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UK: Business Secretary Vince Cable announces funding for ‘peer-to-peer’ lending

PUBLISHED: 16:50 12 December 2012

Secretary of State for Business Vince Cable

Secretary of State for Business Vince Cable

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ALTERNATIVE lending for small businesses that uses the web to match borrowers and lenders received a £110million boost from the Government and private sector today.

Business Secretary Vince Cable pledged £55million to small business finance through peer-to-peer lenders, splitting the cash between providers Funding Circle, Zopa, Boost and Credit Asset Management.

Match-funding from the private sector is expected to lever in a minimum of £55million, making at least £110 million available to lend to small businesses through the web-based lenders.

Mr Cable said: “These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market.”

Funding Circle will receive £20million, Zopa will receive £10million, Boost will receive £20million to set up a fund that will make loans between £1million and £8million, and Credit Asset Management will receive £5million.

The Government funding comes from the £100million Business Finance Partnership fund. The allocation of the remaining £45million will be announced next year.

Mr Cable, who was speaking at the Association of British Insurers’ Investment Conference, also announced that a network of 1,000 Business Finance Advisers is to be launched.

Samir Desai, chief executive and co-founder of Funding Circle, said: “Not only is this a huge vote of confidence for peer-to-peer lending, it’s a defining moment for the future of small business finance.

“For too long, British firms have been held back by a banking monopoly, with businesses across the UK struggling to get the finance they need. Today is an important milestone in redrawing the financial landscape to give them a brighter future.”

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