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Business Peer-to-Peer Lending in 2015

A common theme in all today's peer-to-peer lending news articles and blogs on 4thWay has been the see-saw effect: more borrowers make it easier for lenders to lend at better rates while borrowers have to pay more.

This encourages more lenders to come, which makes it harder for them to lend at better rates as they compete with each other to be the ones to lend money to borrowers.

Today, rebuildingsociety, a P2P lending company focused on business lending, shared its views on what's going to happen in 2015. Each item it lists could impact the see-saw, for better or worse:

Fewer borrowers, lower lending interest rates

“Election year should mean there is greater political pressure on lenders to prioritise business lending.” This means more banks might feel the pressure to lend to businesses at more competitive rates. More businessses borrowing through banks means fewer businesses borrowing through P2P.

More borrowers, higher lending interest rates

The government is so keen to encourage P2P lending way beyond the £2 billion mark it achieved in autumn that banks are going to be forced to refer borrowers to P2P lending companies. Santander has already started to refer borrowers to Funding Circle.

In addition, more businesses are using “cloud accounting”, which means that P2P lending websites can more easily plug in business borrowers' data and analyse them better.

rebuildingsociety said: “This allows lenders to plug in to their accounts and make a better judgement of the business’ ability to repay finance, making them more attractive to lenders.”

On a related point, rebuildingsociety thinks P2P lending companies will use their data skills to continue to find new niches of untapped borrowers who couldn't previously be analysed properly.

More lenders, lower interest rates

Just as Jane Rey wrote in her Candid Opinion blog today (see Start Lending Now Before P2P ISAs Arrive) there will be an “influx of ISA cash at some point in 2015”. That cash will come from lenders, so that means lower interest rates will temporarily chip the edge off any tax savings.

To counter balance this, rebuildingsociety says there will then be “a new wave of media interest”, which will also attract borrowers' attention again.

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