Funding Circle

Funding Circle is an online marketplace which allows savers to lend money directly to small and medium sized businesses. Funding Circle was the first site to use the process of peer-to-peer lending for business funding in the UK, and now operates in both the UK and US markets. As of February 2014, Funding Circle had facilitated £223 million in loans to small and medium sized firms.

History

Funding Circle was set up in the UK in August 2010. It was launched at a time when small businesses were struggling to obtain finance from traditional channels. In its first 10 weeks lenders used the platform to lend more than £1 million to small businesses.

It received £2.5 million in funding from Index Ventures in April 2011. In March 2012 Funding Circle closed a series B round of £10 million led by Index Ventures and Union Square Ventures.

A report published by Nesta in April 2013 found widespread preference for online lending over traditional banks among existing Funding Circle users. 77 per cent of businesses that borrow through Funding Circle said they were ‘likely or very likely’ to approach the peer-to-peer lender for a loan first, rather than go to a bank.

By September 2013 Funding Circle had trebled in size and announced it had facilitated over £150 million of loans since it launched. In October 2013, Funding Circle announced that it had raised a $37 million investment. Accel Partners led this round of funding, which brings the company’s total to $58 million. New investor Ribbit Capital contributed, along with existing investors Union Square Ventures and Index Ventures. Additionally, Funding Circle announced it was launching in the US and joined forces with Endurance Lending Network. Endurance now trades under the Funding Circle name. Since launching more than 50,000 people have registered at Funding Circle. Investors now include local councils, universities and the British Government.

Business Model

Funding Circle provides a platform where investors can browse businesses that Funding Circle has credit assessed and approved for lending. Businesses submit an application which is reviewed by Funding Circle credit assessors. Once approved, businesses post their loan request on the Funding Circle marketplace. Here, investors choose which type of businesses to lend to, and through an auction process, bid the amount of money they wish to lend, and the interest rate they want to earn. Loan auctions typically take seven days. After the business accepts a loan, they make one repayment each month which is collected by Funding Circle and distributed to all the investors. Loan requests are typically made up of lots of investors each bidding small amounts on hundreds of different businesses to spread their risk.

Funding Circle also has an Autobid function, where the system automatically places bids according to the criteria investors have set. Investors can choose the average rate they wish to offer, which types of businesses they want to lend to, and the maximum percentage of their portfolio to be lent to any one business.

Investors can build up their portfolios quickly by buying parts of existing loans from other investors via the secondary market. Similarly, if investors need to withdraw money at any point, all or part of the investment can be sold via the secondary market. Alternatively investors can choose to withdraw their money gradually as they receive their monthly repayments. In the UK, loan lengths start at the 6 month mark and go up to 5 years. Businesses can borrow between £5k and £1M to finance working capital, expansion capital, asset finance and one off business expenses.

Risk and regulation

If a borrower fails to fully repay the loan then the lender risks losing part of his or her return. To mitigate against this, Funding Circle recommends that users lend to at least 100 businesses equally. This can be done with as little as £2,000 – i.e. lending £20 to 100 businesses.

In the UK any established and creditworthy business currently operating can apply for a loan at Funding Circle, including partnerships, limited companies and sole traders. Businesses must have at least 2 years of filed or formally prepared accounts and have no outstanding County Court Judgements over £250. A minimum turnover of £100,000 is also required.

Funding Circle use many of the same credit checks as the high street banks to ensure only strong, healthy and creditworthy businesses can post a loan request. This includes an Experian check, whilst also splitting businesses into five risk bands (A+, A, B, C, and C-). If a business defaults, Funding Circle will pursue the business owner to recover the remaining part of the loan on behalf of the investors.

In partnership with Zopa and RateSetter, Funding Circle launched a trade body, the P2P Finance Association, with the stated goal of "ensuring high minimum standards of protection" for lenders and borrowers in the industry. The association will also lobby the UK Government to regulate the industry itself. The Government has since ruled that peer-to-peer lending and borrowing activities will be overseen by the UK’s new market regulator, the Financial Conduct Authority, from April 2014.

