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UK Government investment in Peer to Peer Lending

In this year’s budget, the government announced a raft of financing measures directly targeting SMEs in response to the widely held belief that the High Street banks were not providing adequate support for these types of businesses.  One of these initiatives commenced on 31/5/2012, whereby  Peer-to-Peer lending groups are invited to tender for £100m of government funding.  The government funds will be offered as a supplement to financing provided by the successful peer to peer groups and likely  in effect to  double the financing on offer and on the same terms and conditions.  This latter condition is necessary to avoid providing state subsidies, unlawful under EU legislation. The current Peer to Peer lending market in the UK recently emerged following the worldwide recession and has experienced rapid growth since.  It is currently estimated at £100m pa.