P2P lending rediscovers balance sheet magic

That snippet is from the latest annual accounts of Ratesetter, one of the UK’s top three “peer-to-peer” lenders, and shows the startup taking £2m of risk on to its own balance sheet in order to fund a borrower in “financial difficulty”. In the broader world of business, £2m is not a huge sum of money. But this particular sum of money is important for one specific and one general reason. First, it’s a meaningful amount of cash for Ratesetter and, according to a spokesperson, it’s the first time it’s done something like this. At the end of March this year, the accounts say, the lender had £15.4m of funds available, meaning the £2m working capital commitment accounts for about 13 per cent of its cash.

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