Business
finance that
Annual Report and
Accounts 2024
backs you
STRATEGIC REPORT
Overview and highlights
Powering UK
businesses
We’re the UK’s leading SME finance platform, backing
small businesses with the funding they need to win.
From coffee roasters and bakeries to furniture
manufacturers and estate agents, our customers
are the nation’s small and medium-sized businesses.
Our products
Enabled by data and technology,
our expanded product suite allows
businesses to borrow, pay later and
spend – supporting them at every
stage of their finance journey.
Borrow
Longer term
Pay later
Monthly
Spend
Daily
More detail on page 18
Our customers
We’re building a great
business for our customers,
who are the backbone of the
economy. We provide the fuel
to power SMEs, enabling them
to build their businesses that
create jobs, bring economic
growth and support their
communities.
More detail on page 14
Front cover image: Laird Hatters.
More detail on page 44
Our financial performance
Revenue
£160.1m
Credit extended
£1.9bn
Balances outstanding
£2.8bn
Profit before tax
(before exceptional items)
£3.4m
Contents
Strategic report
01 Overview and highlights
02 Chair’s statement
05 Chief Executive Officer’s statement
08 Our business model
10 Our strategy
12 Key performance indicators
14 Our customers
16 Technology and data
18 Our products
20 Our people
24 Environment, social and governance
(“ESG”)
39 Non-financial and sustainability
information statement
40 Engaging our stakeholders
44 Financial review
51 Risk management
55 Principal risks and uncertainties
63 Viability statement
Corporate governance
66 Chair’s introduction
67 Governance at a glance
68 Board of Directors
70 Corporate governance report
78 Report of the Nomination Committee
82 Report of the Audit and Risk
Committee
88 Report of the ESG Committee
90 Directors’ remuneration report
101 Annual report on remuneration
112 Report of the Directors
115 Statement of Directors’
responsibilities in respect
of the financial statements
Financial statements
117 Independent auditors’ report
124 Consolidated statement of
comprehensive income
125 Consolidated balance sheet
126 Consolidated statement of
changes in equity
127 Consolidated statement
of cash flows
128 Notes forming part of the
consolidated financial statements
180 Company balance sheet
181 Company statement of changes
in equity
182 Company statement of cash flows
183 Notes forming part of the Company
financial statements
193 Alternative performance measures
194 Glossary
197 Shareholder information
198 Company information
160.1
1.9
2.8
3.4
130.1
1.3
2.9
(9.9)
2024
2024
2024
2024
2023
2023
2023
2023
The Strategic report was approved by the Board on 06 March 2025.
Lisa Jacobs
Chief Executive Officer
STRATEGIC REPORT
01Funding Circle Holdings plc | Annual Report and Accounts 2024
CORPORATE GOVERNANCE FINANCIAL STATEMENTS
STRATEGIC REPORT
Chair’s statement
A remarkable
year of evolution,
and serving
more SMEs
Review of the year
2024 was a remarkable year, a year of major decisions
and change.
In last year’s report I wrote about our decision to seek
an exit of our US business which we had owned and
developed almost since start-up. This was a hard
decision made after we won the licence to distribute SBA
loans in 2023. We received several approaches for the
business and, following the Board decision to proceed,
the team executed a seamless sale despite our emotional
connection to all the team and all we had achieved
in the US.
Over a period of years, we had invested heavily in
talent, having built expected economic recovery into
our budgets. However by the end of 2023 we stopped
building in such recovery in our budget process. The
decision to press ahead with cost reductions during
2024 was another hard but necessary decision. I am
pleased that this was done fairly and properly with
a significant reduction in our cost base but a culture
largely unscathed.
These two major decisions were also driven by a
prioritisation of shareholder value. In 2023, I referenced
the value of the operational and financial leverage in our
business model, “we can hope and expect that the share
price will reflect that value in due course”, I wrote. It is at
last pleasing that Funding Circle Holdings was one of the
best performing shares in the UK market in 2024.
corporate.fundingcircle.com
Andrew Learoyd
Chair
2024 was a remarkable year
for Funding Circle, a year of major
decisions and change. I feel more
confident about Funding Circle’s
future than ever before.”
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202402
Strategy
In 2022, we began our strategic pivot from a single
to a wider product offering, and in 2024 we completed
the shift to a single geography focus. We now offer UK
SMEs more ways to borrow, pay later and spend and
we will continue to bring more flexibility and value to our
existing customers and also say “yes” to a broader range
of customers.
While the Board has made a conscious decision to
demonstrate the underlying profitability of our core
business, we do not want to do this at the expense of
growth. New products require research, development and
investment and we will use our balance sheet strength
and cash generative core business to fuel the longer-
term growth. FlexiPay is a good demonstration of how
much growth we can deliver with this strategy and since
launching in 2022, FlexiPay is now facilitating almost
£45 million payments per month. Our newly launched
Cashback Business Credit Card (“Cashback credit
card”) is next, and we have high hopes this will drive
further growth.
Board and people
Last March, I said there would be changes to the Board
over the year as some of our Non-Executive Directors
were nearing the end of their tenure, and that we would
use this opportunity to ensure we have the right size
and composition of Board for our revised strategy. In
May 2024, our Risk and Compliance Committee Chair,
Eric Daniels stepped down after almost eight years on
the Board. In October 2024, founder Samir Desai CBE
stepped down from the Board as he was coming to the
end of his three years as a Non-Executive Director, and
Matthew King recently retired from the Group Board
having spent many years chairing the Board of our
regulated subsidiary. We also announced in May 2024
that CFO Oliver White would stand down at the end
of the year.
To our departing Directors, I give thanks for your
commitment, your support and for leaving Funding Circle
in the strong position it is in today. Samir, especially to
you, none of this would have been possible without you
and your co-founders.
The Nomination Committee had much to do in 2024 and
the work is ongoing. We appointed Tony Nicol as CFO and
Ken Stannard has joined as Non-Executive Director and
Chair Designate to replace me following the AGM in May
2025. We plan to appoint at least two new Non-Executive
Directors in the coming months.
In Tony Nicol we have a trusted colleague who
understands our business intimately. We are excited to
have Ken Stannard join us, together with the additional
Non-Executive Director hires that we are seeking, we will
have a new Board replete with the skills and experience
to drive Funding Circle forward as the champion of SMEs
in the UK.
Introducing our new Chair
Excited to be joining Funding
Circle on its next chapter
I am delighted to join Funding Circle as the
Independent Non-Executive Director and Chair
Designate. In 2025 and beyond, I look forward to
working with the Board, the executive team and
Circlers to drive forward the Group’s strategy and
ensuring that it continues to create significant
value for all stakeholders.
Assuming the role of Chair Designate is a
significant responsibility. However, with over three
decades of experience and expertise in credit,
lending, and payments, I am eager to contribute
and continue bringing the Company’s vision to
life, and ensuring more small businesses get the
funding they need to win.
I look forward to my election to the Board and role
of Chair at the Annual General Meeting in May 2025,
where our shareholders will have the opportunity to
ask me and the Board about our vision.
I am confident that 2025 will be a year of
excitement and opportunity for Funding Circle
to grow and maintain its position in the market.
Ken Stannard
Chair Designate
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 03
It has been an honour,
a privilege and a pleasure
to serve on the Board of
Funding Circle for the
nearly 15 years since it
was founded.”
Board and people continued
While 2024 has been a year of great successes, some
of the changes have been difficult for our Circlers such
as the sale of the US business, and the restructuring in
the UK. I pay full respect to the whole team who have
together delivered an exceptional year of growth with
almost no blip in the culture that defines Funding Circle.
The future
With my final report to shareholders, I feel more confident
about Funding Circle’s future than ever before. No longer
“unproven through the cycle”, the attractive financial
model and cash generation of our core business will
become obvious, while our newer products will provide
the turbo charge to growth.
Our new strategic direction has given us a more simplified
focus, but a wider product offering also raises challenges
that we have not previously faced. For example, it has
dramatically increased the velocity and frequency of our
customer interactions and the need for us to offer the
right product with the simplest messaging. Having spent
many years offering a single product, we will need to
offer a different and improved customer experience in the
future. We need to be best in class to ensure that SMEs
come to us and stay with us for an increasing number of
their financial needs.
As part of this process, there are skills we need to learn
and resources to hire. We have recently set up a team of
AI experts who will harness the technology to support
this. For many years, we have used machine learning
to develop the market leading SME credit technology.
Adding AI will allow us to become the go-to supplier of
financial products for the vast army of SMEs that are the
bedrock of the British economy.
Thank you
Our journey since 2010 has not always been easy. The
sector that we helped to create, peer-to-peer finance,
is said no longer to exist, but here we are with much the
same platform-based model that we started with. We
have faced a series of economic and political headwinds,
but we have faced these challenges with great purpose,
based on a mission that has always remained constant, to
support SMEs with the funding they need to win.
With that mission, there have been some extraordinary
achievements. We knew the demand from SME borrowers
would be there, but how could we ensure there would
always be a steady supply of investor lending. We have
proven after 14 successive years delivering positive net
returns for institutional investors on our platform that we
have indeed invented a new asset class. An asset class
that has been endorsed by the Bank of England, which
recently approved our securitised loans as eligible bonds
for collateral.
It is an asset class which feeds capital and jobs to the
real economy, and we have secured a market position
that is so important to that asset class that when the
State needed to provide government-guaranteed loans
to British businesses, we became a significant part of
the British Business Bank’s programme. I once told a
shareholder that I would not leave Funding Circle until
we were regarded as essential to the health and funding
of a large swathe of SMEs in the UK economy. I believe
that Funding Circle is now in that position, I truly believe
that with Funding Circle around, British business is in a
better place!
It has been an honour, a privilege and a pleasure to serve
on the Board of Funding Circle for the 15 years since it
was founded, and I wish all who will now take it forward
great fulfilment, success and fun.
Andrew Learoyd
Chair
6 March 2025
Chair’s statement continued
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202404
Chief Executive Officer’s statement
A year of change
and significant
progress
We provide the fuel to power
SMEs up and down the country.
We enable these entrepreneurs to
build great businesses that create
jobs, bring economic growth and
support their communities.”
2024 was a successful year of change and transformation
as we executed against our plan to deliver a simpler,
leaner business.
I am proud of the progress we have made. We have
delivered strong revenue growth and profitability ahead
of market expectations. Our business is in a strong
position as the market leader in online SME lending. We
have leveraged our data and technology strengths to
expand our product set to serve more of our customers’
needs. We have delivered robust, attractive loan returns
to our institutional investors through the cycle. We have
an attractive go forward plan, driving sustained revenue
growth and expanding our margins.
Borrow, Pay Later and Spend: Our multi-product
transformation
Three years ago, when I stepped into the CEO role, I set
an ambition to be a multi-product business, one that
enabled businesses to not only borrow for the longer
term, but to also pay later and spend, becoming a more
important part of our customers’ lives and providing further
growth opportunities. Over the last three years, we have
delivered against this plan. Today, businesses can borrow
with our Term Loan, for longer term investment; pay later,
managing their cash flow through FlexiPay; or spend on
our Cashback credit card.
