The final Weekly Lending Review of 2014. Merry Christmas!

Week 51: 15 – 21 December 2014

With just 2 days left before Christmas, we’ve been busy making sure there are still a number of lending opportunities available to you to review and lend to over the festive period.

This will be the last weekly lending review of 2014: we’ll be back in touch in the week commencing 5th January. We hope you all have a nice break!

New loans

There are currently 26 auctions on the marketplace which are all available for you to lend to.

The total value of the new listed loans was £7,483,240; averaging at £68,029 per loan. The largest loan value was £400,000 and the smallest loan value was £6,000.

Business loans still available for bidding on for the next 3 days or more:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 15-Dec represents the week of 15th – 21st December.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

Great to meet you! Investor evening summary and property deep dive

We held an informal get together for investors at our London office at the end of November. For those that couldn’t make it, we’ve put together a video and write up of how the evening went. You can watch a summary video and a property focussed video on our blog.

Highlights from 2014

As 2014 draws to a close, we wanted to take a moment to share with you some of the highlights from this year. We teamed up with our colleagues over in the US and put together this short video. You’ll meet members of the Funding Circle team, watch some of our favourite borrowers from the year, and hopefully get a sense of what you’re helping to build.

Loans defaulted last week

Content producer. Loan 7674

This Essex business has been trading since 2005 and is in liquidation. All affected investors have been notified.

Lift repair firm. Loans 2312 and 4530

This Hertfordshire business has been trading since 2007 and is in liquidation. All affected investors have been notified.

Aquatic pet shop. Loan 3308

This Lancashire business has been trading since 1998 and is in administration. All affected investors have been notified

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

 

Merry Christmas!

The Funding Circle Team

 

Highlights from 2014

As 2014 draws to a close, we wanted to take a moment to share with you some of the highlights from this year. And what a year it’s been.

Together, you’ve now helped over 7,000 businesses access finance, in excess of $800 million across both the US and the UK. Many of these businesses are going on to do some fantastic things, and we hope you enjoy reading some of their stories.

We teamed up with our colleagues over in the US and put together this short video. You’ll meet members of the Funding Circle team, watch some of our favourite borrowers from the year, and hopefully get a sense of what you’re helping to build. From cinemas in Florida, to manufacturers in Reading, we’re showing businesses there’s a better way to access finance.

Digging into the data: stress testing the Funding Circle loanbook

Funding Circle launched in 2010, in a post-recession era, and one question we’re frequently asked is what would happen to the loanbook and investor returns, if we encountered further adverse economic conditions in the UK. That’s a good question, and one we’ll aim to answer in this blog by providing results of a recent stress test we carried out.

What do we mean by stress test?

Stress testing has become a crucial part of every bank and financial institution’s risk management strategy since 2008, and for good reason. It is a way of simulating what would happen to a business in an economic downturn.

Last week, the Bank of England published the results of a UK Banking System stress test, where 3 of 8 leading banks were found to be lacking in financial strength. Although we do not work as a bank operates, we are interested in finding out what would happen to the returns of our investors on the marketplace, should we encounter an economic downturn. We feel it is important for marketplace lending to come under the same scrutiny and undergo the same test as the banks did. The scenario we are therefore going to focus on is one which was set out by the Prudential Regulation Authority (PRA) for the 2014 stress test, and is also the most stringent.

What did we do?

Recently we invited an industry leading external consultancy, Hymans Robertson, to undertake an assessment of the loanbook (all Funding Circle loans) and present their findings to us. Hymans Robertson built a stress testing model for us and applied their model to our loans so we could find out how returns would vary, if we saw another downturn in the economy, and witnessed a PRA stressed scenario. In all, 10 industry specific models were built and we followed the exact same methodology that banks and other financial institutions employ to test the Funding Circle loanbook.

Data

The primary component Hymans Robertson used when building their stress model was data surrounding historic insolvencies by sector over a period of 23 years of data (1990 – 2013). This data, available from The Insolvency Service, provides invaluable insights into how every UK sector fared during the 1992 and 2008 recessions. Looking back at both is important as they had different macroeconomic variables, which would have affected sectors differently. For example, high interest rates were a contributing factor to the 1992 recession; they rose to over 14% in 1989, whereas interest rates in 2008 were very low.

