What happened last month in Peer-to-Peer lending and real estate crowdfunding? Which platforms are on the rise and which ones are falling behind? How has the sector performed over the last 12 months? We take a look at numbers reported to P2PMarketData in June 2021 and dive deeper into this month’s special focus: the post-pandemic acceleration of business lending.
About the monthly report
In the Monthly Funding Report, we track the funding amounts of real estate crowdfunding, peer-to-peer & online marketplace lending platforms. Please note that:
- The statistics exclude some prominent platforms such as Lending Club, Funding Circle, Credimi and Prosper, which do not accept individual investors and remain open only for institutional and corporate investors.
- None of the numbers cited is an estimation – the amounts are reported directly to us or pulled from the platforms’ publicly available loan books and statistic pages.
- We convert all amounts to EUR for comparison reasons, using exchange rates from the last day of the month.
- Historical funding volumes reported below may divert slightly from volumes calculated in previous reports due to exchange rate fluctuations and the changes in the pool of platforms we track.
We currently track data from 77 participating platforms, including originators operating in 27 markets and with 12 different currencies. After a major clean-up of our database in May, this month we recorded no changes to our pool of participating platforms.
Key highlights: What happened in P2P finance last month?
We recorded a total funding volume of €519.1m in June 2021. Looking at the main currencies, the eurozone boomed, while funding in GBP increased only marginally. Funding in other currencies recorded a huge increase (+70%), but that’s largely due to a rebound in CreditGate24’s volume, which fell to a record low in May – CreditGate24 accounts for almost half of lending amounts in “other currencies” in our database, thus its large impact on the monthly fluctuations. Looking at investment types, business lending platforms recorded the highest increases (at a whopping average of +65%), followed by real estate lending (+13%) and personal lending platforms (+12%).
We reported several noteworthy milestones reached last month:
- The Italian market leader in business lending Borsa del Credito has crossed the €300m total funding barrier; and
- Both Peerberry – an emerging marketplace lending giant and October – Europe’s largest P2P business lending site have broken above the €600m mark.
Looking at a longer-term, total monthly funding volumes continue the recovery since touching the bottom in Spring last year. Over the last 12 months, the total volume has increased by roughly 77%, rising on average at a 6% rate per month – although with significant month-to-month variations.
Big player ranking
Business lending platforms, including Borsa del Credito, CreditGate24 and October, performed extremely well this month. So did Peerberry – a challenger to the so-far undisputed leader and by far the largest source of P2P financing – Mintos. These five largest platforms in our database accounted for over half of the June funding volume (54%).
Rising star ranking
Here, you can see 10 platforms that have grown the most over the past 12 months. With MyConstant’s volumes decreasing for the past few months, the second place this month belongs to Loanpad – a British real estate lending platform with a very straightforward product structure and low but safe returns. I expect MyConstant to fall further down in the ranking as the cryptocurrency boom, which we discussed in the April report, is fading.
Below, we show the reverse of the rising star ranking – 10 platforms that have noted the slowest growth in the last year. While half of the rising stars are real estate lending platforms, there are no defined “losers” – we record slow-growing sites across countries, currencies and investment types.
A deep dive: Is business lending the future of P2P finance?
Business lending platforms rocked the P2P lending market this month with a 65% increase in funding volume compared to May 2021. Of course, this is probably an abnormal variance in data and business lending is extremely unlikely to sustain such a growth rate. But it does provoke some thoughts – maybe it is a high tide for SME financing right now? Businesses, after all, must respond to the unprecedented growth in demand for goods and services as we come out of prolonged lockdowns. And in the long term, maybe P2P business lending will dominate the alternative investment/alternative finance scene?
According to other sources, alternative finance is indispensable for SMEs already. In 2017 in the UK, the most developed market, P2P business lending was estimated to provide between 9.5% and 29% of total new loans issued to SMEs. It’s no surprise – P2P lending is simply a good alternative to bank loans, especially for SMEs. FCA calls it “a natural progression from mainstream banking with several layers of bureaucracy removed”. With a reduced bureaucratic burden and no branches to sustain, P2P lending platforms can offer much easier and quicker application processes and competitive rates. In the UK, the role played by online platforms in providing crucial finance to SMEs has been acknowledged when several platforms were accredited for the Coronavirus Business Interruption Scheme (CBILS). Although continental Europe lags in maturity and importance of the P2P market for SMEs, the new upcoming EU regulations might help integrate online platforms deeper into the EU’s financial system.
The role of alternative finance will only strengthen – some forecasts predict business lending will grow at a much higher rate than other types and might constitute a (large) majority of the overall P2P lending market by 2027. The COVID-induced crisis has only sped this process up, as many businesses in need of easy and rapid access to finance turn to P2P borrowing. According to the Cambridge Centre for Alternative Finance, business lending accounted for 47% of the total volume in 2020 – a significant increase from 38% in 2019.
The quickly rising share of business lending in our reported funding amounts seems to reinforce these conclusions. Our numbers inherently underestimate the business lending volumes as many business lending sites accept only institutional investors and are excluded from the report. Business lending, therefore, accounts for only 14% of the total funding volumes we ever recorded. The upward trend is clearly visible though – over the last 12 months, 19% of the total funding was attributable to business lending and this month, almost a quarter of issued loans went to business borrowers (23%).
We’ll keep an eye on how this trend develops in the future, so stay tuned for more updates from P2PMarketData!