Small businesses access half a billion pounds via Funding Circle
30 January 2015
In just four and a half years, more than 7,000 businesses have accessed half a billion pounds of finance via Funding Circle, the leading marketplace for business loans. Almost £100 million of this was lent in the last quarter of 2014 alone.
Helping the economy to grow, small businesses are able to borrow directly from people and organisations, and typically access the finance they need to grow within two weeks. More than 36,000 British people are earning inflation beating rates by lending directly to small businesses, alongside the Government-backed British Business Bank, local councils, universities and financial organisations.
Investors are now lending approximately £35 million a month to creditworthy small businesses, making Funding Circle’s marketplace the fourth largest net lender to small businesses in the UK.1 Since launch, an estimated 21,000 jobs have been created across the country.2
Geoff Ridgeon and David Massey, owners of the award winning restaurant, The Exhibition Rooms, based in Crystal Palace, London, last year borrowed £36,000 from 763 investors to open a second restaurant, Brighton Hill, based in Streatham Hill.
Geoff Ridgeon, co-owner at ‘The Exhibition Rooms’, said: “At first we tried to approach the banks, but we were consistently told that lending to restaurants wasn’t a priority this year. We were recommended Funding Circle by a friend, and after checking it out, we decided to apply. It was stress-free and straightforward, but more than anything we found that people wanted to invest in us.”
James Meekings co-founder of Funding Circle, said: “The demand we’re seeing from businesses for fast and transparent access to finance continues to grow exponentially. Marketplace lending is increasingly becoming a mainstream part of financial services and there is significant potential for further growth over the next few years. We recently announced another referral partnership with RBS, following the partnership we set up with Santander last year. We believe it will create thousands more opportunities for small businesses to access finance, and achieve increased awareness of the alternatives now available within the business community.”
By bringing together industry leading risk management and cutting edge technology, Funding Circle’s proven model enables businesses to access finance in a matter of days, directly from investors. To be eligible, businesses must typically have a minimum turnover of £50,000 and have been trading for at least two years.
Notes to editors
1 Based on Q3 lending figures included in November’s Funding for Lending data, and Q3 Funding Circle lending (£72.8m) minus repayments (£26.7m).
|FLS group||Q3 lending to SMEs (£M)|
|1 Lloyds Banking Group||304|
|4 Close Brothers||46|
|4 Funding Circle||46|
|5 Shawbrook Bank||44|
2 Independent research by government think tank, Nesta, found that an average business borrowing through Funding Circle employs ~10 people and increases headcount ~30% after taking a loan.
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Funding Circle (www.fundingcircle.com) is the leading marketplace for business loans, enabling investors to directly lend to small businesses. Businesses can borrow between £5,000 and £1 million, while investors can earn a 6.4%(1) average return after fees and bad debt. Since launching in August 2010 Funding Circle has helped over 7,000 businesses borrow more than £500 million. Investors include thousands of individuals, the Government-backed British Business Bank, local councils, financial organisations and the University of Huddersfield. Funding Circle was the first lending marketplace to announce a formal referral partnership with Santander, one of the UK’s leading high street banks, and has since announced a similar referral arrangement with RBS.
(1) 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 18 August 2014.