Zopa to lend to Sole Traders via Government scheme

The Government, in the context of a stimulus program called the Business Finance Partnership, has pledged to allocate £1.2 billion in funds towards diversifying the financing options available to small businesses. Out of this £1.2 billion, £100 million is to be invested in peer-to-peer (P2P) lending services, an alternative financial service that has grown increasingly popular over the past few years. Out of this £10 million is to be funnelled through Zopa, the UK's largest and oldest P2P lending service with a view to providing finance to Sole Traders. Peer-to-peer lending is an increasingly popular alternative financial service which allows small businesses and individuals to gain access to funding outside of traditional lending channels. Zopa has a system that pairs money from lenders with borrowers applying for loans. Each loan is funded by many different lenders, a method that diversifies lenders' holdings and dampens the effect of a borrower defaulting. The Government intends to effectively become a customer of Zopa, with all of its lending subject to the same fees and interest rates. Not only will this provide more funds for small businesses across the country but, default rates notwithstanding, the government should also make a healthy return on their money. In the face of banks' reluctance to grant loans, many capital-seekers have turned to sites like Zopa for funding. Zopa CEO Giles Andrews has expressed Zopa's pleasure in the opportunity to participate in this innovative new government program, which involves a method of capital injection that has never been attempted before. Many are hopeful that the Government's entry into the P2P lending scene will help revitalize a dismal economy that has banks clenching their fists. With Government-backed funding, P2P lenders like Zopa may be able to break through bank's monopoly on lending. The Treasury has stated that it wishes to promote creative new financial services like P2P funding, and plans on supporting the fledgling industry. Leaders of the P2P lending have also expressed a desire for Government regulation, citing benefits the industry would have to gain, such as increased credibility and reduced risks. If all goes well, P2P lending has the potential to rise up to be a major competitor to mainstream banking, in as early as the next few years. At Choice Loans we are heavily involved with Peer-to-peer lending and can offer no-fee unsecured personal loans of up to £25,000 or unsecured commercial loans (to limited companies only) of up to £100,000 as well as secured loans up to £500,000. To apply please visit the relevant page and complete the form or call us on 0845 1260350 for further information.