P2P lending slumps as high street banks up their game
LENDING in the alternative finance space – including peer-to-peer – has slowed over the past 12 months, as traditional lenders widen their offering in response to the competition.
According to the latest annual report from the National Association of Commercial Finance Brokers (NACFB), lending to small businesses increased by almost 30 per cent to £20.7bn between July 2015 and June 2016, based on business written by their brokers.
However, while traditional forms of lending showed impressive growth over the past year, lending in the alternative finance sector – including P2P – slumped by 14.4 per cent, down from £848m to £725m.
“Conventional lenders have responded to the competition posed by smaller alternative lenders,” Robin Skuse, spokesperson for the NACFB, told Peer-to-Peer Finance News.
“Borrowers who had to go to more specialist firms for certain types of financing can now get these products at the traditional high street banks.”
The decline also reflects the previously stratospheric growth of the sector, according to NACFB chief executive Adam Tyler.
“The alternative finance sector has grown at such a pace that it was inevitable that rate of growth couldn’t be sustained,” he said.
“P2P will always have its place, but alternative forms of funding are no longer the only future; they are just one of many forms of finance available to small and medium sized businesses.
“There has never been a better time for businesses to secure finance, as the commercial finance sector continues to innovate and diversify. The challenge is to make sure the message reaches SMEs that there are many routes to funding.”