At a time when fundraising methods in the UK include the ever popular “peer-to-peer lending” (p2p lending) scheme, the financial New Year looks bright, say money experts. In fact, the financial predictions for 2014 include the alternative peer-to-peer lending that has become so mainstream in the UK that it is expected to be regulated by the government by April in the New Year, say financial analysts. For instance, wired.com offers some consumer tips about how the British government intends to regulate this scheme that is designed to help fill the gap between potential borrowers and lenders. Growthbusiness.co.uk also present some eye opening data about why this type of alternative borrowing will become more prevalent in small business lending.
In 2013 we saw only a few regional peer-to-peer lending companies successfully operate in the UK such as Folk2Folk in Devon and Cornwall so we expect to see companies enter the UK peer to peer lending arena in 2104.
Getting On Board for Peer Lending
The appeal of peer-to-peer lending is also linked to various start-ups and other small business lending as a sort of “alternative method” for securing funds, say financial planners when commenting online about how banks have been more conservative with lending during these uncertain economic times.
Thus, more and more business-minded people are turning to various peer lenders instead of more traditional lenders. Still there is a view in banking circles throughout the UK that because peer-to-peer lending data does not reflect a long and successful track record, it may not be ideal for more conservative investors.
Savvy Lenders Like Peer-to-Peer
Because online revenue is spiking and offering huge financial returns for investors, the idea of investing into peer-to-peer lending is attractive because investors have monitored huge returns from various online start-ups that have asked venture capitalists for funding. According to a joint report by the UK charity group Nesta, in partnership with financial social scientists at the University of Cambridge and the University of California, Berkeley, nearly $1 billion has been raised through alternative fundraising methods such as peer-to-peer lending.
The report states that the data reveals “the first time that the size and growth of the alternative finance market has been mapped”. For example, the report states that peer-to-business lending reached a record high of nearly $200 million in 2013; while predictions for 2014 estimate that figure doubling due to the popularity of investing capital for start-up online businesses.
Peer-to-Peer “Buzz” Starting Online
There is a “buzz” online these days due, in part, to the news that start-ups can turn to peer-to-business lending as one great alternative to dealing with traditional lenders. Moreover, there are numerous online testimonials from various investors that peer-to-peer funding has “only scratched the surface” in terms of real data and awareness in banking and investment circles of just how many great new funding sources are out there in cyber space. Still, the new proposed government regulations in the UK may be a show stopper for some start-ups that do not play by the rules in terms of managing working capital.
For example, the investment group “Funding Circle” states on its website that nearly $1 billion is in businesses during 2013. The group expects that figure to grow in the New Year as the financial landscape improves both in the U.K. and with other European Union partners.
Overall, the Nesta research points to steady growth in 2014 for peer-to-peer lending, while investors are looking for more comprehensive data on this new and growing area of finance.