Concentration

Hymans Robertson also conducted an analysis around industry and region concentration levels of our borrowers. The results confirmed that the Funding Circle loanbook is well diversified across UK regions and industry sectors. As their model uses historic country-wide sector data of business insolvencies, it is important  to ensure that our borrowers are representative of the UK. I.e. if we only had financial services borrowing through the marketplace, allocated to the B risk band, all based in London, this would lead to bias in the final results.

The PRA scenario and the results

Hymans Robertson tested several different stressed situations, but we will focus on the PRA scenario. 9 different economic factors were used in the model, including income gearing, the unemployment rate and the average wage. In this scenario changes to GDP, interest rates and inflation over the course of 3 years were as follows:

  • UK GDP drops by 4% (cumulative)
  • Interest rate increase: 0.5% to 4.2%
  • Inflation increase: 1.8% to 6.6% peak

Below we explain in more detail how the assessment worked but at a very simple level: in the most extreme economic conditions which the PRA set, average annualised returns for Funding Circle investors would remain above 5.5%. These results are encouraging.

The results are outlined in the below graphs. Overall, we would expect to see an increase in our annualised bad debt rates from 2.2% to 3.4% at peak on a yearly basis, which would lead to a fall in the overall annualised net return investors would earn, from 6.7% to 5.6%. To put this into context, the expected increase in loss rates represents a c. 50% increase. During the 2007 recession, UK insolvencies increased by 65%.

If you’re lending to businesses through Funding Circle, the peak of bad debt would happen in year 2, where the annualised bad debt rate would increase from 2.5% in year 1, to 3.4% in year 2. It would however, start to fall again in year 3.

losses

The bad debt rates pictured above are reflected in the expected annualised returns graph below. After experiencing an increase in losses, annualised returns would fall to their lowest point in this scenario, to 5.6% in year 2. Once bad debt rates fall again, annualised returns are expected to increase over the remaining years.

returns1

Limitations of this scenario

As with all stress testing assessment, it is important to note that past performance is not necessarily a guide to future performance. The nature of modeling for future economic events is that it is an estimate. For example, currently interest rates and inflation are low so stress testing for every institution at this time, is based on a predicted time for when interest rates and inflation rise.

Conclusion

In the most extreme stress case scenario outlined by the PRA, and modeled by Hymans Robertson, the outlook for investor annualised returns remains positive. We would estimate annualised returns to drop from 6.7% to 5.6% across Funding Circle’s portfolio of loans, over a three year stressed period.

We are committed to building a stable marketplace which continues to be representative of the whole small business lending sector in the UK, and we’re confident in the future of investor returns through Funding Circle, and the sustainability of the marketplace through future economic cycles.

You can read more about the performance of Funding Circle loans on our statistics page.

_______________________________________________________________________________________

Other macroeconomic points to consider

As well as interest rates, inflation and changes in GDP, income gearing also plays an important role in how small businesses perform.

Income gearing, or in other words, how much income there is available for a business to service debt, is one of the leading indicators of SME (small and medium sized enterprises) insolvencies. SME income gearing is at the lowest level since 1987, which means that the impact of a macroeconomic shock will be lower on small businesses. The graph below shows income gearing for the SME sector in the UK.

gearing

 

What a night! Highlights from our November Investor Evening

At the end of November we held our second investor evening at our London office. The invitation was open to all of our investors, as we wanted to meet more of you in person and hear your opinion first-hand. Thank you to all who came, it was a valuable forum for us and is something we’ll look to do again in the new year.

We appreciate that London is not accessible by all, so we’ll be producing 3 videos from the evening for those who would have liked to attend, but couldn’t. The first will show you the evening’s highlights, the second will be a deep dive into property lending with Luke Jooste, who heads up property finance at Funding Circle, and in the third video, you’ll hear more from the co-founders and what they see for the future of Funding Circle.

How did the evening go?

We kicked off the evening with some informal drinks and an introduction from James Meekings, co-founder of Funding Circle, and Samir Desai, co-founder and CEO. We then heard from key members of the Funding Circle team who talked about their areas in more detail, and we finished by opening the floor up to questions.

