Funding Circle smashes through £100m milestone as British public and businesses seek banking alternatives

05 May 2013

This weekend, the British public will reach a major milestone having lent more than £100m to the UK’s small businesses through Funding Circle in less than three years.

  • Funding Circle’s year-on-year growth triples
  • Growth of peer-to-peer lending gathers pace as Funding Circle investors lend £10m in 30 days
  • £20m Business Finance Partnership programme expected to be completed within 12 months

As the largest peer-to-peer lender exclusively for business borrowers, Funding Circle has released figures today showing more than 200% year-on-year growth and set out ambitions to expand the small business lending market.

Of the £100m total, £50m has been lent out by British people since September 2012 including £10m in the last thirty days. The exponential growth has led to independent estimations that Funding Circle could account for between 10%-20% of the small business lending market in the next ten years.

Additional figures released for the first time today highlight that, as part of the Business Finance Partnership (BFP) which commenced last month, the Government has already committed £2 million of lending to more than 160 businesses. Fashionizer, a London-based designer of corporate uniforms, was the first business to successfully benefit as part of this scheme. They borrowed £32,000 to assist with overseas expansion and more than 387 people contributed to the loan. In total, Funding Circle expects the full £20m BFP funds to be allocated within the next 12 months.

James Meekings, co-founder of Funding Circle, said:

“British people across the country are increasingly cutting out the middleman by assuming the role of the banks and lending directly to ambitious British businesses.

“The fact that the industry has grown so quickly highlights the demand for finance among British small businesses. With 90% of small business lending controlled by five major banks, our rate of growth proves the demand for choice.

“Peer-to-peer lending is challenging the way business finance is done.  We believe peer-to-peer lending has the potential to provide up to 20% of all small business funding within ten years.”

Funding Circle launched in August 2010 and has experienced growth of more than 200% year-on-year, and increased its number employees at its London headquarters from 3 to 60.

In the same time period lending to small businesses from banks has fallen by 35.5%1, despite government intervention through schemes like Funding for Lending. Non-bank lenders like Funding Circle have allowed savvy Brits – seeking better ways to grow their money – to step in where traditional banks have failed.

To date more than 16,000 investors have funded nearly 2,000 businesses, earning an average return of 6.2%

Last month an independent report by Nesta, the UK’s innovation foundation, found that 77% of businesses that had used Funding Circle before would use it again rather approach the banks2.

Notes

(1) Taken from the Bank of England’s Trend in Lending report 19 April. Excludes real estate.

(2) Nesta, Banking on Each Other, published April 2013

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