The Institute of Directors will tell MPs this week that alternative funding should be encouraged as a way to get people away from investing in property.
Policy chief Jimmy McLoughlin will speak to the Treasury Select Committee at this week’s investigation into access to business finance.
He is confident that lending to small firms through crowdfunding – raising small sums from large numbers of people who have little recourse if their investments fail – will not turn into a bubble and that the relatively new industry is suitably regulated.
But critics believe the industry bears similarities to the credit and property boom before the crash in 2008.
McLoughlin told The Mail on Sunday: ‘The Government has been pretty good in terms of the new areas of finance – crowdfunding is regulated but there’s not a heavy hand on it.’
He is not in favour of imposing limits on sums invested, and said that from a regulatory point of view, past crowdfunding failures ‘prove that the market is working’.