Key themes of the evening

Product developments

Steve Green, Product Director, gave us some insights into how people access our website. Since 2012, we’ve seen a steady increase of visits from mobile and tablet devices, and a decrease in users accessing Funding Circle via their desktop. Of mobile devices, iOS has remained the most popular, and it’s for this reason that we launched an iOS app at the end of 2013. A quick note to Android users: we are committed to developing an app for Android, but our current focus is on improving our iOS app first.

product

 

David Townsend, our VP of Engineering also gave an overview of what we’ll be doing to help scale the business over the coming months.

Loan performance

Ari, Head of Underwriting, and Rahul, Head of Credit Analytics, discussed the performance of our loan book in more detail, and how our loss rates, after recoveries, have improved year -on-year, despite introducing new risk bands such as C- in 2013. (Origination values are: 2010-2011: £19.6m, 2012: £49.2m, 2013: £129m, 2014: £250m to date and you can download this information in our loan book on the statistics page.)

lossrate

Property finance at Funding Circle

Luke gave an overview of the types of projects your lending is contributing to. Stay tuned for the next blog of this series where Luke will discuss more detail around property loans at Funding Circle.

Loan Servicing

Andrew Jackson, Head of Collections and Recoveries, gave us an overview of how his team have reduced the percentage of loans that are late in repaying, to a record low of 0.683%. You can find out more about the performance of our loans on our statistics page and read more about this team’s work here.

Regulation for the industry

As many of you may know, the peer-to-peer lending industry became formally authorised  and regulated by the FCA in April of this year, so Lucy Vernall, General Counsel, used this opportunity to highlight some key points on what regulation meant for us. They include the need for: minimum capital requirements, the segregation of client money and having a back-up loan service provider, should Funding Circle cease to exist. It’s worth noting that we have complied with all of the above since the day we launched, and we were founding members of the P2P Finance Association back in 2011.

 

We’ll post the second part of our investor evening shortly.

An update to the business profile tab

In September we announced that borrowers would now be required to show the total amount of additional debt they had, rather than broken down by specific types of finance. We wanted to let you know that over the coming weeks you’ll start to to see this change in the loans and credits tab in the business profile.

Additionally, as part of this drive to attract more creditworthy businesses to the marketplace, we have refined the application businesses need to complete to register at Funding Circle. We have condensed the three questions business owners provide on their Profile page, into a single question titled: “How will this loan help your business?

Rather than making this change immediately, we will roll it out slowly over the next few weeks. As a result you will continue to see some loan requests where the businesses has provided answers to the old three questions.

If you have questions about this change, please feel free to get in touch or join us on the forum.

The Funding Circle Team

A Lending ISA. Weekly Lending Review

Week 50: 8 – 14 December 2014

It’s the run up to Christmas and the marketplace is busier than ever: you helped lend over £8 million to businesses across the UK last week, making it the fifth consecutive week of lending over £8 million.

Of the new businesses who came to the Funding Circle marketplace last week, the majority were either located in the South East of England or the Midlands, and the most common sector was manufacturing and engineering.

New loans

There are currently 75 auctions on the marketplace which are all available for you to lend to.

The total value of the new listed loans was £10,650,820 averaging at £65,342 per loan. The largest loan value was £250,000 and the smallest loan value was £5,120.

Business loans still available for bidding on for the next 3 days or more:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 08-Dec represents the week of 8th – 14th December.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

A Lending ISA

Since March we have been working closely with the Treasury and other players in the industry to refine exactly how a peer-to-peer lending ISA would work. Last Friday the consultation came to a close and we wanted to share our recommendations.

Loans defaulted last week

Roofing business. Loan 6485

This Scarborough business has been trading since 2005 and is in administration. All affected investors have been notified.

Digital marketing agency. Loan 4663

This Wymondham business has been trading since 2010 and is in arrears with their repayments. All affected investors have been notified.

Bicycle retailer. Loan 3170

This online business has been trading since 2010 and is in administration. All affected investors have been notified.

Energy business. Loans 1050 and 3201

This Retford business has been trading since 1997 and is in arrears with their repayments. All affected investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

 

Enjoy lending, The Funding Circle Team

A Lending ISA

Earlier this year, the Chancellor announced that the government was committed to the inclusion of peer-to-peer lending within ISAs – a huge moment for the industry.

