A slowing economy and Brexit uncertainty are proving a drag on the growth of online "alternative lending" to the UK's small businesses although gross lending continues to expand, according to the loan data specialist Brismo.
Lending to businesses, including invoice finance, reached £1.1bn in the first half of 2019, representing a rise of 14.5% compared with the first six months of 2018. That marked a slowdown from the 17.4% year-on-year growth rate recorded a year ago.
The latest Marketplace Lending Index report, compiled by Brismo in conjunction with Link Group, says the first half of 2019 saw a surge in property lending by alternative providers, with the gross amount advanced jumping by 54.5% to £848m. This meant that property accounted for 60% of all new lending by peer-to-peer and online marketplace providers during the first six months of 2019.
The surge in property lending came during a difficult period for the P2P sector, with the collapse of bridging and development specialist Lendy into administration amid rising arrears. This left up to 20,000 private investors facing potentially significant losses. However, online property platforms LendInvest and Landbay both more than doubled their lending in the first half of 2019, between them advancing £335m more than they lent over the same six months of 2018.
The report highlighted rising loss rates across P2P lending to businesses and consumers. A year ago, the realised loss rate stood at 2.1%. This climbed to 3.4% in the first half of 2019 – the highest level on record.
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