The U.K. government is starting to spend some of its £1.2 billion Business Finance Partnership fund, starting with a “peer-to-peer” lending companies, according to The Telegraph.

Peer-to-peer lending companies organize a loan for businesses and individuals without having to go to a bank. Funding Circle is rumored to have received £20 million. It focuses on the business loans side, with a marketplace where people can surf various investors and investment opportunities. The company says it has funding £65,526,520 in loans with 1,000 businesses using the site. The company was founded in 2010 and is otherwise backed by Index Ventures, Union Square Ventures, and angel investors.

Zopa is also rumored to have received £10 million. It handles consumer lending and says it has approved £253,737,220 in loans. It was founded in 2005 and is otherwise backed by Bessemer Venture Partners, Balderton Capital, Wellington Partners, Tim Draper, and the Rowland family.

But this kind of lending structure is often unregulated, making it a risky move, albeit sometimes a move companies and individuals need to take in order to get favorable terms or work around bank loan rejections. The  Telegraph notes that these kinds of investments make by the U.K. government could be an effort to get a little more control over the peer-to-peer process, or a look inside its workings.

Others receiving funding from the partnership include Boost Capital, a venture capitalist firm, as well as other forms of lending solutions that cut out the banks.

London image via Shutterstock


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