Previous research of ours found that 41% of investors would invest more in marketplaces like Funding Circle if it was included within ISAs, and one in ten people said they would transfer their existing stocks and shares into a ‘Lending ISA’. Additionally, TISA (Tax Incentivised Savings Association) estimates that more than £50 billion is invested in ISAs every year. If just 3% of this money was channelled through marketplaces such as Funding Circle it would create more than £1.5 billion of new lending to businesses annually, leading to approximately 75,000 new jobs.*

Since March we have been working closely with the Treasury and other players in the industry to refine exactly how this would work. Last Friday the consultation came to a close and we wanted to share our topline recommendations.

We have recommended that the government introduce a third ‘Lending ISA’. Currently you can have a cash ISA and a stocks and shares ISA, but lending to businesses is different to depositing money in a savings account (hence the higher return), and is less volatile than investing on the stock market. A third ISA will give investors more flexibility and allow for a higher level of diversification, as you will be able to choose how best to allocate your £15,000 limit across three types of investment depending on your risk appetite.

It will also mean that Funding Circle will become an ISA manager, which would be challenging if wrapped up in a stocks and shares ISA, as we would not be able to offer this type of investment. The benefit of this would be that you will be able to own all of your investments yourself, rather than go through a third party ISA manager. You will also be able to go directly through Funding Circle and invest via your existing account if you wish to.

Finally, we are recommending that investors are able to transfer their existing Funding Circle investments directly into a Funding Circle ‘Lending ISA’. We also hope that those of you who already have ISAs and would like to diversify across a ‘Lending ISA’, will be able to transfer money across from other types.

Having spoken with many of you over the last period, we hope that this is in line with what would work for you. It’s an exciting development and whilst it will take many months to implement, we will continue to update you as and when we have more information.

Funding Circle’s new Innovative Finance ISA can be found here

If you have any questions then please get in touch or join the conversation on the forum.

The Funding Circle team

 

*Independent research by government think tank Nesta last year found that businesses that receive a loan through Funding Circle employ on average 11 people, and see an average increase in employment of 27 per cent after receiving finance.

Meet Chris Morris, a Funding Circle introducer at NGI Finance

NGI Finance is run by Chris Morris and his wife Maria, who between them have over 45 years of lending experience. They are based in Oxford and we went to say hello to hear a bit more about why Funding Circle is a ‘welcome addition’ to their small business clients. Chris quotes speed and ease amongst the top benefits and explains that it is an ideal product for their business clients.

If you’d like to have a chat with our dedicated business development team about how we might be able to help your clients, then please give us a call on 020 3667 2208 or email us.

Watch the short video here:

A new tax relief for your lending. Weekly Lending Review

Week 49: 1 – 7 December 2014

Last week was a fantastic week for the peer-to-peer lending industry as the Chancellor announced a new tax relief for people who lend to businesses through marketplaces like Funding Circle.

New loans

There are currently 75 auctions on the marketplace which are all available for you to lend to.

The total value of the new listed loans was £10,543,420 averaging at £66,311 per loan. The largest loan value was £300,000 and the smallest loan value was £6,000.

Business loans still available for bidding on for the next 3 days or more:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 01-Dec represents the week of 1st – 7th December.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

New tax relief for your lending

Last week the Chancellor confirmed plans for the introduction of a new bad debt tax relief for individuals lending through marketplaces like Funding Circle. This means that losses incurred by lending through Funding Circle will be offset against income tax rather than capital gains tax. This relief is expected to be effective from April 2015.

No update to minimum bid rates

We review the minimum bid rates in the middle of every month to decide whether they should be changed or kept the same. This month, we have decided to keep minimum bid rates for January at their current levels:

A+: 6%

A: 8%

B: 9%

C: 10.2%

C-: 12.2%

Join us on the forum

David, our VP of Engineering has answered some of your technical questions you had. Let us know if you have any more!

Loans defaulted last week

Fitness equipment retailer. Loan 4604

This Mid Glamorgan business has been trading since 2010 and is behind with their repayments. All affected investors have been notified.

Marketing consultancy. Loan 2747

This Kent business has been trading since 2000 and is in arrears with their repayments. A;; affected investors have been notified.

Packing suppliers. Loan 4096

This Salford business has been trading since 2003 and is in arrears with their loan. All affected investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

 

Enjoy lending, The Funding Circle Team

 

Digging into the data: the secondary market

In the second instalment of our data blog series, we take a look at the secondary market data in more detail. The secondary market enables investors to buy and sell their loan parts with each other. This means new investors are able to build up a diversified portfolio very quickly and it also gives investors the ability to access their money early if needed. This blog will take a look at the ability to sell loan parts and the average time it takes to access money.

