LONDON British peer-to-peer lender Funding Circle said on Thursday it planned to raise 150 million pounds through the launch of a new London-listed fund that will provide loans to small businesses.

Funding Circle, which like other peer-to-peer lenders allows investors to lend to businesses via low-cost online platforms, said its SME Income Fund would focus on lending to companies in Britain and the United States.

Funding Circle plans to list it on the London Stock Exchange once it is launched, becoming the first peer-to-peer platform to float its own fund. The fund is targeting a dividend yield of 6-7 percent a year.

Peer-to-peer lending has grown rapidly in Britain since the 2007-9 financial crisis, providing an alternative source of finance for small firms as banks cut back on lending to strengthen their balance sheets and meet regulatory demands.

The platforms also allow retail investors to achieve greater returns at a time when benchmark interest rates are at record lows.

(Reporting by Matt Scuffham; Editing by Pravin Char)