This shift is reaping strong rewards for our business. First,
we have seen strong growth. In 2024, more than a quarter
of our credit extended was via FlexiPay and FlexiPay
revenue grew threefold. Secondly, we are seeing an
increase in our share of our customers’ financing as over
70% of FlexiPay revenue came from existing Term Loan
customers. Finally, we have increased our interactions
and engagement with our customers. Three years ago,
we interacted with a customer approximately every half an
hour, today we interact with a customer every 92 seconds
as they take a loan, FlexiPay a supplier or spend on their
Cashback credit card.
Lisa Jacobs
Chief Executive Officer
corporate.fundingcircle.com
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 05
Over the last three years,
we have transformed our
business. We see a future
where Funding Circle is at the
heart of SMEs’ financial lives.”
£33.7 million of share buybacks in 2024, we finished
the year with a healthy unrestricted cash position of
£151 million.
Our core Term Loans business grew strongly with
33% origination growth, reaching £19 million in PBT, a
margin of 13.3% as we attracted more businesses and
enhanced our product offering, launching government-
backed Growth Guarantee Scheme loans and a broader
Marketplace offering.
FlexiPay, our pay later proposition, continued to show
strong growth with revenue tripling over the course of the
year. Businesses have now FlexiPaid more than 280,000
times. When we launched FlexiPay, we had a hypothesis
that this would be a product that would attract both
existing and new to Funding Circle customers, and I am
pleased to say that this is the case, with ~30% of our
2024 FlexiPay revenue from new customers. We continue
to see strong usage from existing FlexiPay customers,
once a customer starts using FlexiPay it becomes part
of their day-to-day cash flow management tools. In
2024, over 70% of revenue was from customers who had
opened their FlexiPay account before 2024. In H2 2024,
we launched our Cashback credit card, completing our
“borrow, pay later and spend” proposition. It is still early
days for our credit card but initial metrics are in line with
our expectations and we look forward to seeing further
growth in 2025 and beyond.
2024 was a year of change and progress as we executed
against our plan of delivering a simpler, leaner business.
I am proud of the progress we have made, delivering
strong growth, expanding our product set and delivering
profit ahead of market expectations.
We executed the plan I laid out to be a simpler, leaner
business. We sold the US business in July for a gain on sale
of £10 million and restructured the UK business, to deliver
£15 million in annualised cost savings from 2025. These
were not easy decisions to make. We said goodbye to some
talented Circlers who were vital in our business’s journey.
However, these decisions were essential to position us for
long term success, and they have placed the business in a
strong position to deliver against our medium-term plan with
continued growth and profitability trajectory.
Our competitive advantage: data and technology
at the heart of everything we do
We’ve delivered this by leveraging our credit, data
and technology advantage, delivering the same great
customer experience. SMEs want fast, easy access to
credit. We provide that with a six minute application form,
an instant decision for 77% of applicants and funding in
businesses’ accounts in as little as 24 hours. This drives
strong customer satisfaction with an NPS of 79 and
enables our busy customers to get back to what they
do best, running their business.
Our AI powered risk models are trained with data
from public sources alongside proprietary data on our
hundreds of thousands of loans and transactions and are
three times better at discriminating risk than the bureau
scores alone. Despite the challenging macroeconomic
environment of the last several years, our business
has delivered well through the cycle. Loan returns have
been robust and attractive, attracting further institutional
investor demand and we have continued to attract and
serve SME demand.
Fuelling the nation’s SMEs
We’re passionate about our mission. We provide the
fuel to power SMEs up and down the country. We enable
these entrepreneurs to build great businesses that
create jobs, bring economic growth and support their
communities. They are not the high growth venture-
backed rocket ships, but they are the backbone of
the economy – the florists, the manufacturers, the
restaurateurs, the builders and countless others.
They have a huge impact on the economy, but they
have historically been underserved. For the last
15 years, we have been changing that with fast,
easy finance that backs small businesses.
As we continue to back these businesses, we’re
also backing the economy. In 2024, lending through
Funding Circle supported over 87,000 jobs, £7.2 billion
in GDP contribution and £2 billion in tax receipts. We
lent to businesses in every one of the country’s 650
constituencies. That is pretty remarkable and I am
reminded of the impact we have whenever I meet
one of our borrowers and hear their stories. This year,
I have had the pleasure of meeting Tina from the French
bakery, Croissant D’Or, and Debi from the flooring
business, Springfield Carpets, in Leeds; and husband
and wife team, Brian and Kerry, from Powderhall Bronze,
an Edinburgh based foundry, fine art producer and
gallery. They each have wonderful stories of running
and building their businesses with plenty of ups and
downs. It’s a privilege to know that our loans have
been part of those journeys.
2024: a simpler, leaner, high growth, profitable
business
In 2024, we executed well. We delivered £3.4 million
in PBT, above market expectations and up from a loss
of £9.9 million in 2023. Revenue grew by 23% to £160
million. Alongside this, our credit extended grew 47% to
£1.9 billion. We have a strong balance sheet and despite
Chief Executive Officer’s statement continued
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202406
Simpler
Sold US business for
a gain on sale of £10 million
In July, we sold our US business to iBusiness
Funding for a gain on sale of £10 million in order
to focus on nearer term profitability and cash
generation in the UK.
Leaner
Restructuring announced
to deliver an annualised
benefit of ~£15 million in 2025
In May, we announced a restructuring
programme to reduce our total head count
by c.120, delivering an annualised benefit
of c.£15 million in 2025. This focused on
management layers, business prioritisation
and productivity, supported by GenAI tools.
Profitable
Delivered PBT margins of
13.3%, in line with profit
guidance
The actions that we have progressed this year
have meant that the business has delivered
£3.4 million PBT, following an upgrade to our
profit guidance in September. In our more
mature Term Loans business, we delivered PBT
margins of 13.3%.
Key actions
from 2024.
People & culture
Our performance this year is down to the hard work of
our Circlers. We are a technology business, but we are
also a people business, driven by the passion, innovation
and delivery of our team. I want to thank them all for
their dedication and commitment to helping SMEs thrive.
Our culture is something that we nurture and celebrate.
We pride ourselves on being a great place to work and
develop careers. In 2024, we have held various team
events and socials, including our first ever CircleIN. Our
Circler groups have been active and we have had an
office refresh to upgrade the space, foster collaboration
and work seamlessly for a hybrid working environment.
We were delighted to be awarded the Transformation of
the Year at the PLC Awards in recognition of the changes
we have made and the team’s strong execution.
I would like to thank Oliver White, our departing CFO, who
has had a significant impact in his four years at Funding
Circle, and our departing Board members, particularly
Samir Desai and Andrew Learoyd, whose leadership
and vision have built this business from the start. I am
delighted to have Tony Nicol step into the CFO role, after
six years at Funding Circle, and Ken Stannard bringing
his vast experience and energy as he steps into the
Chair role.
Looking ahead
2024 was a strong year, but I believe the best is yet to
come. The market opportunity is vast, with over £80 billion
in SME loans outstanding, over £1 trillion in SME B2B
payments and over £80 billion in SME card transactions.
We are in a strong position to capitalise on this opportunity
with high customer satisfaction rates driven by proprietary
and defensible data and technology advantages.
Our four strategic priorities are focused on profitable,
customer-led growth:
l Get to Yes: continuing credit innovation and
product enhancements will enable us to get to yes for
more businesses as we bring the right product to the
right customer.
l Expand our audience: expanding our audience
by targeting new segments with our newer
products whilst also deepening and expanding
our distribution channels.
l Scale our product offering: scaling our products
and adding new features, capitalising on the
significant market opportunity to drive growth
and margin expansion.
l Build a seamless lifetime customer experience:
delivering an exceptional experience throughout our
customers’ journey as their trusted financial partner.
We have a strong, mission-driven team, a clear vision and
plan. As we execute this plan, we’ll become an even more
integral part of our customers’ lives, fuelling the success
stories of hundreds of thousands more businesses and
creating countless jobs. We see a future where Funding
Circle is at the heart of SMEs’ financial lives, providing the
tools and resources they need to thrive.
Lisa Jacobs
Chief Executive Officer
6 March 2025
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 07
Our business model
We’re proud of our impact in powering the nation’s SMEs, which supports jobs and
economic and community prosperity. Small businesses are the backbone of the
economy. Since 2010 we have been fuelling small businesses with the funding they
need using our data and technology advantage to drive a superior, fast and hassle-free
customer experience.
Our capital light model enables scale and growth whilst our superior risk and analytic
capabilities deliver robust and attractive returns for institutional investors.
Our addressable
market
Our
customers
l Access to affordable finance
l Fast, convenient applications
l Instant automated decisions for 77% of applications
l Superior customer experience with a 79 Group
Net Promoter Score
Our business model
£84bn
addressable SME
loans market
1
£1.3trn
SME B2B
payments
2
£80bn
SME card
transactions
2
Small business
borrowers
l Access to hard-to-reach asset class at scale with
diversified loan book
l Robust and attractive returns
l Forward flow agreements with £2.1 billion future
funding in place
Institutional
investors
1. Funding Circle addressable market research July 2022
2. Visa SME market sizing July 2022
STRATEGIC REPORT
Funding Circle Holdings plc | Annual Report and Accounts 202408
CORPORATE GOVERNANCE FINANCIAL STATEMENTS
More detail on page 16
The value
we create
>111,000
small businesses
supported
£7.2bn
contribution to GDP
87,000+
jobs supported
~5%
annualised returns to
institutional investors
171
Impact Days taken in
2024
Our competitive
advantage
Superior customer
experience
79
NPS
4.6
Trustpilot
3x
better risk
discrimination
77%
instant
decisions
Data and technology
advantage
Wide product suite
Borrow
Spend
Pay later
For details on how we generate revenue, see page 46
STRATEGIC REPORT
09Funding Circle Holdings plc | Annual Report and Accounts 2024
CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Our strategy
We delivered against
our ambitious strategy in 2024
Our product expansion and growth
have enabled us to increase
applications, open up new
marketing channels and attract a
broader set of businesses.
In addition to our product evolution,
we have continued to invest in our
brand with our second and third
season sponsoring Premiership
Rugby. We expanded our sponsorship
by welcoming Jamie George, England
Captain and Funding Circle borrower,
as our brand ambassador.
Along with our regular marketing
channels, the sponsorship has
driven increased brand visibility and
helped us reach an even wider pool
of customers. Our Season 2 content
series amassed 43 million views
across online media platforms and
11 million in print and radio, driving
increased spontaneous brand
awareness and brand consideration.
In 2024 we grew our credit
extended by 47%.
Throughout the course of the year, we
continued to use our credit analytics
and product innovation capabilities to
say yes to more businesses.
In July 2024, we launched
our lending under the Growth
Guarantee Scheme, expanding
our offering to a new segment of
SME borrowers.
Through Marketplace, we expanded
the number of partners we work
with and the products we provide so
we can say yes to businesses even
if we don’t have a Funding Circle
product to meet their needs. Our
Marketplace now accounts for ~11%
of our loan originations, an increase
of 1% in 2023, enabling us to deliver
a great outcome for our SME
customers and further monetise our
distribution capabilities.
