Factoring and peer-to-peer lending are displacing traditional loans

The change in the funding culture has caught the government’s attention. Last year Vince Cable, the business secretary, announced a business Finance Partnership that would hand out £87m of state cash to non-bank lending channels he believed were filling a funding gap.

Market Invoice, one of seven successful applicants, received £5m. Others include Funding Circle and Zopa, the peer-to-peer lenders; Boost & Co, the venture capital firm; and Beechbrook Capital, the mezzanine fund.

“Too few businesses realise they don’t have to go to their nearest bank if they want finance,” said Cable. “Competition and variety are key to restoring finance as a course of support to small business. The business Finance Partnership is all about supporting lenders who provide a viable alternative.”

Samir Desai, who co-founded Funding Circle three years ago said “The growth of peer-to-peer lending over the past three years shows how crucial this industry is to the British economy.” A number of small businesses are turning to peer-to-peer funding when the banks refuse finance.

Read the following article for how Peer-to-peer lending is helping small businesses;

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