Made in the UK

For those of you unfamiliar with peer-to-peer lending, won't know that peer-to-peer lending actually
originated in the United Kingdom.  In 2005 a company called Zopa launched in the UK with a new concept in banking for the web age.

The UK has been at the forefront of innovation in the financial sector and the introduction of peer-to-peer lending, and peer-to-business lending, has proved this to still be the case.  The P2P money website exclusively reported in November 2011 that peer-to-peer lending in the UK had now surpassed �100million of current loans, and more than �200million in loans has been made by the industry in the UK alone since Zopa launched.  Peer-to-peer lending has also spread across the world, and had been used in micro-finance.

With the recent financial crises of 2008 to 2012 the banking industry has retreated, with banks attempting to maintain sufficient capital to protect themselves, and this itself has caused great pain to the private sector, which employs 60% of the UK workforce, with banks less willing to lend and in turn slows economic growth.

Peer-to-peer companies such as Funding Circle and ThinCats are well placed to take up some of this slack, and through these companies loans of �25million to private sector companies have been made.  The government has come up with the idea of Credit Easing but if the government encouraged more peer-to-business lending they wouldn't need to try to force banks to lend more.

Peer-to-peer lending is taking a more prominence with around 2% of personal loans now being made through providers such as Zopa and RateSetter.  Banks are still here to stay, but perhaps taking a slightly smaller role than they did previously.  So lets all support an industry that was made in the UK.

Read the P2P money blog for more snippets on peer-to-peer lending.

Article written by Ian Gurney, last updated on 22^nd March 2012