We have continued to expand and
diversify our Funding Circle product
offering, scaling our FlexiPay pay
later product and launching our
Cashback credit card. In doing so,
we have expanded the ways we can
serve customers and increased our
share of wallet with our customers,
whilst leveraging our strengths in
credit, data and distribution.
We have enhanced our FlexiPay
offering, adding new product
features throughout the year,
including enabling businesses to
buy now and pay later in 1, 3, 6, 9 or
12 months. FlexiPay revenue grew
by 3.4 times in 2024.
In Q3 2024, we launched our
Cashback credit card, initially in
beta. This enables us to attract
a broader set of customers, and
interact with them on a daily basis.
1
2
3
Attract more
businesses
Say yes to more
businesses
#1 in new
products
How we delivered in 2024Our strategic pillars
See our KPIs on page 12
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202410
Evolution of our
strategic framework
Over the course of the last three years, we have transformed our business offering
from a single product to one that enables businesses to borrow, pay later and spend.
We now have deeper relationships with customers as we meet more of their needs and
have increased our interaction with them from every few years to every few days.
As we continue to scale our business, our evolved strategic framework is focused on
customer-centric profitable growth.
Get to ‘Yesʼ Expand our audience
Scale our product offering Deliver a seamless lifetime
customer experience
When our customers win, we win. We will leverage
our credit and product innovation capabilities to
enhance our products and open new segments to
serve a broad customer base.
Enhanced product offerings to new customer
segments through new marketing channels will
expand our audience, attracting more businesses to
Funding Circle.
Our product suite is wide and meets most of the
needs of our customers, but some products are
nascent whilst the market opportunity is large. Over
the coming years, we will scale our newer products,
innovating and unlocking new product features to
drive profitable growth.
Our customers have a broad range of finance needs
and we now have the right products to meet them.
Through our broader product set we will deliver a
great lifetime customer experience serving them
with our renowned superior customer experience
and the right product at the right time.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 11
Key performance indicators
Net income (£m)
£160.1m
Profit/(loss) before tax (£m)
(before exceptional items)
£3.4m
Basic earnings/(loss) per share (p)
(before exceptional items)
0.8p
Definition
The Group generates net income
principally from: transaction fees earned
from originating loans with borrowers;
servicing fees from servicing of loans
under management; interest income
from FlexiPay and cash balances; and
investment income net of investment
expense and after fair value gains/
(losses) and cost of funds.
Definition
Profit/(loss) before tax is defined as
net income after taking into account
all operating expenses and finance
income, costs and share of (loss)/profit
of associates. It is presented above
before the impact of exceptional items.
Definition
Basic earnings/(loss) per share is
defined as the profit/(loss) for the year
attributable to ordinary equity holders
of the Parent Company divided by the
weighted average number of ordinary
shares in issue during the year. It is
presented above before the impact of
exceptional items.
Links to strategy:
1
2
3
Links to strategy:
1
2
3
Links to strategy:
1
2
3
Financial
Operational
2023
119.5
2022
(0.9)
2022
2024
160.1
130.1
2022
(3.1)
(9.9)
2024
3.4
(2.4)
2024
0.8
Term Loans originations
£1,407m
FlexiPay transactions
£492m
Originations (£m)
Definition
This represents the monetary value of loans originated through the Group’s platform or
through Marketplace referrals in any given year as well as drawdowns on the FlexiPay
lines of credit and Cashback credit card spend. These are key drivers of transaction
and servicing fees for the Term Loans business and the upfront fee for the FlexiPay
business. These are presented above for continuing operations only in both the
current and comparative periods.
Links to strategy:
1
2
3
2023
2023
2022
1,095
59
2022
1,060
2024
1,407 2024
492
234
2023
2023
How we measure our performance
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202412
Financial Alternative performance measures (“APMs”)
Links to strategy:
1
2
3
Links to strategy:
1
2
3
6.7
Adjusted EBITDA (£m)
£24.5m
Free cash flow
1
(£m)
£(1.2)m
Definition
Adjusted EBITDA represents the profit/(loss) for the year
before finance costs (the discount unwind on lease liabilities),
taxation, depreciation and amortisation, and impairment,
and additionally excludes share-based payment charges
and associated social security costs, foreign exchange and
exceptional items.
Definition
Free cash flow represents the net cash flows from operating
activities less the cost of purchasing intangible assets,
property, plant and equipment, lease payments and interest
received. It excludes the warehouse and securitisation
financing and funding cash flows and lines of credit cash
flows. The Directors view this as a key liquidity measure.
1. Free cash flow excludes restricted cash movement due to the
payment of guarantee fees.
Key to strategic objectives
1
Attract more businesses
2
Say yes to more businesses
3
#1 in new products
Operational continued
Term Loans under management
£2,714m
End of month balances
£119m
Balances outstanding (£m)
Definition
This represents the total value of outstanding principal of borrower loans, lines of credit and credit card balances.
It includes amounts that are overdue but excludes loans that have defaulted and loans originated through
Marketplace referrals to other lenders. These are presented above for continuing operations only in both the
current and comparative periods.
Links to strategy:
1
2
3
58
2023
2023
2023
(27.9)
2023
3,311
2022
12.6
2022
24.5
2024
(1.2)
2024
2024
2,714
2024
119
2,853
182022
(13.3)
2022
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 13
Our customers
The pandemic has fundamentally changed SME Britain, with
92% small business owners who pivoted during Covid-19,
making these strategic changes permanent.
Five years after the pandemic, SMEs
continue to show their resilience
SMEs remain resilient and
competitive in an evolving market
With 2025 marking five years since the pandemic,
small businesses are more resilient than ever. The latest
research published by Oxford Economics in partnership
with Funding Circle in 2024 shows that over three in five
(65%) SMEs are expecting their business to grow in 2025,
highlighting their long-term confidence.
The pandemic accelerated digital adoption, and
the research demonstrates that it was not just a
temporary measure, it has fundamentally reshaped how
SMEs operate.
SMEs are increasingly prioritising digital transformation
and technology investment over physical expansion,
while maintaining a strong appetite for growth. This trend
signifies a lasting change in business strategies that
began as a response to the Covid-19 pandemic.
Making up 99% of the business population, small
businesses create jobs, boost the economy, and support
local communities. In 2024, Funding Circle’s Term Loans
and FlexiPay lending not only contributed £7.2 billion
to the UK’s gross domestic product (“GDP”) but also
played a pivotal role in supporting over 87,000 jobs.
Additionally, the economic activity supported by these
loans generated £2 billion in tax receipts.
Investing in the future
Despite macroeconomic headwinds, the findings highlight
that SMEs are investing for the future, rather than pulling
back. The continued prioritisation of technology investment
and hiring suggests that businesses are focusing on
productivity, operational efficiency, and adaptability to
remain competitive in a post-pandemic world.
SME access to finance
To support this momentum, access to capital remains
crucial. While SMEs are demonstrating strong resilience,
many will require continued financial support to unlock
growth opportunities. Ensuring that businesses have the
right tools to fund expansion is key in shaping the next
stage of business recovery and innovation.
Despite tougher credit conditions, the research also
showed that Funding Circle remained committed to
providing loans to SMEs with businesses in every one
of the UK’s 650 parliamentary constituencies, with an
average of £1.9 million in Term Loans per constituency.
£7.2bn
contribution to GDP
>87k
jobs supported
£2bn
generated in tax receipts
Details of Funding
Circle’s impact
in 2024 can be
found here
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202414
Reaching more
Powderhall Bronze Editions, a fine
art foundry in Edinburgh, tried to
get a loan from their bank but found
the process slow and painful.
Instead, they turned to us for help,
and really appreciated the speed
and service. Their loans have
since allowed them to reach more
customers, and set up a stand at the
Chelsea Flower Show.
Building up
Constructive & Co Ltd are a team of
makers who design, create and fit
bespoke furniture.
Having attracted more customers in
their local area, they used their loan
to invest in new machinery for their
workshop – so they could take on the
additional demand in house, and get
more headspace with their cash flow.
Looking ahead
England rugby captain Jamie George
and his business partner Rhys Carter
started The Carter & George Practice
to deliver elite physiotherapy
services to the public.
With big plans to grow, they took
out a loan to fund acquisitions of
other physio businesses, while using
FlexiPay to protect their cash flow.
We’re proud to support businesses across the country with agile,
competitive finance. Whether it’s long-term investment through
a Term Loan or everyday cash flow management using FlexiPay
or our Cashback credit card, we’re helping businesses seize
opportunities like never before.
We’d use Funding
Circle again and again
thanks to the great
service and ease.”
We found borrowing
to be an essential part
of taking us to the
next level.”
Once we’d been
approved, the funds
were in our account
in 24 hours or so.”
Our customers’ stories, investing
in growth and innovation
Scan to learn more Scan to learn more Scan to learn more
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 15
Reinventing
SME lending
Our cutting-edge technology and data platform is
constantly evolving, enabling more small businesses
to access the funding they need to win.
We combine our unique behavioural and performance data from over
150,000 Term Loans and nearly 230,000 FlexiPay transactions with publicly
available sources over nearly 15 years to give us a deeper understanding
of SMEs.
Our approach to SME credit risk, using machine learning tools and approaches
and combining public and proprietary data, gives us a competitive edge. Our
ability to discriminate risk better than the bureau scores enables us to deliver
superior customer outcomes and launch new products.
Risk model evolution
Building on over ten years’ worth of data, our ninth-generation risk models outperform bureau scores by a
factor of three. This allows us to streamline the customer journey and balance risk insights with a frictionless
customer experience.
Technology and data
Open banking
Commercial Credit Data Sharing
Bank statement
Application
Financials
Internal behaviour
Consumer bureau
Commercial bureau
Gen 3
2015
Gen 4/5
2016
Gen 6
2017
Gen 7
2018
Gen 8
2019
Gen 9
2023
Our performance data so far
150,000
Term Loans
228,000
FlexiPay transactions
Learn more about
our technology
and data
STRATEGIC REPORT
Funding Circle Holdings plc | Annual Report and Accounts 202416
CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Our proprietary technology platform
is designed to provide customers with
quick and easy access to finance.
Built-in flexibility and scale enable us
to successfully expand our product
range and continually improve the
digital customer experience. Today, we
see customers engage more frequently
with our broader range of products.
Use of AI
AI is at the core of our lending and we are
investing in the transformative potential of
Generative AI (“GenAI”) to benefit both our
customers and employees.
l We have implemented GenAI tools to enhance
employee productivity.
l We are actively exploring further opportunities
to streamline and improve the customer
experience, from loan origination to ongoing
customer service.
l In 2024, we established technical and
governance frameworks to ensure the ethical,
secure, and effective use of GenAI as we expand
its applications in 2025.
2024 highlights: scalable
platform with ongoing
product releases
l Scalable platform managing 36% loan
application growth.
l >100% transaction growth and 3x growth in
monthly active users on our app.
l Deployment of improved product features and
customer experience such as an increase of 20%
engineering productivity.
l Launch of Cashback credit card and Growth
Guarantee Scheme loans.
