses the scale of the challenge facing the banking industry.