British government grant to boost peer-to-peer lending
Alternative lending for British small businesses that uses the web to match borrowers and lenders received a £110m (€136.5m) boost from the UK government and private sector today.
Business Secretary Vince Cable pledged £55m (€68.3m) to small business finance through peer-to-peer lenders, splitting the cash between providers Funding Circle, Zopa, Boost and Credit Asset Management.
Match-funding from the private sector is expected to lever in a minimum of £55m, making at least £110m available to lend to small businesses through the web-based lenders.
Mr Cable said: “These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market.”
Funding Circle will receive £20m (€24.8m), Zopa will receive £10m (€12.4m), Boost will receive £20m (€24.8m) to set up a fund that will make loans between £1m (€1.24m) and £8m (€9.9m), and Credit Asset Management will receive £5m (€6.2m).
The funding comes from the £100m (€124.1m) Business Finance Partnership fund. The allocation of the remaining £45m (€55.8m) will be announced next year.
Mr Cable, who was speaking at the Association of British Insurers’ Investment Conference, also announced that a network of 1,000 Business Finance Advisers is to be launched.
Samir Desai, chief executive and co-founder of Funding Circle, said: “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.
“For too long, British firms have been held back by a banking monopoly, with businesses across the UK struggling to get the finance they need. Today is an important milestone in redrawing the financial landscape to give them a brighter future.”