CoFunder, which has been operating in Northern Ireland since June, has received regulatory backing from the UK’s Financial Conduct Authority, and the firm’s chief operating officer, Aidan Doherty, thinks the Central Bank should start regulating the peer-to-peer finance industry here.

“We think it’s important that this segment of the industry is regulated to both give security and to ensure there’s a firm foundation there in terms of both the borrowers and the funders,” Mr Doherty said.

“We feel that regulation introduces a level playing field for everybody to ensure the general public can be confident.” He said peer-to-peer finance is “very much democratising the engagement of the general public … to give them the power to invest money directly but equally to receive a fair rate of interest.”

He said the direct relationship peer-to-peer financing creates between borrowers and lenders serves to improve corporate governance and responsibility.

“We believe that if borrowers know they are responsible to real people rather than faceless institutions, they are less likely to default.

“Lenders will have a true sense of ownership, and will act to benefit their investment by using and promoting the businesses they invest in.”

CoFunder carries out due diligence on the firms who wish to obtain financing through the platform, and potential investors can then make offers to lend between €100 and €2,500 at the interest rate each investor chooses. Investors can change their offers if a bidding war breaks out.

Firms then decide which offers to accept.

Peer-to-peer financing has been embraced by the UK government, which has invested £60m (€77m) into SMEs through alternative financer Funding Circle.

“Too much business lending is concentrated in the big banks and, if we’re to have a properly functioning business lending market, they need to be challenged by new banks, peer-to-peer lenders and other alternative providers,” UK Business Secretary Vince Cable said last May.

In July, the Oireachtas Joint Committee on Jobs, Enterprise and Innovation said the UK scheme should be replicated here.

Irish SMEs have now raised over €5m through Linked Finance, and the firm hopes to see €30m loaned through its platform next year.

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