UPDATE 1-UK channels business lending via alternative financiers
* Peer-to-peer lenders to get 30 mln pound boost
* Funding providers to match govt lending to businesses
By Kylie MacLellan
LONDON, Dec 12 (Reuters) - Britain is to lend 55 million pounds ($88.6 million) to small businesses through alternative financiers such as peer-to-peer lenders, in its latest attempt to channel cash to hard-pressed firms.
The government, which has said a lack of bank lending is partly responsible for Britain's slow recovery from the 2008-09 financial crisis, has unveiled a raft of schemes over the last two years aimed at boosting funding for small and medium-sized companies, but so far they have had muted impact.
The latest 55 million pounds initiative is part of the 1.2 billion pound Business Finance Partnership, announced in May, to help to improve the flow of credit to businesses.
The government said at the time it planned to pump 100 million pounds through non-traditional channels. It expects to announce early next year where it will put the remaining 45 million.
"Small and medium-sized businesses need access to a diverse range of finance options, including non-bank lending," Business Secretary Vince Cable said in a statement.
Peer-to-peer lending, where members of the public provide funding for businesses and individuals, is among a host of alternative financing models that have developed in response to reduced bank lending.
The government said it would put 30 million pounds through peer-to-peer lending websites, with 20 million of that going to Funding Circle and 10 million pounds to Zopa.
"Not only is this a huge vote of confidence for peer-to-peer lending, it is a defining moment for the future of small business finance," said Samir Desai, chief executive and co-founder of Funding Circle, through which more than 60 million pounds has been lent to businesses since it was founded in 2010.
As well as the peer-to-peer websites, Boost Capital, which provides business cash advances, will receive 20 million pounds of government funding to set up a fund to make loans of between 1 million pounds and 8 million to small businesses.
Credit Asset Management, a subsidiary of investment company City of London Group, will get 5 million pounds to provide asset finance and cash-flow lending to small businesses.
The finance providers have agreed to match the government funding from the private sector, bringing the total to be made available to small businesses to 110 million pounds.
The government will also launch a network of 1,000 advisors to help small businesses work out which type of financing best suits their needs, Cable will tell a conference on Wednesday.
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