Revolutionizing the traditional system to raise funds and fast Personal Loan, peer-2-peer (P2P) lending’s are reshaping the consumer loan industry. Earlier the spotlight was towards individuals, now the field of interest is more directed towards the developing sectors like SMEs, retailers and more. For start-ups and new businesses, apart from bank lending’s, it is a must to raise funds through various external finances. To ensure growth and expansion, tapping sources like P2P borrowings are a reliable source to raise capital.

Taking the statistics into account, countries like the UK have experienced a significant increase in demand for business funding from P2P Lending Platforms. Also, the lending market like P2P has shown a significant growth of 187% in the UK between 2014 and 2015. In India, P2P is a smart move for the growth of SMEs to fund their capital requirements, as a larger share of raising funds is dependent on the external finances. The alternative lending market is growing many folds each year. In 2015 it grew by 84 percent and generated USD 4.7 billion worth of business. The small and medium enterprises were one of the main users of this platform.

Faircent recently launched loans against collateral in a tie-up with Baxi, India’s first bike taxi operator. Under this arrangement, Faircent lists Baxi drivers interested in buying bikes on their portal as borrowers and help them get auto loans. Baxi operators generally belong to the low-income groups and find it difficult to get personal loans or even auto loans from traditional financial institutions. Through this product, Faircent bridges the gap between demand and supply democratizing financial services in India and empowering individual enterprise.

Similar to more developed countries like UK and USA, Indian SMEs are also encountering various challenges which they need to overcome. Our financial landscape is scattered unevenly and a balanced growth is sought in many fields. A large part of the population needs to be tech-enabled. Many still depend on traditional financial systems. Most funding is controlled by nationalized banks with deeper penetration in rural India. There is a need to speed-up the evolution of various financing options to promote choice and competition for the small business.

In Indian landscape, the growth potential is high as there are 57.7 million small business enterprises in the country alone. As SMEs and consumers demand new products and services, there is a significant opportunity for banks to innovate with their own new products or to coexist through partnerships with startups and alternative lenders. This will be further facilitated with RBI’s approach to work on an amicable regulatory framework for Peer to Peer personal loan sector. By embracing technological advances, financial institutions can also contribute to serving entrepreneurs and SMEs with this growth in the new forms of lending and expanded credit.

(Source:http://https://letstalkpayments.com/the-market-for-sme-finance-in-the-uk/ )