Improvements to the borrower application process
At Funding Circle our aim is to provide more lending opportunities for investors by offering businesses a quick and simple way to apply for finance. As part of this commitment we have been reviewing our processes when a business applies to us, and will be making some changes to the information investors see on the loan description page. This will give our credit assessment team greater flexibility to deal with a business’s application on a case-by-case basis.
Previously we have required businesses that do not already have management accounts prepared, to produce them before applying for a Funding Circle loan. This can be a lengthy and expensive process for borrowers, particularly non-limited businesses, who often incur significant costs from their accountants as part of the process.
In order to support more businesses, we are amending this requirement. We will now require businesses to provide us with recent bank statements (typically three months) with every application. Due to data security these cannot be published publicly.
We will still continue to collect financials for the last two fully completed financial years for the business based on their published year end dates (filed or management). Most businesses have a year end of December of each year, so in these cases we would show the last 2 years of full performance from January to December.
In certain cases we may collect YTD management accounts, for instance where there has been a long time since the end of the last financial year and where we do this we will display more recent financial information to investors.
Bank statements provide a more reliable indicator of cashflow and a more recent overview of a business’s financials than management accounts. They also provide detailed information of actual live business activity, which cannot be replicated by management accounts. This introduction will allow our credit assessment team to deal with applications for businesses that do not typically prepare management accounts as a matter of course, generating more lending opportunities to creditworthy businesses.
Outstanding loans and credit
Additionally, we are making changes to how information regarding outstanding loans and credit is collected and displayed. Over the next few weeks we will start to require borrowers to provide the total amount of further debt taken out in the last 12 months over £25,000, rather than broken down by specific types of finance. We are making this change to help streamline the application process and avoid duplication.
Information regarding further debt will be communicated to investors in the loan description page. By collecting the total amount of further debt taken out in the last 12 months over £25,000, investors will be able to see any significant changes in liabilities since the last set of full accounts were filed.
As well as enabling more businesses on to the marketplace by providing a smoother and quicker application experience, introducing these changes gives our credit assessment team greater flexibility when dealing with business applications, and ensures we remain competitive in the market. It’s important to note that we will always assess a business’ ability to repay a loan, and only list those that pass our credit assessment.
You will notice some changes to how this information is displayed in coming weeks. If you have any questions about the kind of information you will be able to see going forward, then please get in touch or join the conversation on the forum.
The Funding Circle team