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

16:50 12 December 2012

Secretary of State for Business Vince Cable

Secretary of State for Business Vince Cable

Archant

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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