3x
better risk
discrimination
77%
instant
decision
6 min
application time
24 hrs
funds in account
79
NPS
See our Technology risk on page 62
STRATEGIC REPORT
17Funding Circle Holdings plc | Annual Report and Accounts 2024
CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Our products
Our diverse product range enables businesses to borrow,
pay later and spend. We meet a broad range of finance
needs through our product suite, all with our trademark
ease, speed and instant decision technology.
Borrow
Term Loans
Loans for long-term investment or working
capital purposes to support business growth
or long-term cash flow management.
l Loan sizes of £10,000 to £750,000.
l Available from six months to six years.
l Amortises monthly.
l Marketplace offering for SMEs, opening
the door to finance solutions from across
the market.
Case studies
l ANNA Cake Couture used their
loan to grow by expanding their
kitchen, creating more jobs and
opening a new office.
l Studio Gauthier used their loan
to expand their restaurant by
renovating and refurbishing.
Scan for
product details
STRATEGIC REPORT
Funding Circle Holdings plc | Annual Report and Accounts 202418
CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Pay later
FlexiPay line of credit
Flexible line of credit for paying bills, supplier invoices
and managing cash flow using bank transfer or card.
l Businesses can pay bills directly to suppliers or into
their bank accounts for a fixed fee.
l With flexible terms and billing, small businesses can
repay in 1, 3, 6, 9 or 12 months.
l Credit limit up to £250,000.
Spend
NEW
Case studies
l Carter & George were able to protect their cash
flow and do acquisitions of SMEs.
l Beauty Boutique were able to invest in medical
machinery as the line of credit helped with their
cash flow.
Scan for
product details
Scan for
product details
Cashback Business
Credit Card
Cashback credit card for everyday
business spending.
l Launched the Cashback credit card
in Q3 (beta), with full roll-out in Q4,
following customer feedback pointing
us in the direction of a credit card for
everyday transactions.
STRATEGIC REPORT
19Funding Circle Holdings plc | Annual Report and Accounts 2024
CORPORATE GOVERNANCE FINANCIAL STATEMENTS
84%
equal opportunities
171
Impact Days taken
91%
aligned to values
51
Circler events and initiatives
81%
bring their authentic self to work
1,364
volunteering hours in 2024
Our values
Our people
Backing our
people
’
s growth
Gender pay gap
Gender breakdown
(as at 31 December 2024)
1. Includes those in levels CEO -3
Other metrics
Obsess over the customer
Live the adventure
Think smart
Be open
Stand together
Make it happen
All Circlers
Mean pay gap Median pay gap Women in leadership
Executive Committee ExCo and direct reports
1
Group Board
42%
25%
37.5%
43%
57%
58%
75%
62.5%
20.4% 27.1% 35%
17.4% 26.1% 34%
22.4% 30.5% 32%
18.5% 27.1% 34%
21.4% 32.2% 31%
2024 2024 2024
2023 2023 2023
2022 2022 2022
2021 2021 2021
2020 2020 2020
Female Male
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202420
CircleIN
It is vitally important to invest in our people, their
understanding of the business, our customers and
our products, and their personal development.
To reconnect Circlers and reinforce our mission,
strategy and culture, we brought our team
together for our first ever CircleIN event.
Hosted on site in our newly refurbished office
space, Circlers spent an afternoon hearing from
our leaders on our strategy, mission and evolving
product suite, meeting our customers, and learning
more about other parts of the business. Alongside
this, we shared information on our development
programmes and our Circler groups, and gave an
opportunity for Circlers from across the business
to connect.
Our people (“Circlers”) are central to all that we do
at Funding Circle. 2024 was a significant year for our
business, as we undertook a number of large strategic
changes, which tested our resilience. Thanks to the
contributions of everyone working at Funding Circle,
we continue to build a better, stronger business together,
as the wider social and economic environment has
shifted in the post-pandemic years.
As we evolve our business strategy, we have come a long
way and made big strides under our strategic people
core foundation, “High Performing Teams Executing
Brilliantly”. We have continued to nurture a strong, diverse
and unique culture underpinned by our values. We remain
fully committed to our hybrid model, balancing flexibility
with in-person collaboration to enable our teams to
collaborate, be productive and develop at Funding Circle.
Backing high performance
We believe in excellence and challenging ourselves to
set new standards. We believe it is possible to create
an inclusive environment and a supportive culture, but
equally one where we can challenge each other to set
new standards and push ourselves to achieve more.
This is the core philosophy underpinning “High Performing
Teams Executing Brilliantly”. We continue to place a
strong focus on developing a high performance company,
embedding performance, ownership and accountability
further into our culture. Sitting alongside the Company’s
Objectives and Key Results (OKRs) framework, we have a
well established cadence of goal setting for all Circlers,
anchored in our business context and personal growth
journey. Performance is assessed through an individual’s
impact on the business on a biannual basis, alongside our
value-based behaviours to measure how we achieve
our goals.
Similarly, our tools and data for helping us calibrate
how we measure performance consistently and through
multiple lenses are applied rigorously and equitably
across all parts of the business. Our ambition is high
performance, and we reward those who stretch
themselves to go further.
Looking ahead, in 2025 we will be investing further in
resources to enhance our high performance philosophy,
both in how we feed back to each other and how we
recognise Circlers for their efforts. We will also be
focusing on continuing to build our career frameworks,
to ensure consistency of standards and progression
pathways across teams.
Backing personal growth
We embraced a “best of both” philosophy as we emerged
from the pandemic and entered the world of hybrid
work. Now into our fifth year, we continue to operate a
model which provides all Circlers with flexibility whilst
retaining the best of what we know and love about
working together in person. To support this, we invested
in a 100 day refurbishment programme to redesign our
office space in 2024. We remain fully committed to a
flexible and hybrid approach, but we strongly believe that
in-person collaboration is an important element to enable
our teams to achieve more.
We continued to empower Circlers with resources to
support their growth and development. To support
newly promoted or hired managers at Funding Circle,
we launched the Emerge programme. Emerge is a
blended development offering designed to give our
managers the tools and knowledge they need to
successfully manage and coach for high performance.
We also invested in our leadership with the launch of
Elevate, a development initiative to support our senior
leaders, enhance their leadership capabilities and further
embed our leadership commitments.
More widely, backing growth and development remains
a core foundation of our Circler experience. Throughout
2024 we hosted 230 training events and 610 Circlers
(84%) took the opportunity to further their professional
growth. 2024 saw Funding Circle’s first Growth Week
as part of a dedicated month-long development
series. Anchored around the pillars of ownership,
entrepreneurship and commercial mindset, Circlers
engaged with live sessions and curated content to
enhance their future performance.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 21
Our people continued
Technology apprenticeships
In 2024, we sponsored our third cohort of technology
apprentices, in line with our ambition to create opportunities
for all and our commitment to building an inclusive and
diverse workforce. We welcome all backgrounds and
experiences from those looking to start their career in
technology, whether that be an early career technologist
seeking out a training opportunity and a place to put
their knowledge into practice, a career changer with
significant experience in another field looking to kick-start
their professional journey within a technical environment,
or an existing Circler looking for an opportunity to pivot
their career into technology and transfer their skills and
experience to further serve our customers.
Technology apprenticeships have provided us with the
opportunity to build stronger gender and ethnicity equity
in our teams and create a pipeline of future female and
ethnically diverse talent in technology.
Q&A with Jennie Woods, VP, Engineering
Q
What drives you to lead our Engineering
teams at Funding Circle?
I’m driven by the opportunity to lead diverse teams
that build products which enable SMEs to thrive – it’s
incredibly rewarding.
Q
What do we do to change the under-
representation of women in technology?
We take a multi-faceted approach to increase female
representation. We attract diverse talent through
initiatives like our apprenticeship scheme, which
provides an alternative route into the industry for
people from a variety of backgrounds. We ensure
fair hiring practices by using gender-neutral job
descriptions, diverse interview panels, and bias
training for interviewers. To retain female talent,
we offer flexible work arrangements, provide
development programmes, and foster a supportive
environment through employee resource groups.
Q
Why is building a female future talent
pipeline important?
Diversity and inclusion are core to our culture. We
believe diverse teams are more innovative, make
better decisions, and better represent our customers.
By fostering a supportive environment and building
a strong female talent pipeline, we ensure continued
innovation and success for Funding Circle.
Q
What are the biggest successes or learnings
you’ve seen from Funding Circle’s hiring and
development of technology apprentices?
The programme has successfully attracted and
developed diverse talent, fostering a more inclusive
and innovative workplace.
Apprenticeships have
proven to be an effective
way to identify and
develop high potential
individuals with strong
technical skills and a
passion for technology. Many
apprentices have gone on to have
successful careers within Funding Circle.
Recognising the importance of continuous
improvement, we have introduced the Apprentice
Academy to provide dedicated mentorship and
ongoing support for apprentices throughout
their journey.
Q
What initiatives in technology have helped
ensure there is time available for ongoing
professional development?
Last year, our Engineering team achieved a notable
increase in its productivity. A key contributor to this
success was the implementation of an AI Copilot. By
automating low complexity tasks, the Copilot empowers
engineers to concentrate on higher value business
challenges supporting their continued development.
This tool has proven particularly beneficial
for entry-level engineers, including apprentices.
They receive real-time code feedback and
explanations, facilitating a smoother onboarding
process and accelerating their professional growth.
These insights help them understand existing code
and improve their coding skills.
It’s amazing
to see how far
you’ve come
at the end.”
Ella Bastian, Engineer
Graduate apprentice
Diversity, equity and inclusion
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202422
85%
identify as
female
Of our technology apprenticeship cohorts:
69%
are of Black,
Asian or multiple
ethnicity heritage
23–52
age range
We have created a robust framework for the development
and support of apprentices in our technical teams making
the required time, resource and training available to
ensure successful completion of their apprenticeship,
and that they are set up for success in their onward
career. To date, 100% of apprentice Circlers have
received a distinction grade in their formal qualification,
the highest available level, and have proven to be able to
operate above the expected level at time of completion.
Circler-led groups
Our Circler-led groups remain at the forefront of our
culture as a driving force for positive change. Across our
six Circler-led groups there were events and initiatives in
2024, with highlights including 1,364 volunteering hours
taken. Circlers are given two paid “Impact Days” per year
for charitable contributions to causes important to them.
Women @ FC
l Building a community where women connect,
thrive and win.
Parents @ FC
l Providing a supportive space and a network for
working parents and carers.
Neurodiversity @ FC
l Spearheading the discussion about how neurological
differences add value, and building the infrastructure
for an equitable and accessible workplace.
Let’s Talk About Heritage
l Educating on the experiences of minorities, celebrating
racial diversity, and creating a safe space to continue
engaging in dialogue.
FC Impact
l Coming together and giving back to communities in
need, raising awareness for worthy causes, and making
an impact through charity and volunteering projects.
Circle of Pride
l Championing inclusion for all by building an open
community and celebrating LGBTQIA+ contributions.
