FinTechs join forces to support small businesses
13 May 2020
Starling, the digital bank, and Funding Circle, the UK’s largest small business loan platform, have entered a strategic partnership to provide £300 million of lending to small businesses under the Coronavirus Business Interruption Loan Scheme (CBILS).
Starling will lend through Funding Circle alongside other institutional investors, and will help more than 4000* small businesses to access finance across the UK.
The announcement follows Starling’s and Funding Circle’s accreditation to CBILS, with both FinTechs opening for applications last month. This lending commitment will further increase the flow of funds available to small businesses and help get money into the hands of business owners more quickly.
Today’s news demonstrates the vital role FinTechs will play in facilitating loans under the government’s Covid-19 support schemes. Since 2017, the majority of net growth in SME finance has come from FinTech lenders,** which is testament to the unique user experience and customer service these businesses provide.
Lisa Jacobs, UK Managing Director at Funding Circle said:
"Small businesses form the backbone of the UK economy and will be at the heart of the nation’s future recovery. At Funding Circle we are pleased to be able to offer businesses a decision in as little as four minutes through our instant decision technology. This partnership will help to ensure the UK’s vital small business community has the financial firepower required to not only survive this period, but to go on and thrive.”
Anne Boden, Chief Executive of Starling Bank said:
"At Starling we are pursuing every avenue we can to get this money into the hands of small business owners as quickly as we can. This partnership with Funding Circle provides us with another outlet, on top of our own CBILS and BBLS lending, to help meet the needs of business owners affected by coronavirus. It’s a great example of the FinTech industry pulling together to meet a very urgent need.”
With CBILS loans, the first 12 months of interest and any arrangement fees will be paid by the UK government as a Business Interruption Payment. At Funding Circle, CBILS loans also benefit from an initial 12 month payment holiday, to ensure small businesses benefit from no repayment of principal, interest or fees in the first 12 months.
SMEs with an annual turnover of up to £45 million can apply and there are no penalties for early repayment. No personal guarantees are required.***
For more information:
Funding Circle: firstname.lastname@example.org / +44 (0) 203 667 2245
Starling Bank: email@example.com / +44 7973 668363
Notes to editor:
* Based on the average loan size of £70,000
** Since 2017, all net growth in SME lending has come from smaller banks or lending platforms (BoE data from Mar 2020)
*** The government will provide CBILS lenders with a guarantee of 80% of the outstanding principal on each loan. For loans to qualify, customers must have a borrowing proposal that the lender would consider viable if not for the coronavirus pandemic. Borrowers will remain liable for repayment of 100% of the loan
About Funding Circle
Funding Circle (LSE: FCH) is a global SME loans platform, connecting SMEs who want to borrow with investors who want to lend in the UK, US, Germany and the Netherlands. Since launching in 2010, investors across Funding Circle's geographies - including more than 100,000 retail investors, banks, asset management companies, insurance companies, government-backed entities and funds - have lent more than £8.5 billion to over 81,000 businesses globally.
About Starling Bank
Starling Bank is a digital bank based in the UK. Its banking app offers personal, business, joint and euro current accounts on Android and iOS. The Starling Marketplace offers customers in-app access to a selection of third-party financial services. Starling also offers B2B banking and payments services.
It has opened more than 1.3m accounts, including 155,000 business accounts. Since launching its SME accounts in March 2018, it has become the UK’s fastest-growing business bank. In addition to CBILS lending, it is also participating in the Bounce Bank Loans Scheme, providing loans of £2k to £50K to smaller companies affected by coronavirus.
Headquartered in London, with offices in Southampton and Cardiff, Starling is a fully licensed and regulated bank, founded by Anne Boden, former Allied Irish Banks COO, in 2014.