P2P business lending

P2P business lending up 51%

The value of P2P business lending grew by 51% during 2017, according to new research from the British Business Bank (BBB).

The bank’s Small Business Finance Markets report revealed that UK SMEs were diversifying their choice of finance as they began to look beyond their main bank and towards alternative sources.

The report also found that the value of SME asset finance deals was up 12%.

Although net bank lending volumes remained positive (£700m in 2017), it was weaker than in both 2016 (£3bn) and 2015 (£2bn).

The BBB found that there had been a significant increase in both the value and number of SME equity deals, up 79% and 12% respectively.

The report also highlighted that SMEs’ awareness of P2P lending platforms had grown during 2017.

In 2017, 47% of respondents said they were aware of P2P platforms, a small increase on the 45% reported in 2016, but a major increase on the 24% recorded in 2012.

“A core objective of the British Business Bank is to encourage greater diversity of finance, so we welcome the growth in the uptake of equity finance and other alternatives to traditional lending,” said Keith Morgan, CEO of BBB (pictured above).

However, the report found a decline in smaller business confidence and low demand for external finance was becoming entrenched as businesses’ cash balances rose.

BBB analysis found that over the last 10 quarters, only 1.7% of SMEs sought new loans, a record low since the SME Finance Monitor began in 2011.

Less than half (43%) were confident they would get a loan if they applied, even though most new applications (72%) were approved.

“It can’t be overstated how important it is to build a more complete funding ladder for economically important, high-growth businesses, no matter where they are located,” added Keith.

“Scale-ups need more long-term patient capital throughout all stages of their development to be world-beating companies, and we look forward to using our new resources allocated at [the] Autumn Budget to unlock more of this type of capital.”

In November’s Budget, the government allocated additional resources to the British Business Bank in response to the patient capital review.

The bank believes that enabling greater access to patient capital was a key element of helping high-growth start-ups reach scale, and of funding capital-intensive research and development-based businesses. 

“Today’s report from the British Business Bank shows that although challenges remain, more small businesses are accessing finance from a wider range of sources,” said Andrew Griffiths, small business minister.

“The British Business Bank plays a vital role in this, which is why we are working with them to establish a new £2.5bn investment fund to ensure small businesses can access the finance they need to succeed.”

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