To further champion flexible working in support of the
wellbeing of our Circlers, we joined Working Families,
a charity for parents and carers. We have worked with
the charity to advance our policies and practices to
better recognise and empower our Circlers to achieve
their full potential alongside their parenting and caring
responsibilities. We continue to drive a culture of
productivity that embraces individual and personal needs.
Each year we run reverse mentoring initiatives and we
focused on neurodiversity in 2024. Circlers volunteered
throughout Q4 to reverse mentor managers on
neurodiversity to further bolster our manager population
in its ability to manage neurodivergent individuals and
educate our individual contributors on the importance of
making the necessary accommodations when working
with neurodivergent teammates. We launched several
other mentorship schemes and have established a
certification programme. Currently we have 52 internally
certified mentors across departments and of varying
seniority whose experience can be called upon. The
Mentoring in Tech (“MinT”) scheme, a programme
connecting women and gender minorities in technology
with mentors across Funding Circle, specifically aims to
support female Circlers in achieving their individual goals.
Diversity, equity and inclusion (“DEI”) statement
Our recruitment process is designed to ensure
all applications, including those from disabled
persons, are treated equally and fairly.
We’re here to build the incredible at Funding
Circle. We know we can only achieve this through
an inclusive and diverse culture where Circlers
of all backgrounds feel confident in bringing their
whole selves to work, where they can contribute
their ideas, have opportunities to be successful,
and have their talents nurtured. Through
empowering our people we are not only building
something incredible for our customers, but an
incredible place to work too.
We live by our Company values and cherish
our diversity; be that culture, gender, race or
ethnicity, sexual orientation,
gender identity and expression,
disability, marital status, age,
nationality, religion, of thought,
belief, experience or expression.
We stand together, as one.
Awards in 2024
l Luke Santon – recognised as one of LGBT’s
Great 2024 30 Under 30 Role Model.
l Kate Turgoose – named in Innovate Finance’s
Pride in FinTech Powerlist.
l Antje Bustamante Mena – won HotTopic’s Global
CDO 100 Award.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 23
Environment, social and governance (“ESG”)
Delivering on our
commitments
At Funding Circle we are committed to contributing positively to our
communities; we do this through the business finance we provide
to our SME customers who are often underserved by mainstream
finance, and through sound and responsible ESG practices that
support broader societal and environmental efforts.
Our approach to ESG considers relevant risks and
opportunities, and is informed by our engagement
with our strategic stakeholders. For more detail on
corporate governance and risk management, and our
climate-related disclosures, please refer to the sections
referenced below.
Relevant policies
can be found on
the Company’s
Sustainability
webpage
l More detail on corporate governance is set
out on page 70
l More detail on risk management is set out
on page 51
l Our Non-Financial and Sustainability Information
Statement is set out on page 39
l Our climate disclosures consistent with the
Task Force on Climate-related Financial
Disclosures (“TCFD”) are set out on pages 28 to 38
STRATEGIC REPORT
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202424
Our ESG framework sets out our goals and
roadmap for each strategic pillar
DEI
Our ambition and
commitment
To be best in class and
live by our DEI statement,
building an inclusive and
diverse culture.
Achievements in 2024
l Stable key metrics in 2024, with
continued strong sentiment for inclusion
and belonging expressed in our 2024
engagement survey.
l Delivery of all-Company CircleIN internal
event, celebrating our culture and
spotlighting Circler-led groups, alongside
a knowledge-sharing networking event
to celebrate inclusivity and diversity, led
and delivered by employee groups across
the business.
l Delivery of 51 Circler group initiatives over
the course of 2024, including the MinT
scheme by Women@FC, and representing
Funding Circle at the annual London
Pride celebrations.
l Partnered with Working Families, the
UK’s national charity for working parents
and carers.
Goals and roadmap for 2025
l Continue to make progress against key DEI
metrics and targets, including women in
leadership and the gender pay gap.
l In Q1 2025, we plan to undertake a review
of our approach, plan and goals for DEI, to
ensure we continue to focus on building a
diverse and inclusive culture.
Social impact
Our ambition and
commitment
To back a diverse and
thriving SME customer base
– creating jobs, fostering
financial inclusion and having
a positive impact on UK
SMEs, entrepreneurs and
their wider communities.
Climate and
environment
Our ambition and
commitment
To support initiatives
that help drive progress
towards net zero, and
contribute meaningfully
to climate, nature and
biodiversity outcomes
for healthier communities.
Governance and
risk management
Our ambition and
commitment
To meet shareholder
and investor expectations,
and be viewed positively
in the market.
Achievements in 2024
l As outlined in Our Customers on page 14, our
lending supported 87,500 jobs, £7.2 billion in
GDP, and helped businesses in every one
of the 650 parliamentary constituencies.
l We renewed our partnership with Thrive
Mental Wellbeing, providing free or
discounted access to its NHS-trusted
mental health app to all SMEs in the UK.
l We continued to back underserved social
entrepreneurs through our partnership
with Hatch Enterprise for a third year, also
supporting 72 founders through 93 volunteer
hours of employee mentoring.
l Our Circlers contributed 171 “Impact
Days”, 1364 hours, volunteering with
environmental and people charities
including NishkamSWAT, Hatch Enterprise,
and London Wildlife Trust.
Goals and roadmap for 2025
l Continue to identify internal and external
opportunities to further embed our
ambition of delivering positive social and
sustainability outcomes for our customers.
l In line with our core mission, build on
our strong partnerships with Hatch,
Thrive and others to support the wider
SME ecosystem.
Achievements in 2024
l We achieved a 35% reduction in GHG
emissions (excluding 3.15 financed
emissions) due to the sale of our US
business, head office consolidation, and
a real-world reduction in business travel.
l We brought forward our interim net zero
target for emissions within our control
(scopes 1, 2 and 3 business travel) from
2030 to 2025, but retiring our previous net
zero stretch target for supplier, employee
commuting and waste emissions due to
a need for further work to understand the
drivers and scope for influence.
l We developed our approach to Beyond
Value Chain Mitigation (“BVCM”), retiring the
previous terminology on carbon neutrality,
while retaining our commitment to climate
and nature contributions in line with the
Science Based Targets initiative (“SBTi”)
BVCM principles.
l Our partnership with Earthwatch Europe’s
Tiny Forest initiative was featured in the
UN Global Compact UK’s “Nature-based
Solutions for Business” webinar series.
Goals and roadmap for 2025
l Progress our restated interim net zero
targets towards our 2050 net zero
ambition, including our accelerated interim
(2025) partial net zero target.
l Continue investing in UK-focused BVCM
activities, including verified and robust
carbon credit projects, to contribute
societal nature and climate benefits.
Achievements in 2024
l We published our Human Rights Statement
as planned.
l We developed our Climate Risk
Management Framework (“CRMF”), and
our disclosures are now aligned to the
TCFD recommendations, considering
proportionality and materiality and subject
to continued evolution in certain areas.
l We continued our engagement on
sustainability issues related to SME lending
with industry working groups under UK
Finance and the Partnership for Carbon
Accounting Financials (“PCAF”).
l We continued to uphold the highest
standards of corporate governance and
risk management more broadly, which are
covered in the sections starting on pages
51 and 70.
Goals and roadmap for 2025
l Prepare for UK introduction of ISSB/IFRS
S1 and S2, and changes to the 2024 UK
Corporate Governance Code.
l Understand how our current efforts align
to transition planning guidance and identify
priorities for further development.
For more please see the
Our People section on page 20
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 25
Environment, social and governance (“ESG”) continued
Social impact
In line with our mission to back SMEs with business finance,
we also aim to deliver and support initiatives that bring real
benefits to small businesses and local communities.
Our customers and SMEs
We value the contribution of SMEs to the economy,
through the jobs they create and the potential multiplying
effect they can have on wider society. Our lending
helps businesses invest and scale up, but also sustains
employment and stability locally. We recognise the
importance of financial inclusion – our borrowers sit at the
heart of diverse communities, and the business finance
we provide supports SMEs in every corner of the UK.
Our primary impact as a business is the multi-faceted
positive impact of our lending on society. Given the
materiality of this impact versus our other social and
environmental impacts, we work with Oxford Economics
each year to carry out an economic impact analysis
focused on our efforts and the outcomes they drive. In
2024, Funding Circle’s Term Loans and FlexiPay lending
supported 87,500 jobs, £7.2 billion in GDP, and helped
businesses in every one of the 650 parliamentary
constituencies. Please see page 14 for more detail.
In 2024 we continued our partnership with Thrive
Mental Wellbeing (“Thrive”). Thrive’s NHS-trusted app
provides help anytime, anywhere. In our 2023 Resilience
in SMEs report, 88% of respondents told us employee
wellbeing and mental health was an area they wanted
to focus on, with 79% reporting they would greatly value
external support in this area. We are also giving access to
Thrive’s unlimited in-app therapy to our most vulnerable
customers, providing them with an alternative to NHS
pathways which often have longer waiting times.
Other societal contributions and commitments
Funding Circle is a participant of the United Nations
Global Compact and the UN Global Compact Network
UK, and adheres to their principles-based approach
to responsible business on human rights, labour,
environment, and anti-corruption. We publish our
Communication on Progress annually.
Please also see our Non-Financial and
Sustainability Information Statement on page 39
We are a signatory to the HM Treasury Women in Finance
Charter and the Investing in Women Code.
We renewed our collaboration with Hatch Enterprise for
a third year, contributing to its mission to build a fairer,
more equitable and more diverse business landscape.
In the 12 months to September 2024, our employees
contributed 93 hours of volunteer mentoring, supporting
72 founders. Through its programmes, Hatch supports
underrepresented entrepreneurs from across the UK to
launch and grow successful businesses that also have a
positive impact on their communities. Its work is targeted
at those typically underrepresented in entrepreneurship,
including women and other marginalised genders, people
from ethnic minority backgrounds, people with disabilities
and neurodivergent people.
Alongside our social impact, we want to contribute
meaningfully to the environment, and our approach focuses
on BVCM activities that help move towards societal net
zero, by delivering positive climate and nature outcomes
with co-benefits for communities. More detail on this is
set out on page 31.
Circlers participated in an annual Tower Climb charity
event in March 2024 and fundraised over £3,000 for
Great Ormond Street Hospital Children’s Charity.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202426
Mathew Keech
Company name: HEJ Coffee
Borrower type: Term Loan
HEJ Coffee is an artisan neighbourhood coffee
shop that roast their beans in house at their
London roastery, allowing customers to enjoy
their coffee whilst watching roasters create
exceptional batches of coffee. They play an
active part in their neighbourhood, celebrating
individual identities and championing local
charities and organisations – from including
customer photos on their wall of fame, to
sponsoring local schools and an LGBTQIA+
homeless shelter, and even building a
grassroots football club, HEJ FC.
In addition to being an important part of the
community, Mathew and his team are making
sustainability a key mission for HEJ Coffee.
Leading in their industry, they are in the
process of becoming B Corp certified. They
have already invested in a 100% electric fleet,
and are changing how they package and sell their
coffee, to continue reducing carbon emissions
and materials.
