Peer to Business Lending
Alternative Finance Sector Report - October 2014 29
PEER TO BUSINESS LENDING
ALTERNATIVE FINANCE SECTOR REPORT
PUBLISHED
November 14
AUTHOR
Luke Jackson
Samantha Goins
30 -
• 31 - Nesta: The Rise of Future Finance • 32 - Nesta: The Rise of Future Finance
• 33 -
/
• 34 -
/
According to the Bank of England, the
growth in lending to SMEs has been
negative for the past four years across
a range of measures, though it has
contracted by less since the start of
2013.
30
Bank support for SMEs – 1st Quarter 2014
£6.8bn of new borrowing was
approved in Q1, 10% more than the same
quarter of last year
Demand for new borrowing facilities
from medium-sized businesses rose in
Q1, leading to a small net expansion in
their stock of borrowing
SME cash holdings continue to rise,
by 9% year on year. Deposit levels now
exceed all borrowing by more than
£38bn
Northern regions, Scotland, the East
of England and the South West saw more
new borrowing approved in Q1 than in
either the previous quarter or in the same
quarter a year earlier
SOURCE:
BBA
On a positive note, demand for credit
from businesses of all sizes increased in
Q1 2014, according to respondents to
the Bank of England’s Credit Conditions
Survey.
Alternative Finance for SMEs in the UK
31
(2011-2013)
2011 - £26.7m
2012 - £104m
2013 - £332m
Average Annual Growth Rate – 254%
Number of SMEs using Alternative
Finance
32
(2011-2013)
2011 - 550
2012 – 1,406
2013 – 3,706
Average Annual Growth Rate – 137%
SOURCE:
The UK Alternative Finance
Benchmarking Report
Based on information from Nesta, 5,032
SMEs have raised a total of £463m from
alternative finance during the last three
years, with average growth in the amount
raised per year of 254%. If growth
continues at this rate, nearly £850m will
be raised into SMEs from alternative
finance during 2014. The number of
companies raising money through this
channel has increased by 137% on
average over the last three years and
could top 5,000 during 2014.
P2B PLATFORMS
Funding Circle is currently the largest
P2B lending platform in the UK (and
the world). They have facilitated over
£300m in loans to over 4,000 companies
to date, and are currently issuing £5m
worth of loans per week on average.
33
Funding Circle originally received
£20m from the Government’s Business
Finance Partnership to encourage
lending to SMEs. This £20 million was
lent to over 2,000 businesses across the
country, helping to create an estimated
6,500 jobs.
34
The Government has
since decided to invest a further £40
million alongside private investors
through Funding Circle, although private
investors account for the vast majority of
investment through the platform.
Q2
Q3
2011
2012
2013
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
-10
0
10
20
30
40
50
-10
0
10
20
30
40
50
£ BILLIONS
Gross And Net Lending To UK
Non Financial Businesses
(A) Loans by monetary financial
institutions to non financial businesses.
Data excludes overdrafts. Data cover
lending in both sterling and foreign
currency, expressed in sterling. Non
seasonally adjusted
(B) SMEs are those with annual debit
account turnover on the main business
account less than £25 million
(C) Large businesses are those with
annual debit account turnover on the main
business account less than £25 million
(D) Net lending is defined as gross
lending minus repayments
GROSS LENDING TO
SMES (B)
GROSS LENDING TO
LARGE BUSINESSES (C)
NET LENDING TO LARGE
BUSINESSES (C)(D)
NET LENDING TO
SMES (B)(D)
