1
INTERACT WITH US:
CONTACT US:
+44 (0) 203 375 1700
PUBLISHED
November 2014
PEER TO BUSINESS
LENDING
ALTERNATIVE FINANCE SECTOR REPORT
Alternative finance, crowdfunding and peer-to-peer lending: these are all terms which are becoming more and more common to
consumers and rapidly making their way into the mainstream.
These concepts sound new and exciting and easily pique the interest of investors, particularly with the range of interesting
opportunities and strong returns on offer. They are also extremely accessible as anyone with a bank account and access to the
internet can invest. However, with so many platforms joining the market and so many options for investors, it can often be a challenge
to fully grasp the risks involved with each platform, the market as a whole and to understand the investment opportunities that are
both suitable and appropriate.
Peer-to-business (P2B) lending is a form of crowdfunding which involves a number of lenders (the crowd) clubbing together and
advancing loans to small and medium (SME) sized businesses or property developers through a regulated electronic platform
operating on a website. This reduces the risks for each investor (lender) as they can invest with very low amounts, putting less capital
at risk per loan and spreading this across a number of projects. For the exact same reasons this can also make it easier for companies
to raise finance.
The primary focus of this report is on peer-to-business (P2B) lending. In order to provide a balanced and detailed look at the market this
report also provides an introduction to the Alternative Finance market as a whole which also covers crowdfunding, real estate lending
and peer-to-peer lending. Within the peer-to-business lending section of the report the main focus is on lending to small and medium
sized enterprises (SMEs) but this also covers lending to real estate developers and renewable energy projects.
This report is applicable to anyone with an interest in alternative finance, peer-to-peer and peer-to-business lending. This includes
retail investors, professional investors, financial services professionals, platform providers, financial advisers and wealth managers.
It should provide readers with a detailed background to the sector and an overview of the types of opportunities that are available.
Alternative finance and peer-to-business lending is put into context and compared to traditional forms of saving and investing,
particularly traditional lending institutions. The benefits and risks of peer-to-business lending are discussed in detail and this should
help investors, financial intermediaries and advisers make educated decisions about their involvement in this new, exciting and
rapidly developing sector.
This is also an area that many advisers may be completely new to. It is important to have at least some background knowledge of the
sector so that they can explore opportunities with their clients and have an awareness of the other kinds of investment opportunities
their clients are exposed to and may be considering. They may not feel comfortable advising on this market, but having an awareness
of the market and the opportunities available to their clients will allow advisers to provide meaningful direction when it comes to
portfolio allocation advice. This is important even if peer-to-business lending only accounts for a small portion, or a satellite part of
the overall portfolio, in order to provide fair and balanced advice to the client.
The report is based on online research and published data. This includes independent third party research, trade association
published figures and information published on platform websites.
COMMISSIONED BY
RATIONALE FOR THE REPORT