Accessing your money

In total £77 million has been traded on the secondary market to date, with £2 million traded in October alone. Since we extended the types of loans we offer in April to include small businesses who develop or invest in property, the share of property loan parts listed for sale has also increased. In October 83% of loan parts listed for sale were for business loans and 17% for property. Given that the proportion of property loans is currently 7% of the total outstanding loans, we have split the data out to show access to business loans and property loans separately.

2-Business

When investors look to sell their loan parts, approximately 50% are listed for sale at a premium. For example, a B loan part earning 9.0% per year might be listed on the secondary market at a premium so the buyer rate is 8.8% earning the seller a margin at sale. However we can see above that listing at par means loans parts are more likely to be sold.

Not only does listing at par affect the likelihood of loan parts being sold, it also helps to speed up the time taken to sell.

1-Hours-to-sell

What about property?

Turning now to property loan part listings, we can see below that a lower proportion of these have sold over the summer compared to business loan parts. Comparing the lines on both graphs, discounted loan parts actually sell at a relatively similar rate (~70-80%) on both property and business loans, however fewer par and premium property loan part listings go on to be sold.

This difference appears to be primarily driven by the 2% cashback promotion we have been running on property loans. Early investors may remember that we ran a similar promotion when we launched back in 2010. It gives investors an incentive to try a new type of loan, as well as give us some time to learn and refine our processes. Now that we have passed over £23 million lent on property, we will be running this promotion down. We did the same when we reached a similar milestone four years ago.

3-Property

Liquidity varies on the secondary market

You will have seen in both the business and property loan graphs that there have been variations in liquidity in 2014. This means that at times it has taken more or less time to sell loan parts to other investors. There were two particular events which contributed to lower secondary market liquidity.

The first was between January and March, when the supply of new investor funds was not growing as fast as the demand for loans from businesses. New money therefore predominantly went towards buying primary loan parts as interest rates increased, leading to a fall in liquidity on the secondary market.

The second event following this was the introduction of lending on property loans in April. This meant secondary market liquidity stayed at a similar level. When new types of loans are launched, we expect them to have a temporary impact on the marketplace during a cashback period.

In conclusion

We hope that this blog post has helped to provide some more information and data on how best to sell your loan parts, should you need to access your money quickly. It is important to remember that Funding Circle is a marketplace, so access is dependent on there being a buyer for your loan parts, however the data clearly shows that selling loan parts at par or a discount will ensure a higher proportion are sold quickly. For more information on exactly how the secondary market works, take a look at our FAQs.

The Funding Circle team

Non-bank lending growing in importance. November industry news

Newspapers

The bank that Vince built finally opens its doors

Vince Cable’s vision of a new British business bank with a clean balance sheet and an ability to expand lending rapidly to small businesses, is now a reality. Brussels gave the green light for the new bank to become an independent lender with a chief executive and board managing about £4bn of state money. Of all the G8 members, Britain has so far been the only country without an institution that deals with funding for small and medium-sized companies.

Zopa lends £250m in a year as peer-to-peer industry booms

The strength of the UK’s booming peer-to-peer lending industry was underlined when our friends at Zopa revealed that investors have lent a quarter of a billion pounds in personal loans in just the last 12 months. We also saw a record October and November, with investors lending £30 million and £35 million to small businesses respectively.

Fishing for finance in new loan streams

It’s no surprise to us to hear that levels of non-bank lending in Europe, particularly among small businesses, is rising fast. But figures released this month, by law firm Allen & Overy, confirmed that it is now almost as important to European companies as bank debt.

Challengers press watchdog to end stranglehold of big banks

The Competition and Markets Authority initiated a full-blown inquiry into the lack of competition and transparency in current accounts and small business banking, prompting the Financial Times to take a look at the impact of challenger banks over the last period.

UK alternative finance market set to surge in 2015

Nesta published their third and largest piece of research on the alternative finance industry. Two years ago, their first report mostly included data about Funding Circle, and now it includes data from over 20 companies – a sign of the growth of the industry.

