Bank lending to small businesses down but peer-to-peer lending continues to rise
18 October 2013
As disappointing figures from the Bank of England show that banks continue to fail small businesses across the country, Funding Circle today publishes its own quarterly lending figures for the last year which show businesses are increasingly using peer-to-peer lending to source finance.
- CEO of Funding Circle, responds to Bank of England small business lending figures
- Funding Circle figures show over 570 small businesses have borrowed more than £36 million in Q3, showing 30% growth for the last two quarters
Responding to today’s quarterly lending statistics from the Bank of England, Samir Desai, CEO and co-founder of Funding Circle said:
“As we begin to see early signs of economic recovery in the UK, these figures tell us that the banks are still failing to show confidence in the country’s small businesses. For the economy to continue to strengthen, it is imperative that finance finds its way to those that will do most to drive future growth and employment.
“Many British small businesses are desperate to grow, and are now seeking alternative forms of finance. We have seen lending through Funding Circle soar by 30 per cent for the last two quarters and we expect this trend to continue.”
More than 570 businesses across the UK borrowed more than £36 million in Q3. The last two quarters have seen 30% growth per quarter.
Since its launch in 2010, Funding Circle has helped more than 2,800 businesses to borrow approximately £160 million. Peer-to-peer lending continues to grow at an exceptional rate. More than £600 million has been lent through the three biggest peer-to-peer lenders, with recent predictions by Ernst & Young that the industry will grow to five times its size in the next three years. In the first half of this year, the industry lent more than twice as much as the year before.
Many businesses cite speed and convenience among their top reasons for turning to peer-to-peer lending. Around half of businesses use the online marketplace to apply for loans outside of the traditional working day, with three quarters of these business owners using their evenings to apply and 15% driven to the site on the weekend. Investors receive an average net return of 5.8% on their money.