Funding Circle and Santander announce pioneering partnership to support thousands of UK businesses
18 June 2014
Funding Circle and Santander UK today launched the first partnership between a UK bank and an online alternative finance provider to give thousands of small British businesses greater access to finance.
- Referral arrangement to be the first in the UK, helping to address the challenges of access to finance for creditworthy small businesses
The referral arrangement will see Santander proactively refer small business customers looking for a loan to Funding Circle, the leading online marketplace for business loans. Where Funding Circle is better placed to help, referrals will take place on Santander’s website and in letters to customers1.
To date Funding Circle has helped more than 5,000 businesses borrow £290m through its marketplace. It has a rigorous and proven credit assessment process which has seen investors earn an average of 6.1%* after fees and losses. As part of the relationship, Funding Circle will signpost its customers to Santander where they require day-to-day relationship banking support or other services that the bank can offer such as international banking expertise, cash management and support for growth.
Ana Botin, CEO of Santander UK, said: “SMEs need access to multiple sources of finance, and Santander’s partnership with Funding Circle is a good example of how traditional and alternative finance can work together to help the nation’s SMEs prosper. Peer-to-peer financing is also a useful way to introduce people to the concept of investing in entrepreneurs; an important element in a healthy enterprise economy.”
Industry research2 estimates that 250,000 businesses a year could benefit from being referred to alternative finance providers. The partnership comes at a time when the Government is consulting on whether it should be mandatory for banks to refer small businesses to other non-bank providers.
Samir Desai, CEO and co-founder of Funding Circle said: “This partnership recognises our role as the only marketplace that caters for, and is dedicated to, small businesses. In Santander we have found a fellow challenger brand that shares our commitment to putting small business customers’ needs first. They have created a blueprint for other banks to follow.”
This innovative move sets a precedent for how retail banks and alternative finance providers can work collaboratively to deliver an efficient, transparent and honest service for customers.
It also recognises the growing importance of alternative sources of finance by Santander, and is part of a wider strategy to support small business owners who are the lifeblood of the economy. In 2011, the bank launched its Breakthrough programme, which helps small businesses fulfil their growth potential by creating jobs and stimulating supply-chain demand, therefore creating a private sector-led recovery.
Since launching in the UK in 2010, Funding Circle has helped create an estimated 15,000 new jobs in the UK alone. The model has proven so successful that the Government-backed British Business Bank has injected £60 million to fund 10% of every business loan made via the marketplace. To be eligible, businesses must have a minimum turnover of £100,000 and have been trading for at least two years.
The referral programme will sit alongside the support Santander is providing small business customers. Santander has been a consistent supporter of businesses in the UK, with lending over the last four years growing by an average of 20% per annum. It extended £4.1 billion of new facilities to SMEs in the year to the end of December 2013. Santander has more than 50 regional Corporate Business Centres throughout the UK and has grown its team of regionally based relationship managers to 650+, a 45% increase in three years.
Notes to Editors
1 The referral will be sign posted in our lending decline letters to Santander Corporate & Commercial Customers. As per Santander’s audited decline/appeals process, Santander must communicate the final decision formally by personalised letter of email. An additional paragraph will be added to these communications that says. ‘If you are looking for a business loan, Funding Circle may be able to help. They are an online marketplace that allows people and organisations to lend directly to UK businesses. For more information please visit https://www.fundingcircle.com/.’
2 Industry figures from the alternativebusinessfunding.co.uk portal, designed to provide free and easy access to selecting alternative business funding for small businesses.
* This is the weighted average return across all investors lending for 180 days or more through Funding Circle over an annualised period. It includes all earnings and is calculated after fees and bad debt but before tax. Investment through Funding Circle involves lending to small and medium sized businesses so your investment can go down as well as up. Remember, past returns are not necessarily a guide to future returns. Data correct as of 09 June 2014.