Peer-to-peer lender Linked Finance has received a €2.5m investment from Irish venture capitalists Frontline Ventures as it looks to expand its operations.
The lender is doubling the maximum amount businesses can borrow - to €100,000 - from the first week of March.
Linked has 8,000 members of the public registered as lenders and has a "huge" amount of money ready to go, founder Peter O'Mahony told the Irish Independent.
"We have a three-year target of supporting 5,000 SMEs and in the process supporting 40,000 jobs," he said. Fish and chip company Leo Burdock and 'Vit Hits' maker Vitz Drinks are among the companies to have raised money through the platform.
Business minister Ged Nash said peer-to-peer lending is "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," Mr Nash said.
Peer-to-peer lending works by having a lender like Linked credit check businesses, before putting their funding needs up on the platform if the business is approved. Members of the public then bid to be part of the loan, offering money at a certain interest rate.
The platform then works out the cheapest way for the business to get the money.
Peer-to-peer lending is unregulated by the Central Bank and Mr O'Mahony said he is keen to see a regulatory framework introduced.
Small Firms Association director Patricia Callan said peer-to-peer lending has been "hugely effective" for SMEs.