Returns

Because lenders choose to which businesses and at what rate they lend, returns for lenders using Funding Circle vary from person to person. However, during the first year from when the company was founded in August 2010, lenders received an average return of 8.3 per cent before fees and taxes. As of September 2013 Funding Circle advertise an average return of 5.8% after fees and bad debt.

Get Started

Facts

Reported Return: 6.40%
High Risk Yield: 8.00%
Medium Risk Yield: 7.60%
Low Risk Yield: 7.30%

Total Loans Funded: 567M
Average Service Fee: 1.00%

Loan Terms

6 Months
12 Months
24 Months
36 Months
48 Months
60 Months

Related News

Funding Circle introduces two changes to secondary market - AltFi - Mon Dec 02 08:00:00 UTC 2019
Funding Circle Launches SMB Loan Choice Tool - pymnts.com - Wed Nov 27 08:00:00 UTC 2019
P2P lender Funding Circle to revamp its resale market in December - This is Money - Mon Nov 18 08:00:00 UTC 2019
Funding Circle goes live with secondary market changes - P2P Finance News - Mon Dec 02 08:00:00 UTC 2019
Funding Circle US Launches Small Business Choice, Providing Interest Rate and Loan Term Options to Small Business Owners - Business Wire - Wed Nov 27 08:00:00 UTC 2019
Funding Circle revamps resale market - Your Money - Mon Nov 18 08:00:00 UTC 2019
4 big peer-to-peer lending changes in December 2019 – Which? News - Which? - Sat Nov 30 08:00:00 UTC 2019
Funding Circle unveils £250m securitisation of UK loans - P2P Finance News - Thu Nov 21 08:00:00 UTC 2019
P2P lending: SoFi, Prosper, Funding Circle, Zopa, RateSetter, and more - Lending Times - Thu Dec 05 15:12:34 UTC 2019
Is the current share price of FTSE fintech company Funding Circle a bargain buy? - Motley Fool UK - Wed Dec 04 15:44:03 UTC 2019
Funding Circle US launches new borrower feature - P2P Finance News - Thu Nov 28 08:00:00 UTC 2019
Zopa backer cuts valuation of peer-to-peer lender by almost half - Financial Times - Wed Dec 04 14:55:00 UTC 2019
Funding Circle names regional manager in the South - P2P Finance News - Thu Dec 05 13:05:39 UTC 2019
Investing: get the full picture before you risk peer-to-peer - The Guardian - Fri Nov 22 08:00:00 UTC 2019
Should we give up on peer-to-peer lenders? Watchdog aims to curb firms' Wild West antics - This is Money - Fri Dec 06 21:48:00 UTC 2019
ThinCats follows Landbay in closing its doors to casual investors - This is Money - Mon Dec 09 12:35:00 UTC 2019
Zopa eyes £130m investment to secure bank future - AltFi - Mon Dec 02 08:00:00 UTC 2019
I thought peer-to-peer was as safe as savings. Now I'm paying the price - The Times - Sun Nov 24 08:00:00 UTC 2019
Apple Complies With Russia's Map Change Request - pymnts.com - Wed Nov 27 08:00:00 UTC 2019
Small-Business Term Loans: Where to Find Options - NerdWallet - Thu Nov 21 08:00:00 UTC 2019
Latest Innovative Report on Alternative Lending Market 2019 And Upsurge with Major Players Contributing Heavily towards Market Growth, | Key Players - Lending Club, Prosper, Upstart, SoFi, OnDeck, Avant, Funding Circle, Zopa, Lendix, RateSetter, Mintos, Auxmoney - Market Expert - Wed Dec 11 18:26:30 UTC 2019
Global FinTech Investment Market Growth 2019-2025 – ZhongAn, Oscar, Wealthfront, Qufenqi, Funding Circle, Kreditech, Avant - Industry News Publisher - Wed Dec 11 11:27:24 UTC 2019
European fintech weekly: After a last-minute fundraise, what lies ahead for Zopa and its lending peers - Sifted - Mon Dec 09 06:00:00 UTC 2019
