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UK Peer-to-peer business finance market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Peer-to-peer Business Finance market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

Peer-to-peer (P2P) business finance involves providing funds to businesses via individuals, other businesses and institutions through online platforms. They provide an alternative to bank finance and can offer a different funding product with significantly shorter decision times. There are several P2P lending platforms in the UK which all operate in a similar way – businesses complete an online form, answer questions about their respective business and the loan they require, before the platform matches them with suitable lenders. When a business submits a formal application, P2P platforms will conduct credit checks. Every platform runs a different model, so the range of loans can vary. Depending on the platform, investments can range from anything from £10 to over £50,000, while loans can range from £1,000 to the low millions. Returns are typically around 4% to 8% but can be higher.

Company profiles

  • ArchOver
  • Assetz Capital
  • Folk2Folk
  • Funding Circle
  • Lending Crowd
  • ThinCats

Market Segmentation

  • Retail
  • Healthcare
  • Property and construction
  • Professional and business support
  • Manufacturing and engineering
  • IT and telecommunications
  • Leisure and hospitality

What you need to know

MBD believes that the value of the P2P business lending market has risen by 433% over the last five years - from £900 million in 2014 to £4.8 billion in 2018. The sector achieved significant growth over each of the last five years, with estimated annual growth ranging between 28% in 2015 and 99% in 2017.The opportunities for P2P lending remain significant as demand for business finance continues to grow, and mainstream lenders reduce their lending to smaller businesses.

Expert analysis from a specialist in the field

Written by Lewis Cone, a leading analyst in the B2B sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

P2P lending platforms must continue to attract new funding sources and new borrowers. However, achieving both at the same time is not a formality – platforms may have a strong supply of funding available but lack ‘high-quality’ or suitable borrowers, or vice-versa. A slowdown in either of these will affect the industry’s growth potential. Lewis Cone
B2B Analyst

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Market lending reaches all-time high in 2018
              • Figure 1: P2P business lending, 2014-18, by market value, (£ million)
            • Property and construction obtain highest amount of lending
              • Figure 2: P2P business lending, 2018, by sector, (% of total lending)
            • South East most common destination for P2P business lending
              • Figure 3: P2P business lending, 2018, by region, (% of total lending)
            • P2P business lending to rise by 75% to 2023
              • Figure 4: P2P business lending forecast, 2019-23, by market value, (£ million)
            • Companies and brands
              • What we think
              • Issues and Insights

                • FCA review calls for greater transparency
                  • The facts
                    • The implications
                      • The rising number of SME funding aggregators has been criticised
                        • The facts
                          • The implications
                          • The Market – What You Need to Know

                            • Market lending reaches all-time high in 2018
                              • Lending by sector
                                • P2P business lending to rise by 75% to 2023
                                • Market Size

                                  • Market lending reaches all-time high in 2018
                                      • Figure 5: P2P business lending, 2014-18, by market value, (£ million)
                                  • Market Segmentation

                                    • Lending by sector
                                      • Figure 6: P2P business lending, 2018, by sector, (% of total lending and £ million)
                                    • Lending by region
                                      • Figure 7: P2P business lending, 2018, by region, (% of total lending and £ million)
                                  • Market Forecast

                                    • Business lending to rise by 75% to 2023
                                        • Figure 8: P2P business lending forecast, 2019-23, by market value, (£ million)
                                      • Platforms must attract ‘high quality’ borrowers and diversify to continue growth
                                        • Mainstream lenders react to emerging alternative finance threat but collaboration could still occur
                                        • The Impact of the Economy

                                          • GDP growth rebounds in Q2 but challenges remain
                                            • Figure 9: GDP growth rate, Q2 2014-Q2 2018, (% change on previous quarter)
                                        • Market Trends

                                          • Business confidence turns positive in Q2 2018 which will influence demand for finance, but uncertainty remains
                                            • Figure 10: Business confidence index, per half-year, Q4 2007-Q2 2018, (index figure)
                                          • Credit demand and availability rises for small businesses
                                            • Figure 11: Availability of corporate credit provided to small businesses in the past three months, Q3 2012-Q2 2018, (net percentage balance)
                                            • Figure 12: Demand for corporate lending by small businesses in the past three months, Q3 2012-Q2 2018, (net percentage balance)
                                          • Nearly half of SMEs have never checked their credit score
                                            • Lenders shift focus to recurring revenue
                                            • Market Drivers

                                              • Brexit uncertainty still affecting lending environment
                                                • Accountants could help drive further growth in P2P lending
                                                  • Open Banking initiative should drive product and service innovation
                                                    • Lack of suitable SME finance offers significant opportunities
                                                    • Regulation and Industry Standards

                                                        • The Small Business, Enterprise and Employment Act
                                                          • The Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001
                                                            • P2PFA Industry Standards
                                                            • Companies and Brands – What You Need to Know

                                                              • Institutional funding on the rise in the sector
                                                                • Some lenders have scrapped manual lending in favour of automated lending
                                                                • Industry Structure

                                                                  • Industry development
                                                                    • Institutional funding on the rise in the sector…
                                                                      • …with IFISAs also providing a funding boost
                                                                        • Market share
                                                                            • Figure 13: P2P business lenders, cumulative lending and market share, (in £ million and %)
                                                                        • Competitive Strategies

                                                                          • Some lenders have scrapped manual lending in favour of automated lending
                                                                            • Lenders seek to specialise in certain product areas
                                                                            • Company Profiles

                                                                              • ArchOver
                                                                                • Recent company activity
                                                                                  • Financial information
                                                                                    • Figure 14: Financial analysis of ArchOver, 2014-17, (£ 000)
                                                                                  • Assetz Capital
                                                                                    • Recent company activity
                                                                                      • Folk2Folk
                                                                                        • Recent company activity
                                                                                          • Funding Circle
                                                                                            • Recent company activity
                                                                                              • Financial information
                                                                                                • Figure 15: Financial analysis of Funding Circle, 2012-16, (£ 000)
                                                                                              • LendingCrowd
                                                                                                • Recent company activity
                                                                                                  • ThinCats
                                                                                                    • Recent company activity
                                                                                                      • Financial information
                                                                                                        • Figure 16: Financial analysis of Business Loan Network Limited (under the trading name of ‘ThinCats’), 2015-16, (£ 000)
                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                        • Abbreviations
                                                                                                          • Methodology
                                                                                                          • Further Sources and Contacts

                                                                                                            • Trade associations
                                                                                                              • Association of Short Term Lenders
                                                                                                                • Financial Intermediary & Broker Association (FIBA)
                                                                                                                  • National Association of Commercial Finance Brokers
                                                                                                                    • Peer-2-Peer Finance Association (P2PFA)
                                                                                                                      • Trade magazines
                                                                                                                        • Bridging & Commercial
                                                                                                                          • Business Matters
                                                                                                                            • Commercial Reporter
                                                                                                                              • Loans Insider
                                                                                                                                • Peer2Peer Finance News
                                                                                                                                  • Trade events
                                                                                                                                    • AltFi London Summit 2019
                                                                                                                                      • Financial Services Expo London 2018
                                                                                                                                        • NACFB Commercial Finance Expo 2019
                                                                                                                                          • The Finance Professional Show