Pierrakis, Yannis and Collins, Liam (2013) Banking on each other: peer-to-peer lending to business: evidence from funding circle. (Project Report) London, U.K. : NESTA. 43 p.
Abstract
As banks retrench in the wake of the financial crisis, small businesses have found it increasingly hard to access the finance they need to grow. But there is some cause for optimism. New providers of business finance are stepping into the space left by banks, and are devising innovative business models, often taking advantage of new technologies and different sources of capital. One such model that has grown rapidly in recent years is peer–to–peer financing. This report seeks to cast some light on the emerging field of peer–to–peer lending to businesses, using a large set of data collected through Funding Circle, the largest peer–to–peer business lending site in the UK. Funding Circle has facilitated approximately £100 million in loans to over 1,700 companies to date (as of April 2013). This report looks at the characteristics of both Funding Circle’s borrowers and lenders, which enables the examination of the decision to seek or lend money through the peer–to–peer sites or ‘platforms’. It is the first attempt to analyse the peer–to–peer lending to businesses model using proprietary data from from 630 investors and 89 companies.
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