Global Alternative Finance service Market 2019-2025 | Top key players are Funding Circle, Kickstarter, LendingClub, MarketInvoice, Prosper Marketplace - Commerce Gazette - Tue Dec 10 16:10:45 UTC 2019
How to get a payment processor loan through Square, PayPal, or Stripe - Business Insider - Tue Dec 03 23:50:00 UTC 2019
P2P lending crackdown a “watershed moment”, says RateSetter CEO - AltFi - Mon Dec 09 11:49:47 UTC 2019
Peer-to-peer lending platform Landbay shuts doors to retail investors - Financial Times - Thu Dec 05 14:49:00 UTC 2019
Zopa gets £140m investment amid pursuit of bank licence - Financial Times - Tue Dec 03 08:00:00 UTC 2019
M&C Saatchi’s 1980s business model leaves investors seeing red - Financial Times - Wed Dec 04 19:36:00 UTC 2019
Created to democratise credit, P2P lenders are going after big money - The Economist - Thu Dec 05 16:21:57 UTC 2019
Flourishing demand of P2P lending Market Size Over 2019-2025 | top key players areAvant LLC, Kabbage Inc, Pave Inc, Prosper Marketplace Inc, Funding Circle, Circleback Lending Inc, Social Finance Inc, Daric Inc, CommonBond Inc, LendingClub and Upstart Network Inc - Market Report Gazette - Tue Dec 10 18:18:23 UTC 2019
MarketInvoice rebrands as MarketFinance as it launches SME lending up to £250k - AltFi - Tue Nov 12 08:00:00 UTC 2019
First Woodford, now M&G fund is suspended: These funds MUST be reformed, says JEFF PRESTRIDGE - This is Money - Sat Dec 07 22:01:00 UTC 2019
Landbay, the peer-to-peer lender that's turned away savers - The Times - Sun Dec 08 00:01:00 UTC 2019
Funding Circle seeks to ease fears over withdrawal delays - Financial Times - Fri Oct 11 07:00:00 UTC 2019
Zopa secures last-minute funding lifeline - Business Insider - Business Insider - Thu Dec 05 19:34:00 UTC 2019
Funding Circle shares dive on growth warning - BBC News - Tue Jul 02 07:00:00 UTC 2019
Zopa needs £100m in 3 weeks to satisfy Bank of England requirements to become a bank - This is Money - Tue Nov 12 08:00:00 UTC 2019
Funding Circle losses widen as bad debts in UK worsen - Financial Times - Thu Aug 08 07:00:00 UTC 2019
SMB LENDING REPORT: How alt lenders are providing SMBs with new funding options, and the ways incumbents can r - Business Insider India - Sat Dec 07 12:00:00 UTC 2019
Hadrian's Wall tumbles down in new blow to Mark Barnett and direct lending sector - Citywire Financial Publishers - Wed Nov 20 08:00:00 UTC 2019
Funding Circle Closes $198 Million Securitization to Support US Small Businesses - Business Wire - Wed Aug 28 07:00:00 UTC 2019
Tempted by peer-to-peer? From today the City watchdog says you can only invest 10pc of your cash - Telegraph.co.uk - Mon Dec 09 17:36:00 UTC 2019
Funding Circle Surpasses $10 Billion Lent to Small Businesses Globally - Business Wire - Thu Aug 15 07:00:00 UTC 2019
Online Loans Market 2019 Business Scenario – Upstart, Funding Circle, Prosper, CircleBack Lending - The Market Publicist - Wed Dec 04 12:19:02 UTC 2019
Lending as a platform Market Complete Study by Key Players: Ripple (fka OpenCoin), Funding Circle, Credit Karma, Zopa, BankBazaar.com, Crowdcube, Kreditech - Market Report Gazette - Thu Nov 21 10:07:00 UTC 2019
Insurance startup Vouch tacks on growth funding to serve startups - PitchBook News & Analysis - Wed Nov 20 08:00:00 UTC 2019
Online Loans Market Is Thriving Worldwide| Upstart, Funding Circle, Prosper, CircleBack Lending - Daily Market Insight - Wed Dec 04 09:33:45 UTC 2019
