The Business Finance
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Peer to peer lending

Peer to peer lending

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Three key considerations:

  1. Peer-to-peer (P2P) lending connects established businesses looking to borrow with investors who want to lend, usually via an online platform.
  2. By cutting out the costs and complexity of dealing with banks, peer-to-peer lenders aim to provide business owners with affordable loans, agreed relatively quickly.
  3. Investors are likely to be primarily private individuals wishing to invest in British business. Some P2P lenders are supported by the Government-owned British Business Bank.

What is peer-to-peer finance?

One major innovation in business finance of recent years is Peer to Peer business lending. Internet-based platforms are used to match lenders with borrowers. The UK is at the forefront of innovation in this growing form of alternative online business finance.

Peer to peer (P2P) business lending is a direct alternative to a bank loan. It can often be quickly arranged and allows partners, customers and friends and family who invest through the platform to share in the returns of the business. Investors can lend small parts of individual loans, for very small amounts, which encourages a wide range of lenders to participate in multiple loans. Peer to peer business loan sizes range from a few thousand pounds up to several million with the upper threshold increasing as the industry grows.


Platforms have set criteria outlining which businesses can borrow through the platform. They usually require borrowers to have a trading track record, to submit financial accounts, and they perform credit checks as part of the credit assessment. Platforms offer either a fixed rate or, in some cases, lenders bid for loans by offering an interest rate at which they would lend.

The Financial Conduct Authority (FCA) regulates peer to peer lending. Peer to peer loans has been eligible to be held in Innovative Finance Individual Savings Accounts (IF ISAs) as of 6 April 2016.

Next steps

Peer-to-peer Finance Association
Further information can be found on the Peer-to-Peer Finance Association website.

To explore the other finance options for your business, go back to the Finance Journey tool.


Together on the journey

Access to the right kind of finance at every stage in your growth journey enables businesses like yours to invest, grow and create jobs. That’s why the British Business Bank and ICAEW’s Corporate Finance Faculty, and partner organisations representing finance and business, have created the business finance guide.

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