More NewsAlternative lending is now a trillion dollar industry

Alternative lending is now a trillion dollar industry

A flurry of investment in lending to tech startups and a handful of mammoth IPOs have taken the value of the alternative lending sector up to $1 trillion.

A flurry of investment in lending to tech startups and a handful of mammoth IPOs have taken the value of the alternative lending sector up to $1 trillion.

So far this year, 17 VC deals have been reported with an average investment of $23m apiece, according to TechCrunch. Meanwhile, P2P lenders Lending Club is now valued at $9 billion and OnDeck at $1.3 billion.

It is thought that the rapid growth is spurred by a desire for increased transparency among lenders, especially in the more cautious business environment that followed the crash, coupled with a need for greater access to loans among businesses struggling to secure finance from banks.

“The reason these alternative lending platforms are coming up is that platform lending is simply more efficient for both the borrower and the lender,” said Stuart Ellman, managing partner at RRE.

“The borrower is able to find loans that they otherwise weren’t able to get — either from the banking crisis or from banks tightening up their lending process — and lenders have the ability to do their diligence, see the risk and the interest rates, and make the loans they want to on an a la carte basis.”

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