Making the most of your investment: Competitive bidding

As Funding Circle has grown over the last two years, we’ve seen thousands of people join, unlock their money and start lending to great British businesses. As we continue to grow we wanted to share with you some top tactics many members employ to make the most of lending at Funding Circle.

To do this, we will be publishing a series of short blog posts over the next three weeks. This week, we’re looking at competitive bidding, next week we’ll look at understanding returns and lastly we’ll discuss diversification.

Competitive bidding

As most of you will know, at Funding Circle people lend money to businesses via auctions. You bid the gross interest rate you want to earn and the amount you are happy to lend, and the lowest rate bids become part of the loan. So, your offer is successful depending on how competitive your bid is compared to other investors.

Popularity varies by loan request, but the number of bids placed can often increase significantly in the final few hours of an auction.

The graph below indicates how popular the final few hours of auctions can be. In this auction for £250,000, more than £1.1 million worth of bids were placed by investors with more than 70% of all winning bids taking place on the final day of the auction.

Percentage of loan funded by auction day – example loan, Sept 2012 %


Winning interest rate by day of auction – example loan, Sept 2012 %


If this has happened to you, a good way to manage this is to monitor your offer rates and check the interest rate you have offered is competitive and in line with the level of return you are looking for and the level of risk you are comfortable with. This will ensure you are successful as often as possible.

It’s also useful to remember that once a business loan is 100% funded, a business can choose to accept the loan early and approximately 40% of businesses choose this option. The majority will wait until the auction ends to see if the interest rate will fall. This means that if a business loan is 100% funded and still on the marketplace, you can place a bid at any point until the end of the auction. You do this by offering an interest rate lower than the maximum interest rate which you can see on the loan request page.

If you are unsure whether your bid has been successful, you can check the ‘My Bids’ summary page in your account. If you cannot see your bid and your available funds have increased, then your bid will have been knocked out of the auction. If you wish to re-bid check your new rates is sufficiently competitive, or if you’re using Autobid, lower the interest rate settings. We will be developing new tools to automatically let you know the state of your bids in the future.

We hope you found this post useful. We’d love to hear your feedback about what strategies you employ to ensure you maximise your return. Leave a comment below or get in touch at

The Funding Circle team

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Jack Pritchett

Senior Communications Manager


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