Five E-Commerce Startup Funding Options To Move The Needle - Forbes - Mon Nov 18 08:00:00 UTC 2019
Huge Demand for Online Loans Market 2019 top key companies profiled like Upstart, Funding Circle, Prosper, CircleBack Lending, Peerform, Lending Club, Zopa, Daric, Pave, Mintos - Market Expert - Wed Nov 27 08:00:00 UTC 2019
Funding Circle Finds Banks Doing A Bad Job Lending To Small Businesses - Forbes - Mon Apr 29 07:00:00 UTC 2019
Global Alternative Finance Market Professional Survey 2019 – Funding Circle, Lending Club, Kickstarter, Market Invoice - PR Industry News - Thu Nov 21 17:23:49 UTC 2019
Funding Circle cuts forecast returns for retail investors - Financial Times - Wed Apr 24 07:00:00 UTC 2019
Global Alternative Finance Platforms Market 2019 – Funding Circle, Lending Club, Kickstarter, Market Invoice, Prosper Marketplace etc. - Space Market Research - Wed Nov 27 05:07:21 UTC 2019
Funding Circle (LON:FCH) Shares Down 3.8% - Slater Sentinel - Fri Nov 22 08:00:00 UTC 2019
Online Financing Platform for SMBs Market Is Booming Worldwide With Kabbage, Lending Club, Ondeck, Peerform, Prosper - The Market Journal - Wed Dec 11 07:40:27 UTC 2019
Nexus-backed artificial intelligence startup Observe.ai raises Series A funding - VCCircle - Wed Dec 11 07:02:22 UTC 2019
Funding Circle Hits $10Bn (£8.3Bn) Lending Mark - FinSMEs - Sun Aug 25 07:00:00 UTC 2019
I can't trust any adviser on costs - The Times - Sun Dec 01 08:00:00 UTC 2019
Valentin Stalf, Romi Savova, Nick Ogden and Meri Williams named among AltFi's inaugural Powerlist 50 - AltFi - Mon Nov 18 08:00:00 UTC 2019
FinTech Investment Market with top key players: Oscar,Qufenqi,Wealthfront,ZhongAn,Atom Bank,Avant,Funding Circle,Klarna,Kreditech,OurCrowd,WeCash,H2 Ventures,KPMG - Commerce Gazette - Wed Dec 11 05:18:56 UTC 2019
Funding Circle Announces Expansion to Canada - PRNewswire - Thu Mar 07 08:00:00 UTC 2019
Peer-To-Peer Lending (P2P) Market | by Market Share, Growth Drivers, Challenges, and Investment Opportunities Forecast 2024 : Upstart Network, Peerform, Prosper Marketplace, Avant, LLC - The Market Expedition - Wed Dec 11 11:13:27 UTC 2019
Funding Circle piloting referral scheme for large unsecured loans - AltFi - Mon Nov 11 08:00:00 UTC 2019
Funding Circle upgrades secondary market - AltFi - Thu Oct 31 07:00:00 UTC 2019
Trusting in fast-growing unlisteds - Investors Chronicle - Thu Nov 14 08:00:00 UTC 2019
Huge Imapact of Peer-to-Peer Lending Platforms Market 2019-2025 | LendingClub Corporation, Funding Circle Limited, Prosper Marketplace Inc., Daric Social Finance Inc., Zopa Limited , Avant Inc. - Market Report Gazette - Mon Nov 25 10:52:00 UTC 2019
Global Bitwalk Market, Top key players are Upstart, Funding Circle, Prosper Marketplace, CircleBack Lending, Peerform, Lending Club - Financial Sector - Fri Dec 06 09:18:01 UTC 2019
Ratings agency backs Funding Circle strategy to tighten lending - AltFi - Wed Jul 10 07:00:00 UTC 2019
Funding Circle unveils first UK sponsored deal - GlobalCapital - Mon Nov 11 08:00:00 UTC 2019
Funding Circle revenues jump, losses widen, the market cheers - AltFi - Thu Aug 08 07:00:00 UTC 2019
Shares in Funding Circle up over 10 per cent, after loans under management jump by more than 30 per cent - AltFi - Mon Oct 21 07:00:00 UTC 2019
Logistics-technology firm Freightwalla raises Series A funding - VCCircle - Wed Dec 11 11:08:23 UTC 2019
