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P2P Lending Continues to Soar But Investors Are Not Immune to Losses

Recent figures released by the Peer-to-Peer Finance Association (P2PFA) show that peer-to-peer lenders lent over £500m of new money in the first half of 2014 alone, demonstrating a further acceleration in the growth rate of the sector. Cumulative lending by P2PFA members was already roughly doubling every year, from £83m in Q2 2010 to £154m in Q2 2011, £289m (Q2 2012), £603m (Q2 2013) and now £1.482bn (Q2 2014). So the growth rate appears to be accelerating and it is expected to double in size every six months going forward.

Christine Farnish, chair of the P2PFA, said: "Peer to peer lending is consolidating its position as a good value and reliable form of funding for credit worthy consumers and small businesses. As we continue to grow we are committed to maintaining the highest standards of business conduct and are working with the FCA to ensure a smooth transition to statutory regulation."

The main reason the amount of money being lent is soaring upwards in the UK is the growth of P2P lending for property acquisition. LendInvest completed the 'World's largest' P2P loan repayment at the end of July - a £4.1m loan against a commercial building in Croydon that allowed the developer to finalise planning issues then convert the building into more than 120 flats. The investors were paid a net return of 6% for the 6 months in which their money was invested in the loan (equivalent to 12% pa).

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