Since 2019, they have delivered significant
environmental savings:
l More than 231,000 coffee bags and 38,000
cardboard boxes were redirected from landfill.
l Over 88 tonnes of carbon emissions were
averted by using electric vans or bikes
for deliveries.
l They donated £23k towards planting over 2,300
trees in urban areas.
HEJ Coffee came to Funding Circle in 2019, after
their bank could not see their vision or support
them in delivering their plans efficiently. Funding
Circle fuelled the company with funding quickly,
allowing Mathew to secure the equipment and
begin the process of building the state of the art
all-electric roastery.
We needed a partner that
had faith in our ideas and
could see our vision with the
capacity to help us make
it happen; with Funding
Circle we got exactly that,
a quick decision and a
straightforward process,
allowing us to get on with
our business plans.”
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 27
Environment, social and governance (“ESG”) continued
Climate and
environment
At Funding Circle, we are committed to fostering a
resilient and sustainable business model that contributes
to the broader global effort of mitigating climate change
and protecting the environment. Our approach to
environmental responsibility is being proportionately
embedded in our operational strategies, recognising
the growing importance of climate-related risks and
opportunities for the wider UK economy, but limited
idiosyncratic risks to Funding Circle’s business model.
This section incorporates disclosures consistent with
the Task Force on Climate-related Financial Disclosures
(“TCFD”) recommendations, in compliance with the
Financial Conduct Authority’s (“FCA”) UK Listing
Rules
1
. Our disclosures are now aligned to the TCFD
recommendations, considering proportionality and
materiality and recognising that certain areas will
continue to be deepened and enhanced over many years.
This section includes greenhouse gas (“GHG”) emissions
reporting per Companies Act 2006 regulations.
1. Strategy
Climate-related risks and opportunities
Funding Circle is an SME finance platform, providing
the technology, data and products to provide fast, fair
and hassle-free finance to SMEs and diversified lending
opportunities for institutional investors. Of the £2.8 billion
balances under management on our platform as of
31 December 2024, 98% are funded by third party
institutional investors and 2% by Funding Circle equity.
We have, however, chosen to incorporate all balances
under management, as well as defaulted loans, in our
assessment of climate-related risks to provide maximum
transparency to our stakeholders.
Following the sale of our US business on 1 July 2024,
Funding Circle operates only in the UK. We define short,
medium, and long-term horizons as one year or less,
one to five years, and more than five years, respectively.
These time periods are consistent with those used in
our Enterprise Risk Management Framework (“ERMF”)
and strategic planning, although we recognise that some
climate-related risks and opportunities will take decades to
materialise. The weighted average life of a Funding Circle
Term Loan under management
2
is between 24 and 36
months (i.e. within the current medium-term horizon).
Funding Circle’s business model means we have low
exposure to physical risks from climate change: a minor
operational physical presence, unsecured loan products
which do not rely on the borrower’s physical assets as
security
3
, maximum loan terms of six years, and a broad
geographical distribution of lending to SMEs across the
UK, as shown in Table 1. This means we are at low risk
of operational disruption, have no risk of damage or
devaluation of assets relied on for loan collateral, and are
similarly diversified to the broader UK economy with an
aim to maintain this diversification.
Funding Circle’s exposure to transition risks is also
structurally low due to its business model: lending is well
diversified across sectors in line with the broader UK
economy as shown in Table 2, around a third of lending
is to a broad spectrum of “carbon-related” sectors
4
, and
we support a diversified pool of institutional investors.
Furthermore, as our lending is unsecured
3
, we are not
exposed to the risk of transition-related devaluation of
physical assets used as loan security.
We recognise that physical and transition risks will have
wide-reaching and long-term impacts on all parts of
the UK economy. Although our exposure to these risks
through our lending is deemed low due to the absence
of physical collateral, we acknowledge that potential
disruptions to business continuity may make it difficult for
some impacted SMEs to maintain regular, uninterrupted
loan repayments. We therefore continue to invest in our
forbearance processes and capabilities so that we can
swiftly deploy the right support in the case of a climate-
related event whilst continuing to provide better access
to finance to SMEs in all UK sectors and geographies.
We continue to assess potential transition-related or
sustainable finance product opportunities following
an internal commercial review in 2023. However, we
have seen no change to the review’s findings of muted
customer demand and significant gaps in loan pricing
and institutional investor return expectations.
Beyond our on-balance-sheet lending, which comprises
96% of our greenhouse gas emissions, Funding Circle’s
largest source of emissions is from our supply chain,
as shown in Figures 1 and 2. These principally relate to
digital activities (including software, advertising and
cloud computing) and to purchased services.
Our assessment to determine the materiality of current
and potential future impacts of climate-related risks and
opportunities on Funding Circle’s financial performance
looked across our operations and value chain and
involved measuring emissions, including financed
emissions, a mixture of qualitative and quantitative
analysis, risk analysis in line with our ERMF, and
feedback from stakeholders and subject matter experts.
Due to the nature of our business model, climate-related
risks will only really manifest for us if they affect SME or
investor appetite, performance or liquidity (rather than
risks to any specific physical assets). Currently, we do
not consider there to be any financially material climate-
related risks or opportunities, nor do we foresee any of
significance materialising over the medium term. There
was no impact on our financial position, performance or
cash flows from climate-related risks and opportunities
in the reporting period. Our analysis is summarised
in Table 3.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202428
Table 1: Geographical lending distribution
UK Region
All balances
under
management
Balances on
balance sheet
South East 24% 25%
London 15% 15%
Midlands 15% 14%
North West 12% 12%
North East 10% 10%
South West 10% 10%
Scotland 5% 5%
East Anglia 4% 4%
Wales 3% 3%
Northern Ireland 2% 2%
Table 2: Sectoral lending distribution
Sector (based on SIC classification)
All balances
under
management
Balances on
balance sheet
Wholesale & retail 17.9% 20.4%
Other business activities 18.8% 18.2%
Health & other service
activities 12.7% 11.9%
Other manufacturing 5.5% 6.4%
IT & telecommunication 5.1% 5.4%
Hotels & restaurants 4.1% 3.6%
Finance 1.7% 1.6%
Construction & real estate 20.0% 18.6%
Automotive 4.6% 4.7%
Transport, storage &
communication 3.9% 3.7%
Manufacture of metal products 2.1% 1.9%
Manufacture of paper
products, publishing & printing 1.4% 1.3%
Manufacture of food products
& beverages 1.2% 1.2%
Agriculture 0.8% 0.8%
Electricity, gas & water supply 0.1% 0.2%
Mining & quarrying 0.1% 0.1%
Total “carbon related”
4
34.2% 32.5%
Note: In Tables 1 and 2, and Figure 1, we include defaulted loans for the
estimation of financed emissions and the climate-related risk analysis, whereas
defaulted loans are excluded when reporting balances under management
elsewhere in this Annual Report.
1. The Company has also considered the 2021 TCFD Annex and the Supplemental Guidance for the Financial Sector.
2. Term Loans make up 96% of balances under management, with the remaining balances being up to 12 months and corresponding to shorter-term open ended
products (Cashback credit card and FlexiPay drawn lines of credit).
3. The majority of Funding Circle’s loans under management are unsecured, with <5% subject to a debenture (floating charge). Funding Circle also provides SMEs
with access to a range of asset, vehicle and equipment finance solutions through its Marketplace. These products are arranged directly between the SME and
the third party provider and Funding Circle has no role in the delivery or management of the resulting loan.
4. Carbon-related sectors as defined in “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures” (TCFD, 2021) and
highlighted in Table 2.
Scope 2 – location based 0.02%
Scope 3 – categories 1–14 3.49%
Scope 3 – category 15 (financed emissions
– balances on balance sheet) 96.49%
Fig.1: Total GHG emissions 2024 (location based)
by Scope 1
*
, 2 and 3 (categories 1-15)
Fig.2: Total GHG emissions 2024 (location based)
by Scope 1
*
, 2 and Scope 3 (excl. category 15)
Scope 2
2. Purchased electricity (location based) 0.7%
Scope 3
3.1 Purchased goods and services 79.4%
3.2 Capital goods 10.7%
3.3 Fuel and energy activity 0.2%
3.5 Waste generated in operations 0.4%
3.6 Business travel 3.9%
3.7 Employee commuting 3.2%
3.8 Upstream leased assets 1.5%
*
In 2024 we reclassified Scope 1 (gas heating of UK office) to
Scope 3 category 8, as explained on page 34.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 29
Environment, social and governance (“ESG”) continued
Climate and environment continued
1. Strategy continued
Climate-related risks and opportunities continued
Table 3: Summary of climate-related risks and opportunities
Category Driver Potential business impact
Horizon
(short,
medium,
long) Potential financial impact*
Transition risk Market: changes to SME
and/or investor demand
and preferences
Policy and legal: more
demanding climate
policy including
carbon taxes
Technology: need for
SMEs and suppliers to
transition to greener
technologies
Reputation: climate-
related compliance
or delivery failures
negatively impact public/
stakeholder perception
Strategic: increased SME or investor
demand for green finance products could
reduce demand for existing Funding
Circle products and/or require investment
in data and product innovation
Funding: reduced investor risk appetite
for SME lending or for certain sectors,
or reduction in available investor capital
(e.g. as a result of climate policy) may
constrain platform liquidity
Credit: financial pressure on SME
borrowers in higher carbon industries may
impact their ability to repay
Operational: compliance with more
onerous climate data, reporting or
other climate regulation or taxes could
increase costs for Funding Circle, SME
borrowers and investors; transition
investment by suppliers may increase
procurement costs
M, L
M, L
M, L
M, L
Reduced revenue:
l from lower demand for existing
products and services;
l from deteriorating borrower credit
quality in higher carbon sectors; or
l from write-offs, impairments and early
retirement of existing assets
Increased costs:
l from compliance costs or carbon taxes;
l from investment in data and product
innovation; or
l from suppliers passing on transition-
related costs
Reduced access to capital and liquidity:
l from changes to investor risk appetite
or liquidity
Likely to be below the threshold for
financial materiality in the medium term
Physical risk Acute: e.g. increase in
extreme climate-related
weather events
Credit: temporary interruptions to SME
borrowers’ operations affecting their
ability to repay
Reputation: insufficient forbearance tools
and processes exacerbate SME stress
and contribute to SME business closure
Funding: reduced investor appetite or
liquidity due to impacts of weather events
on borrower or investor operations
S, M, L Reduced revenue:
l from deteriorating borrower credit
quality;
l from customer boycotting;
l from lower demand for products
or services; or
l from write-offs and early retirement
of existing assets
Increased costs:
l from fines or litigation
Likely to be below the threshold for
financial materiality in the medium term
Chronic: e.g. alterations
in weather patterns,
rising sea levels
Credit: permanent changes to SME
borrowers’ operations or supply chains
resulting in structurally higher costs and
affecting their ability to repay
Funding: long-term changes in investor
risk appetite or reduced liquidity due to
chronic impacts on investors’ operations
L
Opportunities Market: changes to SME
and/or investor demand
and preferences
Increased SME demand for
transition-related finance
Increased investor demand for
transition-related or sustainable lending
S, M Increased revenue:
l from access to new and emerging
markets; or
l from new products and services
relating to climate transition, resilience
or adaptation
Increased access to capital and liquidity
(for the same reasons)
Decreased costs:
l from reduced reliance on volatile power
sources;
l from increased energy efficiency; or
l from less physical (e.g. paper) resource
use and waste
Likely to be below the threshold for
financial materiality in the medium term
Technology: innovation
in circularity, energy
efficiency and
renewables
Platform and marketing enhancements
to increase efficiency, reduce waste and
utilise 100% renewable electricity
M, L
*
For further detail on how we determine and define materiality for our climate-related risks and opportunities, please see page 28 and “Risk management” on
pages 33 to 34.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202430
Strategy, net zero and transition planning
The identification and analysis of potential climate-
related risks and opportunities have not driven any
changes to Funding Circle’s strategy, business model
or credit decisioning to date. Our strategy supports an
agile, low risk approach to the climate transition through
the continued evolution of a diversified loan portfolio, a
diversified investor base, and the ability to respond to
changing market demands for new products.
