P2P lending rises in January as Funding Circle hits £2bn milestone

FUNDING Circle became the second UK peer-to-peer lender to hit the £2bn milestone yesterday, as research showed that the sector had a strong start to the year.

Funding Circle’s UK division has now lent £2bn to small businesses, the platform said on its Twitter account on Monday.

The platform, which also has operations in the US, Germany and the Netherlands, has experienced stratospheric growth over the past year, lending out £820m in the UK in 2016.   

Globally, its investors lent more than £1.1bn in 2016, with approximately £400m lent in the fourth quarter alone, a record amount for any small-and medium-sized enterprise (SME) direct lending platform.

The platform announced in January that it had received £82m in fresh equity investment after a record fourth quarter in which it saw 90 per cent year-on-year growth.

Zopa was the first P2P platform to lend out £2bn. The consumer lender announced on 30 January that it had hit the milestone, originating more than £703m in loans over the past year alone.

The other ‘big three’ platform RateSetter is also getting closer to the £2bn mark; as of Monday afternoon, it had lent out more than £1.7bn.

Read more: 2016: P2P’s record year

Funding Circle’s announcement follows research from P2P aggregator OFF3R, which shows that the wider sector had a strong start to the year.

The nine platforms that make up its index – Assetz Capital, Zopa, Landbay, RateSetter, ArchOver, MarketInvoice, Lending Works, Funding Circle and ThinCats – lent a total of £294m in January. This is a six per cent increase month-on-month and a 50 per cent increase year-on-year.

“With interest rates at an all-time low, and many traditionally safe investments carrying low yields, investing in peer-to-peer products continues to be very attractive,” said OFF3R. “These continued low rates are believed to have driven disparaged lenders away from traditional institutions and towards P2P platforms.”

It is expected that this growth will be further fuelled by platforms rolling out their Innovative Finance ISAs.

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Meanwhile, equity crowdfunding slumped by 65 per cent in January to £8.95m, compared to December 2016. OFF3R attributed this to political and economic uncertainty, as well as tough month-on-month comparatives.

Read more: Lending Works re-opens to IFISA investors