Solving the SME Financing Puzzle: Has Online P2P Lending Got the Midas Touch?

Abstract

This article investigates the financing dilemma of small and medium-sized enterprises (SMEs) in the UK. After the global financial crisis, banks have become risk-averse and refuse to lend to small business borrowers. Meanwhile, the recent decade has witnessed the rapid growth of online peer-to-peer (P2P) lending activities, which to some extent substitute bank credit for SME financing. This article analyses the advantages of P2P loans and relevant regulatory issues.

Keywords: SME Finance, Loan-Based Crowdfunding, Peer-to-Peer Lending, P2P Lending, Banking Law, Financial Law, Financial Regulation, Fintech, Financial Technology, Company Law, Corporate Finance, Alternative Finance, Law and Finance, UK, London