Funding Circle hopes to grow enough to tap securitisations

Following our CEO Samir’s speech at LendIt Europe, City AM published a piece on how we are planning to open up lending to small businesses to large investors such as pension funds and insurers in due course. This will allow us to create a sustainable marketplace with a diverse range of investors, big and small, ultimately bringing more lending opportunities to all.

Peer-to-peer lending platforms expect Isa delay

Unfortunately we also heard this month that peer-to-peer lending inclusion in ISAs may be delayed until after the general election in May. However we’re still confident that it will happen and we continue to be part of the conversations with government. We will be soon be posting an update on our consultation response on the blog.

Rebels with a cause

Co-founder James Meekings has been shortlisted for business person of the year in the Sunday Times! The winner of the annual competition will be chosen from a shortlist compiled by the paper, but they want your views so email business@sundaytimes.co.uk and the winner will be revealed in their December 28 edition.

News

How to get a high speed broadband grant for your business

Did you know that your business could get a voucher of up to £3,000 for faster, better broadband through the Government’s Broadband Connection Vouchers scheme?

How could your business benefit?

There are a number of benefits of using superfast broadband, including:

  • The ability to do things faster so you can increase your productivity
  • Improving your customer experience
  • Granting you access to new markets

What does the grant cover?

If you’re eligible for this grant, you could receive up to £3,000 to cover the installation costs of upgrading to a faster and more reliable connection for your business. You could get a fiber optic, cable or wireless broadband connection and most businesses pay nothing but VAT and their standard monthly charge.

Find out instantly whether your area is covered in the scheme

All you need to do is enter your postcode into the eligibility checker and you’ll find out instantly whether your business is in the catchment area.

Time is running out, so make sure you visit the Connection Vouchers website to find out if your business is eligible before it’s too late!

 

Your complete guide to a Funding Circle Christmas

It’s beginning to feel a lot like Christmas: The Pogues are back on the radio, we can finally dust off our winter woollies and we’ve waved goodbye to the chaos of Black Friday for another year. With 20 shopping days left before the big day we thought we’d give you some ideas of how you can make this Christmas extra special, by showing your support for small businesses across the country.

Thousands of investors have already done this by lending over £450 million to 6,000 small businesses through Funding Circle. But there’s more we can do to help British businesses. Instead of heading to the high street giants for your presents, stocking fillers and Christmas Day fayre, why not have a look down this list and see if you can get anything from a local Funding Circle borrower.

Gift ideas from our favourite borrowers this year

1. Add some sparkle: Jewellery

Small wrapped boxes look fabulous under the Christmas tree and diamonds will continue to be a Christmas favourite for your loved ones. Stirling Jewellers, a family-run business in Walsall, may have just the thing for you. As well as watches, bracelets and necklaces, they offer a bespoke design service so you can have a personalised piece made. And, as one of our oldest borrowers having been established in 1893, you’re sure to find something special. What could be better?

minty pegnuins

2. It wouldn’t be Christmas without: Chocolates

This year we’re loving James Chocolates, and especially their dark chocolate minty penguins. We ordered some for our November Investor Evening and not one box was left! Or, if you’re looking for something dairy and gluten free then you’re in luck too. Have a look at Moo Free for yummy chocolate treats without the dairy – you’ll struggle to taste the difference, and cows will be happier too. We also met them earlier this year.

3. Gizmos: Earphones

A recent report found that over 10.2 billion songs were streamed in the UK in the first 9 months of 2014, proving just how important music is to us. BassBuds, who borrowed through the Funding Circle marketplace in October, are high performance, luxury earphones and are available in a range of bright colours to get you and your friends noticed. They have the largest colour range in the world, and you can personalise them. Impressive.

4. Pampering presents: Bath and beauty

Smellies from Neal’s Yard Remedies are a perfect gift for all of the family. They have a number of gift boxes available starting from £22.50, and a range just for men too. Their organic products are all made down at their base in Dorset. 1,604 people lent to the business so they could refurbish their shop in Bath. If you get a chance, why not pop down to see the work they’ve done?

Gift ideas done, now let’s talk about preparations for Christmas Day.

5. Hosting a Christmas get together or a New Year’s party?

It may not be a traditional marquee season but that doesn’t mean they can’t be just as magical in  in winter. If you’re based in the Dorset, Wiltshire, Devon and Somerset, then take a look at Oakleaf Marquees. They have a range of sizes for all types of events so you’ll be sure to find something suitable. And, they have a ‘Christmas House extension,’ just in case you’ve invited a few too many people for the turkey. Good thinking guys!

