Funding Circle closes $198 million securitization to support US small businesses
28 August 2019
Funding Circle, the leading small business loans platform in the UK, US, Germany and the Netherlands, today closed its first asset-backed securitization (ABS) of US small business loans originated through its platform. The $198 million deal marks the debut of Funding Circle’s US securitization sponsorship capability, and is the fifth securitization of Funding Circle business loans globally.
The transaction is rated by two ratings agencies, with its senior tranche earning an A- (sf) rating from Kroll Bond Rating Agency and an A3 (sf) rating from Moody's Investors Service. The oversubscribed transaction saw demand from 18 institutional investors, ranging from asset managers and private credit funds to insurance companies and sovereign wealth funds. This further demonstrates the market’s continued confidence in small business loans originated through Funding Circle. More information about the transaction, Small Business Lending Trust 2019-A (SBIZ 2019-A), will be available on dv01 and Bloomberg.
"Funding Circle’s inaugural US securitization is a major milestone in our journey to build the infrastructure where any institutional investor can efficiently lend to small businesses,” said Bernardo Martinez, US Managing Director, Funding Circle. “With our global securitization program and sponsorship capability, we’re proud to expand access to a traditional fixed income asset class for new types and styles of investors, while also providing diversified funding for small businesses to grow and drive the economy forward.”
Funding Circle brings together industry-leading risk management policies and cutting-edge technology, enabling investors to earn attractive risk-adjusted returns by supporting established and creditworthy businesses. To date, Funding Circle has originated loans to more than 14,000 US businesses, with US borrowers currently averaging 11 years in business and $1.4 million in annual sales. In the US, Funding Circle recently marked $2 billion of cumulative loan originations and $1 billion of loans under management, meaning that within the United States the company holds more US small business loans outstanding than almost 98% of banks.
With small businesses employing about half of the American workforce, this lending helps to power the economy by expanding access to financing at competitive and transparent pricing. Oxford Economics found that in 2018 alone, lending through Funding Circle contributed $2.8 billion (measured in “gross value added”) to the US economy, and created and sustained 38,000 US jobs.
About Funding Circle
Funding Circle (corporate.fundingcircle.com) is a global small business loans platform, connecting businesses 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 90,000 retail investors, banks, asset management companies, insurance companies, government-backed entities, and funds -- have lent $10.2 billion to 72,000 businesses globally.
1. Federal Deposit Insurance Corporation (FDIC) Statistics on Depository Institutions. March 2019. “Amount of currently outstanding commercial and industrial loans less than $1,000,000 held in domestic offices.” https://www5.fdic.gov/sdi/download_large_list_outside.asp.
2. US Small Business Administration Office of Advocacy 2018 United States Small Business Profile. https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdf