What you need to know

Market Business Development believes that the value of the peer-to-peer business lending market has risen by 486% over the last five years – from £1.16 billion in 2015 to £6.78 billion in 2019.

The sector achieved significant growth in each year, with estimated annual growth ranging between 28% (in 2015) and 99% (in 2017).

Growth in P2P business lending is starting to slow with loss rates beginning to rise. However, investment returns remain strong when compared to other fixed-income options.

With the industry starting to mature, it is becoming more scrutinised, especially in terms of lending standards and platforms’ ability to get investor’s money back and deliver consistent returns.

Covered in this Report

P2P business finance involves providing funds to businesses via individuals, other businesses and institutions through online platforms. They provide an alternative to bank finance and can offer a different funding product with significantly shorter decision times.

There are several P2P lending platforms in the UK which all operate similarly – businesses complete an online form, answer questions about their respective business and the loan they require before the platform matches them with suitable lenders. When a business submits a formal application, P2P platforms will conduct credit checks.

Every platform runs a different model, so the range of loans can vary. Depending on the platform, investments can range from anything from £10 to over £50,000, while loans can range from £1,000 to the low millions. Returns are typically around 4-8% but can be higher.

On certain P2P platforms, decisions can be made almost instantly with loans provided in as little as a couple of days.

Loans can vary in size between platforms and, depending on the size of the loan required and the business profile, lending can be unsecured driven by the business cash flow generation, or lending can be secured against assets.

Each P2P lender has its own appetite to risk, so even if a business is rejected by one, they may be approved by another.

Loans are repaid with interest through regular payments for the duration of the loan agreement, and businesses may also have to pay an arrangement fee to the P2P platform.

The P2P lending industry is regulated by the FCA, which requires P2P lending platforms to meet certain requirements.

All values quoted in this Report are at current prices unless otherwise specified.

The term billion is used to represent one thousand million.

Some totals in tables do not add exactly due to rounding methods.

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