6. Christmas Trees

To many, buying your Christmas tree is a ritual and signifies the start of the festive season. To avoid getting into the real vs. fake debate, we’ve got two suggestions of where you can buy your tree. If you’re up in the Argyll area of Scotland, have a look at the real fir trees which Walkers Home and Garden Centre has on offer. Or if you prefer longevity over tradition, then the online Internet Gardener stocks a range of artificial trees. You can pick up all of your lights and decorations from them too. Handy.

7. What are you having for your Christmas meal?

The big day has arrived – what will you be sitting down to? Turkey, ham and duck are some of the favourites, and you need look no further than Direct Meats who borrowed through the marketplace twice this year. Priding themselves on traceability and quality since 1995, you can either visit their outlet outside of Colchester or simply give them a call. Alternatively, visit Newton Farm Foods in Somerset for locally produced, high quality foods.

B60A6707

8. Fill your house with the aroma of mulled cider

Some of you may enjoy the waft of mulled wine and cider at Christmas markets. Thankfully, they’re very easy to make at home: you’ll need some cloves, an orange, sugar and some spices. For the mulled cider, you could try Ashridge Cider from Devon, our favourite was the Organic Vintage Cider. 473 people lent to them through Funding Circle in October. For wine, you’ll find everything you need: from a Champagne to a Rioja at Kent-based Durrant’s Fine Wine’s, although I wouldn’t recommend mulling the champagne…


So that’s the food, drink, decorations and gifts sorted. Now it’s time to relax and enjoy Christmas. Happy shopping!

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50% fee discount for businesses

To celebrate Small Business Saturday tomorrow (6 December), we’re offering a 50% fee discount for all businesses that register this weekend – including Sunday too!

Small biz sat 2014

Small Business Saturday is already a $14.3 billion phenomenon in the US, and last year it successfully came over to the UK for the first time.

The campaign promotes the benefits of buying local, and encourages the public to consider shopping with smaller businesses, taking place on typically the busiest shopping day of the year. As the leading marketplace for business loans, we wanted to show our support and back Small Business Saturday UK.  Their work will help to raise the profile of small businesses across the country.

If you know a small business looking for finance, then tell them to apply this weekend as they will receive a 50% fee discount.

How it works

The offer is a 50% discount off your overall fee to Funding Circle. For example, if your loan was for £100,000 over 3 years where the fee is 3% (£3,000), you would pay £1,500 and receive £1,500 as cashback.

This offer is open to new Funding Circle members. To be eligible, businesses need to register and accept the loan by 01/03/2015. Read the full terms and conditions here.

If you want to take advantage of this offer, then apply here with the promo code: SBS14

Chancellor introduces new bad debt relief for lending through Funding Circle

One of the main questions investors have asked us over the last four years is what more can be done to encourage the Government to introduce tax incentives for investors, specifically the introduction of peer-to-peer lending into ISAs and income tax relief on loans

As many of you will know, following our campaign the Government announced in March plans for marketplace lending to be included within an ISA wrapper; and this week’s Autumn Statement delivered another significant announcement for all individual investors.

The Chancellor confirmed plans for the introduction of a new bad debt relief for individuals lending through marketplaces like Funding Circle. This means that losses incurred by lending through Funding Circle will be offset against income tax rather than capital gains tax. This relief is expected to be effective from April 2015.

This is one of the most significant changes introduced by the Government for the industry and something we have been campaigning on for four years. It is supported by both Labour and the coalition Government and, alongside the ISA introduction, will help create a much fairer tax system for individuals engaged in marketplace lending.

Depending on your individual tax situation, by April next year we estimate individuals will be able to to earn up to 25% more as a result of these changes – and potentially significantly higher depending on your personal  investment strategy. Overall this is a win-win for Funding Circle investors and businesses and we expect it will have a hugely positive impact on the wider industry.

The Funding Circle team

Funding Circle announces groundbreaking £132 million investment into British small businesses

Today we’re pleased to announce that for the first time, a global investor will be investing in small business loans through the Funding Circle UK marketplace.