Funding Circle investors face four month wait to withdraw cash - City A.M. - Sat Sep 28 07:00:00 UTC 2019
Growth Opportunities in Peer-To-Peer Lending Market 2019-2024| By New Business Developments, Innovations, And Top Companies – Forecast To 2024 : Kabbage, Inc., CircleBack Lending, Inc., Daric, Inc., LendingClub Corporation - The Market Expedition - Wed Dec 11 11:13:27 UTC 2019
Tiger Global leads $26 mn funding in invoice discounting platform KredX - VCCircle - Wed Dec 11 08:14:23 UTC 2019
LendingClub Partners with Opportunity Fund and Funding Circle, Increasing Financial Inclusion and Small Businesses' Access to Credit - PRNewswire - Tue Apr 23 07:00:00 UTC 2019
Funding Circle Closes Troubled SME Income Fund - pymnts.com - Fri Apr 05 07:00:00 UTC 2019
Funding Circle ditches selling queue | Business - The Times - Thu Oct 31 07:00:00 UTC 2019
Funding Circle Amateur Lenders Facing Longer Waits To Cash Out - Morningstar - Tue Sep 03 07:00:00 UTC 2019
Funding Circle surpasses $10bn lent to businesses globally—thanks to the falling pound - AltFi - Fri Aug 16 07:00:00 UTC 2019
New Peer to Peer Lending Market Update 2020 – Cost Framework and Forecast Analysis Till 2029 - Daily Criticism - Wed Dec 11 10:41:51 UTC 2019
Global Alternative Finance Market Report 2019 with Market Positioning of Key Vendors: Upstart, Funding Circle, Prosper Marketplace, LendingClub, MarketInvoice, etc. - VaporBlash - Tue Nov 26 08:00:00 UTC 2019
Funding Circle spreads out - Investors Chronicle - Mon Aug 12 07:00:00 UTC 2019
Funding Circle investors face long wait for money - The Times - Sat Sep 28 07:00:00 UTC 2019
Funding Circle Pitching to Private Debt Investors With New Fund - Bloomberg - Mon Jun 24 07:00:00 UTC 2019
Is Funding Circle Holdings (LON:FCH) Using Debt In A Risky Way? - Yahoo Finance - Wed Aug 21 07:00:00 UTC 2019
Funding Circle US Small Business Loan Portfolio Surpasses Most Banks with $2 Billion Lent Through Platform - PRNewswire - Fri Mar 01 08:00:00 UTC 2019
Funding Circle investors face three-month wait for money – Which? News - Which? - Tue Oct 08 07:00:00 UTC 2019
Funding Circle Delays Canada Launch In Forecast - pymnts.com - Thu Jul 04 07:00:00 UTC 2019
AltFi Insights: Funding Circle has sneezed, will the alternative lending industry catch a cold? - AltFi - Mon Jul 08 07:00:00 UTC 2019
Manufacturing services marketplace Zetwerk mops up $32 mn in Series B funding - VCCircle - Wed Dec 11 12:57:26 UTC 2019
Piramal Group, IIFL Wealth launch fund for realty projects - VCCircle - Wed Dec 11 11:31:41 UTC 2019
Financial Technology (FinTech) Market: Understand The Key Growth Drivers Developments And Innovations - Drnewsindustry - Wed Dec 11 07:42:26 UTC 2019
James Meekings to step down from Funding Circle - AltFi - Fri Aug 09 07:00:00 UTC 2019
JEFF PRESTRIDGE: What on earth is going on at peer-to-peer lending group Funding Circle? - This is Money - Sat Oct 19 07:00:00 UTC 2019
Funding Circle shares rally 30% - AltFi - Mon Aug 12 07:00:00 UTC 2019
Funding Circle hands over borrowers | Business - The Times - Sun Nov 10 08:00:00 UTC 2019
Funding Circle falls into square hole | Business - The Times - Fri May 10 07:00:00 UTC 2019
Funding Circle saw its loans and revenues soar in 2019 - AltFi - Thu Apr 18 07:00:00 UTC 2019

Reviews & Ratings

User Impressions
User Ratings: not enough ratings
My Rating

Expert Ratings: None

Get Started