In 2012, Funding Circle and peer-to-peer lending transitioned from a fledgling industry into a real alternative for small businesses looking for investment and investors wanting a better return on their money. I believe 2013 will be the year that peer-to-peer lending becomes mainstream.
2012 was a great year for both our investors and small business borrowers on Funding Circle alike. Over £70million has now been lent by individuals in the UK directly to businesses, providing a viable alternative to bank finance for the first time.
With the reduction of auction times, small businesses can now get access to finance in less than a week versus sometimes months at the banks. And for investors, our secondary loan parts market saw a peak of £2.5 million worth of trades in a month, allowing people to sell their loans in an average of just 20 minutes. All of this means that investors get better returns and access to their money, businesses get efficient access to the funds they need to grow and the economy is able to expand. It is a win, win, win.
The announcement that the Government will for the first time lend public funds directly to businesses through the internet, and that the FSA will regulate peer-to-peer lending, represented a seminal moment for our industry. In 2013 we will continue to campaign hard for tax relief on loans to businesses – either through an extension of EIS or allowing business loans to be included in ISAs.
In 2013 we expect over £100million to be lent through the marketplace which would represent more than the previous two and a half years’ lending combined. We expect significantly more loans to be taken out to purchase assets following tax relief changes. Soon, it may not be uncommon to drive past cranes, coaches or tractors that you will have helped finance.
We also expect larger companies to start borrowing directly from people and their own customers through peer-to-peer platforms. You might not see John Lewis or Sainsbury’s borrowing just yet – but we would certainly hope a household name will emerge on your lending screens this year.
On the investors’ side, we understand you increasingly want to access Funding Circle in different ways, particularly through tablets and mobiles. We’re working on apps and a mobile-friendly website that we hope will significantly enhance your experience of lending through Funding Circle. You can also expect the look, feel and functionality of the site to change radically this year – from the secondary loan parts market, to summary pages and throughout the bidding process.
Even though we have experienced rapid growth since we launched, the opportunity for further growth remains massive. On the 19th December we hit a record of £8 million lent in a 30 day period. But over £7.6 billion is lent to small businesses every month by banks and other finance companies in the UK. That equates to just 0.1% market share. In addition, a recent survey by the Federation of Small Businesses found that less than 1% of businesses had even heard of peer-to-peer lending, let alone got around to considering it. As we all work hard to raise awareness of Funding Circle we expect more and more of this huge market to slip out of the control of banks, and an increasing number of British businesses to embrace peer-to-peer lending.
This can only be good for all of us. Small businesses are the lifeblood of the UK economy, making up 50% of GDP and 60% of the private sector workforce. So, not only are people earning a great return, but together we’re helping businesses to grow and to create jobs.
Thank you for your continued support. I hope that you will find your Funding Circle experience in 2013 a rewarding one, and that we can meet and exceed your expectations.
Samir Desai, CEO Funding Circle
– See more at: https://www.fundingcircle.com/about-us/our-blog/our-ceo-looks-at-the-year-ahead-for-funding-circle#sthash.56wq4WgK.dpuf