Tie-up with Santander and Lending Club IPO. June industry news

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Santander in peer-to-peer pact as alternative finance makes gains

In a sign that marketplace lending continues to march further into the mainstream, we launched a new partnership with Santander last month. The referral arrangement will see Santander proactively refer small business customers looking for a loan to Funding Circle, where we are better placed to help. The exciting new partnership is the first between a UK bank and an online finance provider, and will give thousands of small British businesses greater access to finance, whilst bringing more lending opportunities to the marketplace. More information can be found on our blog, the Evening Standard and Reuters.

Lending Club IPO seeks $5bn valuation

The world’s biggest peer-to-peer consumer lender, Lending Club, is preparing to raise more than $500m from a US initial public offering in what would be a landmark moment in the rapid growth of the industry. The San Francisco-based company has chosen Morgan Stanley and Goldman Sachs to lead the offering, which could come as early as the third quarter of the year, with proceeds from a stock market listing intended to help fund its growth.

Treasury set to launch peer-to-peer ISA consultation next month

The inclusion of peer-to-peer lending within ISAs continued to pique interest in June. The Treasury is poised to launch a consultation next month on how investors might gain access to the peer-to-peer lending market through individual savings accounts – and whether a new type of ISA should be created for the purpose. Funding Circle is part of the steering group working with government to finalise the exact mechanism and timings. We’re expecting the process to take a further six to eight months.

First p2p scheme through a Sipp

Personal pension owners can now invest in peer-to-peer lending through a partnership struck between a peer-to-peer lending platform, a pension provider and financial portal SippClub. The new venture enables self-invested personal pensions (Sipps) to include peer-to-peer lending within the tax-efficient wrapper. This is something we are working hard to allow investors to do. The Daily Telegraph also discusses the improvements that could be made to the way returns are paid out, in order to make peer-to-peer lending an attractive source of income for pensioners who wish to avoid annuities.

First peer-to-peer firm fails – but savers are repaid

Following the introduction of regulation on 1 April, a peer-to-peer lender Yes-secure, has shut down, but has promised a full refund of outstanding loans to all investors. The Financial Conduct Authority requires all peer-to-peer lenders to meet strict capital requirements and show detailed plans of how the contracts would be enforced should a company go bust. All companies belonging to the Peer-to-Peer Finance Association have had these requirements in place for a number of years in the run up to formal regulation.

Ambic furniture company looks to expand beyond Newcastle

One of our borrowers, Ambic, featured in the Times, in an article about overcoming the issue of cash flow. The educational furniture manufacturing company had relied on a bank overdraft over the busy summer months, until the recession kicked in. The director, David Potter, took the decision to try Funding Circle and within two weeks, he received his £100,00 loan funded by 1,277 of you

And finally, whilst it’s not technically industry news, we couldn’t help but include this article in the Evening Standard ahead of Ping Pong Fight Club last month. Following last year’s victory, we descended on Shoreditch to retain our ping pong title against the rest of London’s tech scene.

Natasha

Head of Corporate Communications

 

4 thoughts on “Tie-up with Santander and Lending Club IPO. June industry news

  1. As a Funding Circle fan I am enthusiastic about the ISA idea but could do with investing in an ISA now rather than waiting to see if p2p becomes a reality. Any ideas what would be the best investment vehicle for now with a view to transferring into p2p later?
    Jo

    • At the moment you have a choice between Cash and Stocks And Shares. As of 1st July you can put up to £15000 a year into either, or a combination of both, and you can also transfer between the two now too (not previously possible from S&S to cash). As for which is ‘best’ depends on your situation, goal, attitude to risk etc. but generally the top Cash NISA rates are not much different to inflation and would not be considered an ‘investment’.
      Also, as the article mentions, the details on p2p ISA are yet to be decided, and indeed it may be that a new type of ISA will be created.. which may mean that you will not be able to transfer into it from your previous (n)ISA.

  2. If borrowers are being referred to FC by Santander, on what criteria are they rejecting them?

    • Hi there, unfortunately banks sometimes find themselves unable to lend to creditworthy small businesses because they are already exposed having lent to them previously, or they need security which the business is not able to provide. It can also be the case that small business loans do not provide enough of a return for the bank.

      Instead, our credit policies mean we are able to list loans with personal guarantees up to £200,000, and maintain a low default rate due to our ever evolving credit models. And because investors are directly lending to small businesses via the marketplace, setting the interest rate they’re happy to lend at, there is not the same issue with cost.

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