How peer-to-peer lending is helping SMEs during the pandemic
September 27th, 2020 – In recent years small and medium enterprises (SMEs) have been reporting declining sales and trouble with distribution, among a string of other problems. With small businesses contributing more than 60 percent to GDP, the implications are disastrous.
However, SMEs have recently been given a lifeline in the form of peer-to-peer (P2P) lending platforms. Recent research has indicated that businesses on P2P lending platforms had seen a significant increase in revenue, helping the economy dramatically.
Research into P2P lending
A study by the University of Indonesia has uncovered some heartening results for SMEs and the economy overall. By engaging in new financing means, businesses are showing vast levels of improvement, lessening the strain on individuals and the broader economy.
Borrowers of P2P lending platform Investree—which is comprised mostly of SMEs—have seen a significant increase in revenue. This revenue increase has then enabled SMEs to scale-up operations.
According to the study by the university’s demography center at the School of Economics and Business, the average income increase was between 20 and 50 percent. Additionally, sectors from manufacturing to services and construction are benefiting from the increase.
Investing in P2P lending platforms
P2P platforms are equally benefiting those looking to borrow money and those looking to invest their hard-earned money in a worthwhile cause, potentially paving the way for a change in how businesses choose to fund their operations.
Research indicates that 44 percent of the entrepreneurs in Investree had also been able to employ more people since borrowing from the P2P platform. Leading to a positive impact on SMEs, all the while supporting financial inclusion.
P2P lending platforms are able to help borrowers give out short-term loans that enable SMEs to scale up their business. This will, in turn, eventually qualify them to take out larger bank loans. According to research, 37 percent of millennials borrow money to consolidate debt and is a $173 billion market.
Written by Tech Talks
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