Becoming a private money lender is not something many people would have considered as a means of generating income several years ago.

The internet coupled with advances in payment and ID technology has changed all of that – you can lend money to other people and businesses without leaving your computer.

In the US, Lending Club has taken off and advanced nearly $1.6bn of personal loans since its inception and its website carries a very simple slogan: Investors earn better returns, borrowers pay lower rates.

Lending Club’s rates are higher than those typically offered in the UK, where rates for lending to individuals with good credit ratings more accurately reflects the level offered to savers. Ratesetter for example offers private money lenders a monthly access account that pays c.2% and lenders can also go in for a 5 year account at 5.3%.

In the UK it is also possible to lend to businesses (US regulation forbids this at present) with returns typically much higher. On rebuildingsociety.com at the time of writing, all our completed loans have included lenders who have achieved lending rates of over 19% and we’re yet to have a missed payment.

With the SME funding vacuum still making it problematic for creditworthy UK businesses to secure finance, it has never been easier to become a private money lender.