Peer-to-peer lender Linked Finance has received a €2.5 million investment from Frontline Ventures to expand Irish operations.

The investment from the Irish venture capital firm follows investor presentations in the US and Europe, and will support Linked Finance in doubling its employee numbers as well as investments in IT and business expansion.

The company hopes to increase its staff to 16 by the end of this month, with recruitment already under way. It will also be doubling the amount businesses can borrow from €50,000 to €100,000 as of March.

The company has a three-year target of supporting 5,000 SMEs and in the process supporting 40,000 jobs. It aims to facilitate €250 million of lending through its platform over the three years, with at least €20 million lent this year.

Minister of State for Business and Employment Ged Nash said access to credit is vital for SMEs to invest and grow and ultimately create more jobs, adding that crowd-funding was an innovative way for businesses to gain access to non-traditional forms of credit.

“For a variety of reasons some SMEs may not be able to get the funds they need to expand from banks.

“Therefore access to finance from non-bank sources such as those offered by Linked Finance are part of the solution for SMEs,” he said.

Linked Finance founder Peter O’Mahony said there were thousands of creditworthy SMEs across the country that have been “effectively forgotten” about by traditional lenders.

“A key differentiator for us rests in the fact that lenders and borrowers become partners in success rather than simply the parties to a transaction.”

Small Firms Association director Patricia Callan said crowd lending has proven to be a hugely effective method for SMEs to raise finance.

“Linked Finance’s plans to help 5,000 Irish SMEs over the next three years will be a huge help as we look to strengthen the economic recovery and support job-creation throughout Ireland.”

Last month fish-and-chip shop chain Leo Burdock raised €50,000 in funding through Linked Finance, the most successful loan completed via the platform. A total of 455 lenders pledged €83,000, or 167 per cent of the €50,000 originally sought to help the chain renovate its Temple Bar premises.

Launched in 2013, Linked Finance has already facilitated loans totalling more than €7 million to over 200 Irish businesses.