Reports that surfaced last month hinting at RateSetter's entrance into the corporate lending space appear to have been true. According to Financial Times, the U.K. peer-to-peer lender has secured government approval to begin lending to small and medium-sized enterprises this week.
Reports on Sunday (June 12) said RateSetter has already hired a team of specialists to help it enter into the SME lending competition, which is dominated by top players, like Funding Circle. The British Business Bank is said to be funneling more than $14 million in small business loans through the RateSetter platform.
"Our aim is to help SMEs scale up and become more productive," said Paul Marston, RateSetter's new head of commercial finance. "That is where they're saying is underinvested by traditional banks."
The executive said RateSetter will aim to provide up to $1.4 million worth of financing to small business borrowers, with terms lasting up to five years, according to reports.
Marston, whose background includes time at major financial institutions, told reporters that SMEs continue to be underserved by traditional banks in the U.K.
"One of the reasons I left one of the bigger banks is because I could see constant restructuring going on and a reduction in overall customer service and ability to act for SMEs," he said. "There are so many internal systems that the whole thing is drawn out."
According to reports, RateSetter will provide financing to SMEs within two weeks. It will not lend to startups, however.
Last month, reports said RateSetter secured a license to loan to businesses. At the time, the firm's chief executive, Daniel Foggo, told reporters that "traditional lenders are rigid and formulaic in how they decide to lend."
"We will look at a wider range of security options, including the assets of the business or personal guarantees," the executive added.
RateSetter is based out of Australia but operates in the U.K. as one of the market's leading P2P consumer lending platforms, reports said.