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Unsecured Loans Leading The Way

Author: Ian Moore
by Ian Moore
Posted: May 15, 2018

The fourth annual UK Alternative Finance Industry Report by the Cambridge Centre for Alternative Finance (CCAF), showed the P2P business lending market grew by 39.8 per cent from £881m to £1.24bn.

It overtook consumer lending, which rose by 28.6 per cent from £909m to £1.17bn over the same period.

Debt-based securities platforms saw the biggest proportional increase, albeit from a lower base, from £6.2m to £79m over the year, up around 1,200 per cent.

P2P property lending was up 88.3 per cent to £1.14bn, while invoice financing grew 39 per cent to £452m.

The whole alternative investment market, which encompasses P2P, equity crowdfunding and pension-led funding, grew by 43.1 per cent to £4.5bn.

This figure is likely to be much higher now as some new platforms have passed the £2bn lending milestone during 2017.

Approximately 72 per cent of all alternative finance market volume, or £3.3bn in total, was raised for UK start-ups and small businesses across a combination of the various debt, equity and non-investment funding options offered by the alternative finance industry.

This was a 50 per cent increase on the £2.2bn of business finance raised in 2015.

P2P business lending volume in 2016 was equivalent to just over 15 per cent of all bank lending to small businesses in 2016, according to the report.

This is up from 11.7 per cent in 2015 and just 0.9 per cent in 2012.

The highest proportion of P2P business borrowers came from construction, which accounted for 33 per cent of all funds raised, and engineering at 22 per cent. The vast amount of these were unsecured business loans.

The average size of a P2P business loan increased from £76,280 in 2015 to £95,000 in 2016, with the average number of investors participating per loan increasing from 347 in 2015 to 640 in 2016, the report said.

Total lending at the UK's largest peer-to-peer finance platforms is fast approaching £9bn.

Data from the industry's trade body the Peer-to-Peer Finance Association (P2PFA), released on Thursday, showed its members reached cumulative lending of £8.96bn at the end of the first quarter of 2018.

The figure is up 11.5 per cent on the fourth quarter.

The data shows the largest lender with a loanbook at £3.4bn at the end of March, with the biggest growth for any lender was up 32.5 per cent to £109.4m.

The platforms have a total of 148,222 lenders combined, up 6.7 per cent quarterly. Almost half, 75,615, came from the largest funder.

The number of borrowers was also up, rising five per cent across all members to 276,278 over the quarter.

Levels of lending made possible through P2PFA platforms has continued to grow during the first quarter of 2018 – and this has been particularly pronounced for business loans where more than £660m in new lending has been facilitated in the first three months of 2018," Robert Pettigrew, director of the P2PFA, said.

"Since the third quarter of 2017, there has been a 35 per cent increase – some £75m – in net lending to businesses by P2PFA platforms, which contrasts with data published by the Bank of England for banks, and highlights the important role played by the P2P lending sector in ensuring that businesses have access to the finance needed to fuel our economy.

"These impressive figures demonstrate, yet again, that the peer-to-peer lending sector continues to secure its position as an attractive proposition for investors and borrowers and consolidates its status as a sustainable component in the wider financial services landscape."

About the Author

There has never been a better time to apply for an unsecured business loan and with rates starting as low as 3% now could be the time.

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Author: Ian Moore

Ian Moore

Member since: May 15, 2018
Published articles: 1

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