However, as a finance platform whose activities mirror
the wider UK “real economy”, we are mindful of the
broader economic impacts expected from the climate
transition and physical risks. We expect that the longer-
term impact from climate change on Funding Circle, its
customers and its investors will reflect overall changes
to UK GDP. While we will continue to engage with
relevant information and stakeholders to understand
these impacts, we remain committed to lending to SMEs
across a diverse geographic and sectoral distribution
and do not plan to impose risk appetite changes that
will alter our portfolio away from one that reflects the
broader, diversified UK economy. In response to growing
physical risks from climate change which may create
business continuity challenges for some SME customers,
we continue to invest in developing our forbearance
measures to better support customers experiencing
temporary repayment difficulties.
We are beginning to see early signs of institutional
investor interest in our climate policies and financed
emissions data. We expect this to increase over
time, driven by changing reporting and regulatory
requirements, and will respond as needed, leveraging our
platform technology and expanding data lake. However,
the lack of emissions reporting requirements for SMEs or
straightforward, standardised and affordable tools and
methodologies for them to use is currently an obstacle to
collecting primary data.
We participate in industry-led working groups, actively
engaging on sustainability issues and a just transition
for SMEs – specifically, the UK Finance Industry Working
Group on ESG implications for SMEs, and the PCAF (UK
chapter) working group on Business Loans and Unlisted
Equity, which aims to explore the challenges in calculating
SME emissions and support the ongoing development of
the PCAF Standard.
More broadly, recognising the need for all businesses
to proactively support the transition to a low carbon
economy, we have an ambition to reach net zero by
2050 across all emission scopes. In line with the latest
climate science, we will endeavour to achieve this
through absolute emissions reduction and offsetting the
remaining hard-to-abate emissions by purchasing high
quality carbon credits.
In 2024, we updated our interim climate target, reflecting
a deepening of our transition planning efforts. Previously,
we had in place a stretch target to reach net zero by 2030
for our operational emissions (Scope 1, 2 and 3 excluding
financed emissions). We have evolved this to an interim
target to achieve net zero for Scope 1, 2 and 3 business
travel in 2025 (“interim (2025) partial net zero target”),
which we are currently on track to meet without any
material costs. We have significant constraints around
data accuracy and level of influence for the remaining
Scope 3 categories and as such have decided to retire
the previous 2030 stretch target for these. We intend to
focus efforts in 2025 on improving data accuracy and
assessing potential levers, influence and dependencies,
with a view to setting new interim targets as appropriate.
This approach also allows us to take account of the SBTi’s
revised Corporate Net Zero Standard which is under
development at the time of publication.
Meanwhile, we continue to develop our BVCM approach,
aiming to contribute to the wider societal transition to
net zero.
In 2024, we expanded our environmental contributions
towards nature-based and biodiversity projects in the
UK. Through our partnership with Earthwatch Europe,
we supported the planting of five new Tiny Forest sites
across the UK as part of the Local Authority Treescapes
Fund. With its programme of planting small forests in
ecologically deprived areas nationwide, Tiny Forest
reconnects people with nature, enhances wellbeing,
helps mitigate the impacts of climate change and
provides nature-rich habitat to support urban wildlife.
The partnership was featured in the UN Global Compact
Network UK’s webinar series on “Nature-based Solutions
for Business”. We also partnered with GreenTheUK,
the Blue Marine Foundation and Plantlife, to support
initiatives helping native oyster restoration in the Solent
and the Sussex Kelp Recovery Project, as well as
protecting temperate rainforests in Devon and Cornwall.
We continue to review the evolving technology and
regulatory landscape for carbon credits and intend to
undertake further scoping and due diligence to select
appropriate carbon credits to offset the small tail of
hard-to-abate emissions for our interim (2025) partial net
zero target.
Resilience of our strategy
In 2023/24, Funding Circle engaged external experts to
support the qualitative analysis of its lending in relation to
physical and transition risks. This was based on loan-level
data covering financed emissions (calculated in line with
the PCAF methodology), geography, sector and principal
outstanding as at 31 December 2023, and refreshed for
31 December 2024. We assessed total balances under
management, including defaulted loans, and balances
held on Funding Circle’s balance sheet, with both
exhibiting similar profiles.
Each sector was assigned an overall transition risk
vulnerability rating based on several risk factors:
regulation, raw material cost, technology, market demand
fluctuations, and reputational risk. Physical risks were
assessed through sectoral and geographical lenses.
Inputs were sourced from external research, literature
and tools including the FCA’s Climate Financial Risk
Forum (“CFRF”) climate scenario analysis narrative tool
and the World Bank Group’s carbon pricing dashboard.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 2024 31
Environment, social and governance (“ESG”) continued
Climate and environment continued
1. Strategy continued
Resilience of our strategy continued
Our analysis showed a small proportion of balances, both on balance sheet and under management, that are to sectors
with higher exposure or vulnerability to climate-related risks, as shown in Table 4.
Table 4: Sectors with higher exposure or vulnerability to climate-related risks
Sectors assessed as having high vulnerability to climate risks
% balances on
balance sheet
% balances
under management
Transition risks:
Transport, storage and communication 3.7% 3.9%
Electricity, gas and water supply (“Electricity and Utilities”) 0.2% 0.1%
Total 3.9% 4.0%
Physical risks:
Agriculture 0.8% 0.8%
Total 0.8% 0.8%
We used the Network for Greening the Financial System (“NGFS”) scenarios to assess Funding Circle’s climate
resilience. This was done at a relatively high level, commensurate with the materiality of our climate-related risks and
opportunities. Three diverse scenarios were considered, including one aligned to the latest international agreement
on climate change (Net Zero 2050). The results of our scenario analysis, conducted in 2024, are summarised in the
table below and show strong resilience as at the reporting date, with existing plans to develop our climate-related data,
insight and reporting capabilities sufficient under all scenarios.
As Funding Circle’s balances under management mirror the sectoral diversity of the broader UK economy, our exposure
to any economic shocks or persistent declines would likely be in line with UK GDP. All scenarios are expected to have a
negative impact on GDP by 2050 versus a baseline of no physical or transition risk.
Table 5: Summary of climate scenario analysis
Potential impacts
Characteristics
NGFS – Orderly Transition
(Net Zero 2050) NGFS – Disorderly (Delayed Transition)
NGFS – Hot House
World (NDCs)
2050 GDP vs. baseline of
no physical/transition risk
-3% -4.6% to -4.7% -5.7% to -6%
Transition
Policy reaction Immediate, smooth No additional actions until 2030 No additional pledges vs. today
Technology change Fast Slow then fast Slow
Electrification,
decarbonisation and
energy efficiency
Rapid and steady Slow then fast Slow
Overall transition risk Medium High Low
Physical
Temperature rise 1.4C 1.6C 2.6C
Physical risks Low Medium High
Impacts and considerations
Funding Circle time
horizons affected
ST, MT, LT LT LT
Potential impact on
climate-related risks
and opportunities
(see Table 3)
Heightened transition risks,
particularly for “carbon-related”
sectors, may put strain on SME
profitability and require market-wide
investment in climate compliance.
Muted transition risks initially then
significantly heightened after 2030,
with a shock to revenues and costs likely
felt across most sectors, with “carbon-
related” ones particularly exposed.
Limited transition risks with even
“carbon-related” sectors having a long
time to adapt. Physical risks will increase
significantly over the longer term with
far-reaching economic consequences.
Strategic
considerations
Continued investment in forbearance
tools and processes will support
SMEs experiencing short-term
repayment challenges.
Continued planned enhancement
of Funding Circle’s climate reporting
capabilities will support compliance
with future regulation.
Continued investment in forbearance
tools will better support businesses
suffering short-term stress in relation
to transition-related economic shocks.
Continued investment in forbearance
processes and tools will better
support businesses suffering business
continuity impacts from physical
climate events.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Funding Circle Holdings plc | Annual Report and Accounts 202432
This qualitative approach is proportionate to the
materiality of Funding Circle’s climate-related risks and
opportunities. We will continue to refresh and enhance
this analysis but do not currently have plans to invest
in further quantitative analysis as we do not foresee it
providing actionable outputs for the time being.
2. Governance
Board oversight
The Board of Directors at Funding Circle holds ultimate
responsibility for climate-related risks and opportunities.
Matthew King, Non-Executive Director, continued as
Board-level sponsor for climate in 2024, providing
support and challenge to management, drawing on his
significant financial services risk management experience
as well as knowledge of climate change from his Non-
Executive Director role in a resource-intensive industry.
Geeta Gopalan also has climate-related financial services
risk management skills, and Helen Beck has undertaken
training on transition planning.
The Board reviews climate-related issues as part of
its overall risk management and strategic planning
processes. This includes reviewing analysis on physical
and transition risk heatmaps and climate scenarios which
demonstrate that climate-related risks and opportunities
are not likely to be material in the medium term. The
Board has taken this into account in its oversight of the
Group’s strategy, with no trade-offs being required at
this point. In addition, it delegates certain matters to
two Committees, which are included in their Committee
Terms of Reference:
l the ESG Committee (“ESGC”), chaired by Andrew
Learoyd and responsible for oversight of the Group’s
ESG strategy including climate-related opportunities
(see ESG Committee Report on page 88); and
l the Audit and Risk Committee (“ARC”), chaired by Geeta
Gopalan and responsible for oversight of climate-
related (and broader ESG) risk management. Climate-
related risks are assessed in line with the ERMF and
reviewed and approved by the ARC annually.
The Board considers its skills and competencies in
relation to climate-related risks and opportunities
annually. Following Matthew King’s retirement from the
Board, it will continue to consider ways of maintaining
Board-level expertise on climate and other ESG topics,
with this being a skill taken into consideration in the Non-
Executive Director appointment process. The skills of
Geeta Gopalan and Helen Beck referred to above provide
a strong competency framework, particularly given
climate-related risks and opportunities are not likely to be
material for Funding Circle over the medium term. Further
external training has been provided in the past and will
continue to be delivered as required as we deepen our
climate scenario analysis and develop transition plans.
