Peer-to-peer lending doubled to £2.2bn in 2015 as industry awaits launch of P2P ISA

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Wisdom of the crowd? P2P finance firms have lent more than £4.4bn so far (Source: Getty)

Peer-to-peer finance firms lent more than £2.2bn last year as the sector doubled in size, according to new figures.

The number of lenders jumped 22 per cent to 128,000 while the number of borrowers surged 96 per cent to 273,000, industry body the Peer-to-Peer Finance Association (P2PFA) said.

More than £4.4bn has been lent through crowd-financing so far, with market leaders Zopa and Funding Circle both lending more than £1bn since they launched.

P2PFA chair Christine Farnish said this kind of finance was growing year-on-year and was having a strong impact on a range of markets.

“The growth demonstrates that more lenders and borrowers believe our industry to be a real alternative to traditional lenders,” she said.

“This is only enhanced by our members’ approach to transparency and strict business conduct rules.”

The crowd-financing industry was looking forward to the launch of the Innovative Finance Isa in April, Farnish added.

The government announced in the July 2015 Budget that a P2P Isa would make savers using these alternative platforms eligible for tax-free interest.

Chancellor George Osborne has said he wants to encourage a fast-growing industry offering an innovative challenge to traditional banks.

Lender MarketInvoice predicted in December that cumulative P2P lending could hit more than £6bn in 2016, if the market kept growing at the same pace.

It said small businesses were especially interested, as four in 10 have their first application rejected by banks.

Net lending by P2P firms to small and medium firms rose seven per cent to £96m in last quarter of 2015, compared to the previous three months.

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