The website, which enables users to set up loans with each other and fix their own terms, conditions and rates, has now raised a total of £1.5 million to start-up and expand, according to a company statement.

Charles Peel, co-founder of London brokerage and corporate finance house Peel Hunt, has followed his original investment in the business with an undisclosed additional amount in the round.

RateSetter co-founder and CEO Rhydian Lewis says the cash injection will be principally used to increase marketing spend. Launched in October 2010, RateSettter has 7,000 registered customers and has arranged loans of more than £1.3 million.

The business claims to have a different business model to that of other players in the industry, which Zopa pioneered in 2005. It offers variable rate loans and monthly access savings accounts.