Management’s role
Executive responsibility for climate-related risks and
opportunities is held by the CEO, who delegates climate risk
management to the CRO. Management responsibility for
execution and delivery of the Group’s climate (and broader
ESG) strategy sits with the Chief Legal Officer and Company
Secretary. Oversight is provided by the Management Risk
Committee (“MRC”) which reports into the Board-level
Committees described above.
We have introduced controls and procedures
proportionate to the level of materiality of climate-related
risks and opportunities. As such, the principal procedure
is to identify and assess climate-related risks in line with
the ERMF which is reviewed by the MRC and approved
by the ARC annually. In addition, in 2024 Funding Circle
established the CRMF, which set safeguard thresholds
for climate risk appetite and was approved by the
ARC. The combination of the ERMF and CRMF ensures
climate-related risks are integrated into our broader risk
management processes and executives are updated
regularly.
3. Risk management
Identification and assessment of climate-related risks
Funding Circle evaluates the impact of climate-related
risks on its own operations and its balances under
management, across physical and transition risk drivers.
As well as monitoring external developments to assess
any increases to risk drivers, in 2023/24 we undertook
a loan portfolio risk heatmap exercise. This assessed
the level of exposure to physical and transition risks for
all balances under management and underpinned our
initial scenario analysis described above. The heatmap
and scenario analysis results informed this year’s annual
ERMF Risks and Control Self-Assessment.
The materiality of potential climate-related impacts is
assessed using a risk classification matrix which rates
the inherent likelihood of the risk occurring and the
impact on the business in financial and non-financial
terms. In assigning ratings, we consider both qualitative
factors (such as effect on customers, media coverage
and business continuity) and quantitative financial
thresholds ranging from “critical” (financial impact of £5
million or more in a 12-month period) to “minor” (financial
impact of £250k or less in a 12-month period) over a
medium-term horizon.
As with 2023, policy and legal transition risks were
the main driver of climate-related risks to Funding Circle,
with continued developments in reporting obligations
likely to impact Funding Circle, its SME customers and
institutional investors.
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Funding Circle Holdings plc | Annual Report and Accounts 2024 33
Environment, social and governance (“ESG”) continued
Climate and environment continued
3. Risk management continued
Identification and assessment of climate-related risks
continued
Our 2024 risk assessment identified climate as a level 1
ESG risk, within the strategic risk category. The risk was
defined as: “This risk covers (1) Transition Risks and (2)
Physical Risks. Climate risk is a cross-cutting risk type
that may manifest through some of our other established
principal categories (regulatory, credit, operational,
technology and funding).” The inherent likelihood was
assessed as “Possible” (meaning a potential occurrence
once every one to two years) and the inherent impact
was deemed to be “Minor” based on an assessment of
qualitative and quantitative factors as described above.
The resulting inherent risk rating was “Low”. Consistent
with 2023, the likelihood and impact of this risk on other
principal categories over the ERMF time horizon was
assessed as de minimis.
Management and integration of climate-related risks
Funding Circle’s risk appetite statement in relation to strategic
risks including climate risk is that it “will make efficient use
of its available resources to build a sustainable, diversified
and profitable business that can successfully adapt to
environment changes”. In line with the assessed “Low” impact
materiality, we continue to take a proportionate approach to
building our climate risk management capabilities.
The main controls in place to manage climate-related
risks include internal legal and regulatory review;
management and risk oversight and controls; third party
review; internal audit review; and internal policies and
practices. The financed emissions data and physical
and transition heatmaps developed in 2024 provide
appropriate foundations to proportionately manage and
embed climate risk in the medium term.
The residual risk rating for climate risk in 2024,
considering the effectiveness of controls in place,
was “Low” and unchanged from last year. Through its
integration into the ERMF, climate-related risk is subject
to the same evaluation, response and monitoring process
and governance as all other key risks.
4. Metrics and targets
GHG emissions metrics
Methodology
This section includes our mandatory reporting of GHG
emissions in line with The Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013, and the
Streamlined Energy and Carbon Reporting (“SECR”) under
The Companies (Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report) Regulations
2018. Our GHG emissions reporting period is 1 January
to 31 December and is aligned with our financial
reporting year.
We measure a full inventory of material Scope 1, 2 and 3
emissions in accordance with the GHG Protocol Corporate
Standard, using an operational control approach to define
our organisational boundary. Activity data was used where
available (Scopes 2, 3.5, 3.8, and 3.1 Cloud emissions), or
estimated on a spend basis. Emissions were calculated by
applying recognised and up-to-date emission factors from
reference databases (mainly Exiobase 3.8.2, IEA 2023, UK
GHG Conversion Factor 2024, and Base Empreinte Ademe
23.4) selected based on geographical relevance and
data quality.
We carry out annual independent third party verification of
our GHG emissions in accordance with ISO 14064-1, which
was completed for FY 2023 at a limited level of assurance
at a materiality of 5%, and covering all activities under our
operational control, and all relevant emission categories,
indicating any exclusions. Verification for FY 2024 is
due in 2025.
Beyond reporting requirements, we measure and report
all material GHG categories as a way of monitoring the
transition risks outlined in Table 3, with higher emissions
being indicative of elevated transition risk.
Comparative periods
Funding Circle completed the sale of its US business on
1 July 2024. In line with the GHG Protocol for treatment
of structural business changes, emissions from our US
business have been removed, where possible, from our
core 2024 reported figures and comparative periods.
Work undertaken in 2024 in relation to Funding Circle’s
transition plan highlighted an inaccurate classification of
the London office heating emissions. Funding Circle has
no control over the hours of operation or the equipment
used for heating this building, which is leased by
Funding Circle and shared with other tenants. It was
therefore deemed more accurate to reclassify these
emissions from Scope 1 to Scope 3 category 8 for this
reporting year and all comparative periods.
Financed emissions methodology
Scope 3 category 15 emissions (financed emissions) were
calculated in accordance with the Partnership for Carbon
Accounting Financials (“PCAF”) Global GHG Accounting
and Reporting Standard (the “PCAF Standard”)
methodology for business loans. As we have no primary
emissions data for our SME customers, we have applied
PCAF’s “economic activity-based emissions” method,
which provides sector-based factors for the volume
of emissions per £ revenue (based on Exiobase v3.9,
base year 2019). We then attribute a proportion of an
SME’s emissions based on the ratio between the amount
outstanding originated through the Funding Circle
platform and the total debt and equity of the SME.
As Funding Circle holds only a small proportion of credit
extended on its own balance sheet (c.6% of balances
under management when including defaulted loans), the
majority of attributed emissions form part of the carbon
footprint of the institutional investors who fund the
lending originated through the platform. For transparency,
we report on both Funding Circle’s financed emissions
(relating to the small number of on-balance-sheet loans)
and the overall emissions attributed to the total balances
under management.
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Funding Circle Holdings plc | Annual Report and Accounts 202434
This calculation includes several assumptions which can
materially affect the final calculated emissions. This means
we can provide no assurance as to the accuracy of the
final calculated emissions. Our exposure-weighted data
quality score, based on the PCAF Standard, was 4.01
where 1 is the highest data quality and 5 is the lowest.
This is in line with the previous year’s score, however, an
updated PCAF methodology was used for the emissions
factors meaning results are not comparable with 2023.
As recommended by PCAF we used regional (sector
average) emission factors, instead of country-level ones
for 2023, with the former being generally higher. Had we
taken the same approach as reported for 2023, financed
emissions would have been 22% lower (2,190,709 tCO
2
e)
for all balances under management, and 21% lower
(156,693 tCO
2
e) for balances on balance sheet.
We have not recalculated our 2023 financed emissions
using the updated methodology as we anticipate further
fluctuations until data quality and methodologies improve
and stabilise. Such significant, methodology-related
fluctuations make the development of actions or targets
for financed emissions impractical at present. And while
we have identified potential ways to improve the data
quality score over time, a key limitation is our ability to
source primary emissions data for SMEs, the majority
of which do not measure or disclose this information
at present.
Actions taken to reduce emissions
Total emissions, excluding 3.15 financed emissions, were
reduced by 35% in 2024 (both market and location based)
in part due to the sale of our US business in mid-2024. If
we exclude US-related emissions, where possible, from
2023, the 2024 reduction was 32%; however, we were
unable to disaggregate the US in some categories of
emissions (3.1 and 3.6) and will more fully understand the
impact in 2025 when we report our first full year of UK-
only emissions. Our FTE intensity ratio (Scopes 1, 2 and 3
excluding 3.15) was reduced by 11% (27% when excluding
US-related emissions where possible).
One of the key impacts of the sale is a real-world
reduction in business travel emissions (down 62%),
removing the need for flights between the UK and
US from the second half of 2024, with full annualised
benefits expected in 2025. Our travel policy restricts
flights to essential cases, supported by flexible working
policies, ensuring all feasible steps have now been taken
to limit travel emissions.
We also consolidated our London head office from
two floors to one and completed a re-fit in the process
which included an LED lighting upgrade. These actions
reduced electricity use and, therefore, Scope 2 UK
emissions (down 31% in 2024 vs. 2023). Following the
sale of our US business and the corrected classification
of our London head office heating emissions, our Scope
1 and 2 emissions have now been reduced to zero on a
market basis. Emissions from gas heating of this office
are now reflected in Scope 3 category 8 due to our lack
of operational control. Future reductions depend on
whether and when UK policy abolishes gas boilers in
commercial properties.
We do not fully understand the drivers of the increase in
our Scope 3 waste emissions in 2024, which are estimated
pro rata from building-level data. There was a change in
waste management provider and we saw higher building
occupancy in 2024; however, we need to interrogate the
changes further. The recycling rate was 75% and we are
planning further employee and building management
engagement in 2025.
Key remaining Scope 3 categories – purchased goods and
services, employee commuting (including homeworking),
upstream leased assets and financed emissions – pose
challenges due to limited influence and reliance on
secondary data. Employee commuting emissions reduced
by 36% in the year (even after adjusting for the sale of
the US business); however, we need to better understand
the reasons for this. Purchased goods and services
emissions saw a 38% decrease year-on-year; however,
we were unable to disaggregate country-level data and
so are unsure how much of the decrease is driven by the
divestment of our US business. Capital goods emissions
were an exceptional item included this year due to our
office re-fit.
Excluding divested loans relating to the US business,
Scope 3.15 financed emissions increased by 24% for
balances under management, or 50% for balances on
balance sheet. This reflects the move to an updated
PCAF methodology described in the previous section.
Underlying balances excluding the US business were
broadly flat, and the type of lending and customer base
remained consistent with prior years.
We switched carbon accounting solutions during 2024,
and although we do not believe this has any major
impact on measured emission results, it may account
for minor fluctuations relative to 2023. In 2025, we will
focus on improving data accuracy and identifying which
decarbonisation opportunities we might influence to
inform our evolving transition plan, including modelling
potential reduction levers, and investigating top supplier-
level emissions data. However, we expect there to
be a material dependency on government policy and
societal behaviours.
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