Lending through Funding Circle, a peer-to-peer loan provider, helped the creation of 45,000 jobs in the UK in 2017, according to research.
A report published today (13 June) by Oxford Economics, a spin-off from the university, concluded the value of new loans issued by the platform increased by 77 percent in 2017.
At December 2017, its stock of loans under management in the UK was £1.5bn — four times what it was at the end of 2014.
When all impacts are included, the report estimated these loans supported a £2.4bn gross value added contribution to UK GDP per annum.
This activity, and the creation of jobs, have generated some £730m in annual UK tax revenues for HM Treasury.
Launched in 2010, Funding Circle facilitates lending from a wide range of investors to small businesses in the UK, US, Germany and the Netherlands.
In 2017, investors lent £1.7bn through the platform to small businesses across all four markets, contributing £4bn to the global economy (measured in Gross Value Added), and unlocking 75,000 jobs - with 45,000 in the UK.
In the UK, small and medium sized businesses make up approximately half of the country’s turnover and half of all employment, despite continuing to face difficulties accessing finance through traditional channels, the report stated.
In the last quarter of 2017, the combined net lending of the major high street banks to small and medium sized businesses in the UK was negative (-£75m). These difficulties have been compounded with the closure of some 423 bank and building society branches across the UK during last year, the research added.
In the same quarter of 2017 that bank net lending was negative, investors lent £156m through Funding Circle to UK small businesses on a net basis alone.
According to John Glen, economic secretary to the Treasury, the way people and businesses access borrowing is evolving, and players like Funding Circle make great contributions to UK’s “world-class financial services industry”.
He said: “The success of peer-to-peer lending has brought about real benefits, not only for the businesses of Britain, but as this report shows, our economy at large too."
Samir Desai, Funding Circle co-founder and chief executive, argued that it has become evident that small businesses are underserved in every country in which the platform operates.
He said: “From butchers and bakers, to IT consultants and accountants, these are the businesses that are creating jobs, boosting productivity and driving our economies forward.
“The economic impact that these businesses have had as a result of accessing finance through Funding Circle is hugely rewarding to see."
The strong growth in loans observed by Funding Circle means Funding Circle is set to hire 400 people in 2018, 200 of which will be based in the UK.
Pension provider Aegon is one of Funding Circle investors, after agreeing last year to a £160m partnership with the peer-to-peer lender.
maria.espadinha@ft.com
