This Document Shows the Incredible Growth of Peer to Peer Lending in the UK

UK Alternative Finance Graph 2014 P2PFAThe UK Peer to Peer Finance Association or P2PFA is a participant in the European expert group reviewing the environment for crowdfunding and peer to peer lending in the EU.  Recently the group met and the P2PFA made a presentation delivered by Sam Ridler, Executive Director of the group.

P2P lending started in the UK and then migrated across the Atlantic to the US.  The growth has been dramatic in both countries but the market is considerably smaller in the UK than in the US where companies such as Lending Club, Prosper, Funding Circle are leading the charge. The P2PFA is a representative group that has advocated on behalf of the relatively new sector and has helped to set standards and best practices to assure industry growth.

While equity crowdfunding is growing rapidly, it is dwarfed by P2P.  Christine Farnish, Chair of the P2PFA recently stated;

“Peer-to-Peer consumer lending is set to double by the end of 2014 too. Given the government has already set out plans to include peer-to-peer lending as part of the ISA regime, the impact could be even greater next year.”Christine Farnish

The document below shows why.  High returns, lower risk and investors generate income quickly.  Investing in equity crowdfunding opportunities is largely for the patient among us.  The P2PFa reports a less than 1.5% default rate for member firms.  That is incredible.  Young firms that raise early stage capital are pretty risky.  That being said the investors who believed in Facebook back in the day are pretty happy now.

Some additional bullets from the P2PFA:

  • The P2P sector is disrup:ng the tradi:onal Oligopolies in retail investment, consumer and businesses lending
  • P2P lending largest form of alternate finance and provide vital access to finance for SME
  • Sustainable P2P plaVorms perform thorough due diligence on borrowers to ensure they offer low risk returns to investorsPeer to Peer Finance Association P2PFA UK
  • P2P Lending and Equity crowdfunding are very different asset classes with different risk profiles for investors therefore an effec:ve code of conduct cannot be the same for both.

 

 

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  • Rob Murray Brown

    Equity CF ROI to date is negative – thats ignoring the lost opportunity costs. Over £2m has gone west – companies gone bust. Why? Simply because of over simplified and highly optimistic sales projections, leading to predictable cash crisis and bang. Investors and creditors hung out to dry. On Crowdcube there are currently 3 old favourites trying to raise yet more cash to prevent this happening to them. There is not a whole lot of interest. Companies funded through Crowdcube in 2011 and 2012 are queueing up at the administrators – one recently did a pre packed deal which left the director with a full time job and his debts paid – needless to say the investors and creditors with nada. When are we finally going to wake up?

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