The entire European business P2P lending industry is forecast to maintain its growth this year, rising 12.2% year-on-year, and reaching USD 6.5 billion transaction value, according to data gathered by Finanso.se.
The UK-based peer-to-peer lender Funding Circle has reported a significant increase in searches for business loans since the start of coronavirus pandemic, and a huge number of European P2P investors continue to invest without making changes to their portfolios.
According to data gathered by Finanso.se, the entire European business P2P lending industry is forecast to maintain its growth this year, rising 12.2% year-on-year, and reaching USD 6.5 billion transaction value.
Transaction value increased 75% in three years
The rise of the global peer-to-peer lending industry started during the 2008 financial crisis when banks cut back on loans to individuals and small firms, fearing defaults. It set the groundwork for modern peer-to-peer platforms, which have become one of the fastest-growing sectors in the financial industry. Instead of borrowing from a single source, companies were given the ability to lend directly from tens or even hundreds of individuals.
By using sophisticated computer algorithms to make lending decisions, P2P platforms removed the banks from the equation and connected borrowers directly to lenders. For investors, this new type of arrangement meant up to three or four times the rate of return compared to traditional brick-and-mortar savings accounts.
In 2017, the European business P2P lending market reached USD 3.6 billion worth, revealed the Statista survey. In the next three years, the transaction value of the unified market grew by more than 75%. Statistics indicate the steady growth is set to continue in the following years, with the European business P2P lending industry hitting USD 7.1 billion worth by 2023, or nearly double the 2017 figures.
The UK in the European P2P lending market
Statistics show recent years have also witnessed a steady growth in the number of funded alternative loans in the business segment, increasing from more than 63,000 in 2017 to 71,600 in 2020.
Also, the average funding per loan rose by nearly 50% in the last three years, jumping from almost USD 58,000 in 2017 to over USD 86,000 this year. Analyzed by geography, the UK represents the leading European P2P lending market expected to reach USD 2.6bn transaction value this year. Switzerland follows with USD 1.4 billion worth P2P business loans.
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