A significant number of peer-to-peer lending platforms in the UK are now turning a profit, despite the uncertainty caused by the Covid-19 pandemic.
Over the last few months, more than a dozen UK-based P2P lenders have either reached profitability for the first time or increased their previous year’s profits.
Funding Circle UK became profitable for the first time in the second half of 2020, achieving an operating profit of £21.3m.
Earlier this year, Folk2Folk said that it had made a £1.1m profit in its latest full-year results, up 460 per cent from £198,043 the previous year. And Relendex made a profit of £135,760 in the 12 months to 31 January 2021, reducing its losses since inception to £5,773,702.
Shojin Property Partners reported a £234,000 profit on almost £1m in revenues in the year to 30 June 2020, after making a £830,000 loss in the previous financial year, and a loss of £2.64m in 2018.
EasyMoney also turned around its balance sheet, making an operating profit of £57,184 last year, after posting a loss of more than £1.023m the previous year.
It is believed that higher lending volumes, the normalisation of alternative lending options and government support packages are behind the trend of P2P profitability, as well as the long track record of some platforms and the success of their business models.
“One could argue that it is a bull market for P2P/marketplace lending because of the high level of investor appetite,” said Roy Warren, managing director of Folk2Folk. “These funds are the essential ingredient to drive the engine of lending to SMEs where demand for business loans remains strong as business owners look to invest in their business to adapt, diversify or ‘future-proof’ by building in greater resilience.”