When British entrepreneur Alex Corbett, 35, left his bar job in London to start a pizza delivery business the world felt like his oyster. Corbett, who had added a pizza oven to the back of his Land Rover for the venture, visited several banks in the hope of securing funding, only to be offered rates that would turn a pizzaiolo‘s stomach. Instead, he took a punt on peer-to-peer lender Ratesetter. A week later he had a £60,000 ($91,500) loan and a competitive repayment rate. Today, Corbett’s business Pizzarova has delivered more than 20,000 pizzas and the entrepreneur is well on his way to paying off the loan.

Ratesetter boasts that, since it launched in 2010, investors have lent £585 million and “not lost a penny”. In the last year alone, the peer-to-peer sector’s two biggest players, Lending Club and Prosper, both based in the US, have seen growth rates of 200% and managed more than $1.6 billion in loans. Some forecasters estimate the global industry could grow fivefold in the next three years alone. The timing is far from a coincidence.

Seven years after the global financial crisis, banks remain reluctant to lend to small and medium-sized businesses (SMEs), despite the best initiative of governments to boost the availability of capital. In the US, bank lending to SMEs sits around $47 billion below pre-crisis levels, according to equity crowdfunding firm Trade Up, while the Bank of England has recorded a £7.7 billion drop in lending in the first half of 2014.

Stepping in to fill the gap are alternative finance providers, such as the aforementioned Lending Club and Prosper, providing credit for individuals and small businesses. These platforms enable unrelated individuals to lend money to borrowers without the use of an official financial institution such as a bank. Loan duration typically lasts between three and five years. At Ratesetter, investors can earn up to 5.8%, while borrower loan rates start at 7.3%. To buffer the risk of default, which sat at a rate of 0.83% in 2014, the peer-to-peer lender has created a provision fund.

The name peer-to-peer implies a contract between individual borrower and individual investor, however, according to financial risk news and analysis publication Risk, many institutional investors are taking advantage of the returns. “During the last quarter [of 2014], almost 60% of the $1.1 billion in loans originated on California-based Lending Club were snapped up by asset managers, banks, hedge funds, insurance companies, pension funds, and family offices. At Lending Club’s main competitor, Prosper, 66% of loans went to these same types of investors.”

Lending Club and Prosper have not missed the dynamic change. The two peer-to-peer platforms have already introduced individual accounts for wealthy investors that target specified criteria, primarily credit scores and income levels. Lending Club has also introduced two funds for investors with a net worth that exceed $1 million. That initiative allows financial institutions, wealth managers and family offices to invest in a selection of its most sought-after loans.