UK alternative finance market almost doubled in 2013 - survey
LONDON Dec 13 (Reuters) - The amount raised through alternative sources of finance nearly doubled over the past year in the UK as companies and individuals shifted away from banks, a survey showed on Friday.
Some 939 million pounds ($1.5 billion) was raised by methods such as peer-to-peer lending and crowdfunding, according to the report, which was produced by the charity Nesta, the University of Cambridge and the University of California, Berkeley. That was up 91 percent from 492 million pounds in 2012.
Based on average growth rates over the last three years, it predicts the market could grow to 1.6 billion pounds in 2014.
As banks rein in lending to meet tougher capital rules and greater regulatory scrutiny, alternatives have sprung up. Some allow small investors to earn interest from lending to firms or individuals, or to buy equity stakes for as little as 10 pounds.
Peer-to-business lending grew by 211 percent to 193 million pounds between 2012 and 2013, the report said. Investors got higher interest rates than they would have from high-street banks and companies received funding faster.
The report estimated more than 5,000 small and medium-size businesses used alternative finance over the past three years. The amount raised increased from 26.7 million pounds in 2011 to 332 million pounds in 2013.
"The rapid growth and the diversity of this industry hold significant promise for the UK economy going forward," said Nesta policy advisor Liam Collins.
Britain's financial watchdog is consulting on tighter rules for some alternative financing, to protect inexperienced investors. The consultation is due to close on Dec. 19.
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