Facts and figures about P2P

25th October 2016
P2P, Peer to Peer Lending


It all well and good us telling you how great peer-to-peer investing is. After all, if you’re an investor who’s tired of paltry interest rates[1], P2P could well be what you’re looking for. But without anything to quantify it with, knowing exactly where you stand could be rather tricky.

So, without further ado, here’s a bit of hard line data for you to get your teeth stuck into and determine whether you think P2P is the right investment channel for you.


Growth

In just over 10 years, the P2P industry has gone from a small idea into a revolutionary form of alternative finance. In fact, the head of alternative finance at KPMG, Warren Mead went so far as to say that 2016 is “the year in which P2P lending becomes mainstream” owing to the growth of an industry evolving at a substantial rate.[2] 

In the UK alone, the P2P industry has lent £7,976,097,445 in just over ten years.[3] That’s enough to fund the entire Manchester United first team squad for more than 28 years.[4]

In fact, UK P2P is responsible for some of the fastest P2P growth worldwide and boasts nearly 85% of the European market share.[5] Pretty impressive stats from an industry that started as just a few former London bankers just over a decade ago.[6] 


Weathering the storm

Unless you’ve had your head in the sand for the past few months, the country is in a pretty uncertain place right now. The Brexit vote on June 23 has set in motion a plethora of potential financial repercussions, the results of which may not become completely apparent for some time. However, some may argue that with the recent cut in interest rates, there may be opportunities for the P2P industry in the savings void left by the record low interest rates that the country is now witnessing.[7]

Despite the dip in economic certainty previously alluded to, P2P actually showed little sign of slowing down in the period directly after Brexit. According to AltFi, the UK market made £286.9m originations in August, down from £292m in July but with a total growth of 26% since August 2015.[8]

How this pans out in the near future will of course remain to be seen, but is there a possibility that more people may flock to the world of alternative finance now that savings rates are as demure as they are?

 

P2P and the SME

Did you know that in 2015 alone, approximately 20,000 SMEs raised £2.2 billion with alternative financing such as peer-to-peer lending and crowdfunding?[9]

However, with many SMEs still going down the historical route of bank loans, this figure could conceivably increase. John Longworth, director general of the British Chambers of Commerce, stated to This is Money back in 2015: “we see our fastest growing, most dynamic companies… reaching a plateau or selling up because they can’t get the capital they need to grow”.[10]

And now, during the fallout from Brexit, and with the previous statement in mind it could well be that the quicker, easier form of cash injection attained through alternative finance may be sought after in even greater numbers by SMEs looking to secure capital. As a result, it may very well be that the above mentioned figure may grow exponentially over the course of the UK’s inevitable exit from the EU.[11]

As an investor therefore, your money could not only be making you potential profit, it could also be helping promote economic growth, certainty and assistance within one of the fastest growing SME market’s in the world.[12]


Your capital

As always it’s important to remember that P2P is a type of investment, not a savings account. As such, you’ll not be covered by the FSCS and your capital is at risk.

 

Facts and figures are correct as of October 15th 2016.

 

 

 


[1] https://www.theguardian.com/money/2016/oct/13/tsb-lloyds-slash-interest-rates-current-accounts-santander

[2] https://unbolted.com/uk/blog/peer-peer-platforms-are-driving-uk-lending-revolution/

[3] http://www.altfi.com/data/indices/UKvolume

[4] http://www.totalsportek.com/money/manchester-united-player-salaries/

[5]http://www.altfi.com/data/indices/EURvolume

[6] https://en.wikipedia.org/wiki/Zopa

[7] http://uk.businessinsider.com/the-uks-historically-low-interest-rate-could-benefit-alternative-lenders-2016-8

[8] http://www.altfi.com/article/2233_a_steady_summer_for_uk_origination_volume

[9] https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2015-uk-alternative-finance-industry-report.pdf

[10] https://www.moneyandco.com/news/5256/p2p-lending-to-solve-sme-funding-plateau-problem

[11] http://www.altfi.com/article/2171_what_does_a_drop_in_interest_rates_mean_for_sme_p2p_lenders

[12] http://smallbusiness.co.uk/a-third-of-uk-smes-have-grown-over-past-two-years-2489261/

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Your capital is at risk if you lend to businesses. Peer to peer lending is not protected by the Financial Services Compensation Scheme. Please read our full risk warning here.