The Government has moved one step closer to including the proceeds of peer-to-peer (P2P) lending within ISAs as it launched a consultation on how best to implement the change. The move would allow people to lend to small businesses and receive tax-free returns of up to 6 per cent on savings.
‘We want to support savers at all stages of their life and make sure they have greater flexibility and choice over how they invest and access their savings,’ said David Gauke, the financial secretary to the Treasury.
Lord Turner of Ecchinswell, who led the Financial Services Authority during the credit crisis, predicted that losses on peer-to-peer loans “within the next five to ten years will make the worst bankers look like absolute lending geniuses”.
Peer-to-peer lenders use online platforms to link up consumers and small businesses that want to borrow money with retail and professional investors. The industry has lent an estimated £5 billion since the first platform, Zopa, emerged in 2005.
Wolf Richter www.wolfstreet.com www.amazon.com/author/wolfrichter Deutsche Skatbank, a division of VR-Bank Altenburger Land, which was founded in 1859, is not the biggest bank in Germany, but it’s the first bank to confirm what German savers have been dreading for a while: the wrath of Draghi.
Since the financial crisis, borrowers have been eager to get lower interest rates and better access to credit, while lenders have searched for higher returns on their investments. Banks, saddled with regulatory burdens, haven't been able to fully meet these needs.
The UK generated nearly $2.3 billion in peer-to-peer (P2P) loans in 2014, making its alternative lending market the largest in the world on a per capita basis. To illustrate, 72% more lending volume is transacted in the UK than in the US per person.
Peer-to-peer (P2P) and peer-to-business (P2B) lending are becoming an increasingly common choice as a source of raising the necessary capital to get projects off the ground and expand a business.
But according to the 2014 Nesta Report, only 44% of SMEs have even heard of P2B lending, let alone tried it.
What is P2P or P2B lending?
Peer-to-peer lending is essentially just another way of getting a loan, but instead of a bank being the facilitator, the investor of the loan is an unrelated individual known as a peer.