Time for the government to get behind Peer-to-Peer lendingPosted February 11th, 2014
A number of times over the past twelve months I have raised the issue of peer-to-peer financing in the Dáil, most recently when speaking on the dissolution of county enterprises (you can watch here).
Today, LinkedFinance were in the Oireachtas Committee on Jobs to make a presentation on what they do and the current state of the Irish peer-to-peer financing market.
You can watch my questioning and contribution here.
What is Peer-to-Peer Financing?
Peer-to-peer lending is an alternative financing model to bank lending, where a high number of small lenders lend start-up or expansion capital to small business on-line. Individual lenders typically finance €100-€200 of a €30,000 loan, competing over rates of return in an auction-style market place. The borrower then chooses the preferred rate. The peer-to-peer facilitator manages the market, manages the blended rate, and manages the monthly direct debit payments to the lenders. The borrower gets a low rate loan, the lender gets high interest on their savings. The default rate is lower than 1%.
In 2013, 10% of lending to SMEs in the UK was through peer-to-peer financing. The UK government provides tax relief for those lending this way, as well as a £20million government investment in successful auctions.
LinkedFinance is a peer-to-peer financing platform; originally an Enterprise Ireland High-Potential Start-Up. As of January 2014 they have already helped 51 Irish SMEs to raise an average of €28,000 each and create 150 new jobs.