Peer to Business Lending
Alternative Finance Sector Report - October 2014 5
PEER TO BUSINESS LENDING
ALTERNATIVE FINANCE SECTOR REPORT
PUBLISHED
November 14
AUTHOR
Luke Jackson
Samantha Goins
The first company in the world to
offer P2P loans was Zopa which was
founded in the UK in February 2005.
This was followed by a number of US
based platforms including Prosper and
Lending Club which launched from 2006
onwards. P2P has already become a
global market, with platforms available
on every continent.
10 - Nesta: The Rise of Future Finance
Size and Growth of the UK P2P Market
10
2011 - £68m
2012 - £127m
2013 - £287m
Average Annual Growth Rate – 107%
PEER-TO-PEER (P2P)
Peer-to-peer lending is simply the lending of money from one or many unconnected party/ies (lender) to another (borrower).
This market is now starting to become a viable alternative funding source to the traditional banking sector. It enables
monetary transactions without the use of a financial intermediary like a bank, with transactions happening through a
regulated online platform. Often this means a higher rate of return than offered by traditional savings accounts due to the
substantially lower cost base of a P2P lending platform vs. a bank.
Most P2P loans by volume in the market are unsecured personal loans (compared to secured property and business
lending). They are made to an individual rather than a company, and borrowers do not generally provide collateral as
protection to the lender against default.