A private fund, managed by New York-based KLS Diversified Asset Management, will be investing £132 million in loans to UK small businesses. The KLS-managed fund will invest in whole loans across all risk bands. They will not compete with any individual investors lending on partial loans.

Today’s news is another significant step on the journey to creating a stable and sustainable global marketplace, where creditworthy businesses borrow directly from a diverse range of investors.

Over the last four years we have seen a range of investors join Funding Circle, and today more than 36,000 individuals, the government-backed British Business Bank, 10 local councils, the University of Huddersfield, and other institutions are all helping businesses access the finance they need to grow.

As discussed previously, we have also recently received a lot of interest from institutions, such as pension funds, insurance companies, family offices and hedge funds, who would like to join Funding Circle. To enable these types of larger investors to lend to small businesses, we introduced whole loans in April this year.

Whole loans enable larger investors, like KLS, to participate on Funding Circle whilst not affecting individual investors’ Funding Circle experience,  You can read more about why we introduced whole loans in this blog post, and you can view what proportion of loans are whole or partial by downloading our loanbook on the statistics page.

Today’s news enables us to continue to grow and meet the demand from UK businesses. In November alone, investors lent a record £35 million to small businesses across the UK. As we continue to grow we will manage the allocation between partial and whole loans so that there is consistently enough lending opportunities for all investors. A more and varied range of investors means we increase the amount of lending opportunities for everyone. The amount of lending by individual investors continues to increase this year and we expect it to continue as we grow. Individual investors are part of our DNA at Funding Circle and core to the future success of the company.

For more information about today’s news, join us on our forum where we will be discussing this in more detail. You can also read more the press release announcing the news here.

The Funding Circle team

What a month November was! Weekly Lending Review

Week 48: 24 – 30 November 2014

Last month you helped lend a record-breaking £35 million to hundreds of businesses across the UK, with £9.5 million lent last week alone.

The majority of businesses listed on the marketplace were located in the South East of England, and the most popular reason for needing funding last week was expansion.

New loans

There are currently 76 auctions on the marketplace which are all available for you to lend to.

The total value of the new listed loans was £12,074,060; averaging at £65,331 per loan. The largest loan value was £450,000 and the smallest loan value was £5,000.

Business loans still available for bidding on for the next 3 days or more:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 24-Nov represents the week of 24th – 30th November.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

Did you lend to this property developer?

Last month we visited Medina Capital Investments, a London-based property developer who has borrowed £640,000 through the marketplace since September. They are building 2 family homes with their Funding Circle loan and you can see the development site in this short video.

Reduction of cashback on property finance

Since launching our formalised property product in April, over £20 million of property finance has reached businesses across the UK so we will be reducing the cashback available on lending to property loans, initially from 2% to 1.5%. Remember, by lending to businesses your capital is at risk. Terms and conditions apply.

Join us on the forum

David, our VP of Engineering will be answering the technical questions you have on the forum this week.

Loans defaulted last week

Online retailer. Loan 5328

This Poole business has been trading since 2010 and is in liquidation. The original loan amount was £32,000 and all affected investors have been notified.

Retailer. Loan 3204

This Rugby business has been trading since 2009 and is in arrears with their repayments. The original loan amount was £20,000 and all affected investors have been notified.

Life insurers. Loan 5853

This Manchester business has been trading since 2010 and is in arrears with their loan. The original loan amount was £50,000 and all affected investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

 

Enjoy lending, The Funding Circle Team

 

You are helping to build family homes

Throughout the year we’ve been lucky enough to visit a number of small businesses across the country who have borrowed through the Funding Circle marketplace. They’ve taken out business loans for all sorts of reasons including stock purchases, general expansion and product development.

Having launched our formalised property product in April, we thought it was about time we visited a property developer to see how they were getting on after their Funding Circle loan.

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Medina Capital Investments is a London-based property development company who has borrowed £640,000 from over 5,000 people since September 2014. They are part of the way through the development they’re working on in West London, and are expecting to complete the construction and sale of 2 family homes by March 2016. The total loan facility they need is in excess of £1.5 million, so keep an eye out on the marketplace for the later tranches over the next few months!

In this short video you’ll meet the founder of Medina Capital Investments, Nidal Al-Khail, hear from him first-hand about his experience, and you can take a look at the site where the homes are to be built.

Property development loans were available between April 2014 and April 2017. If you work in the property industry and are looking for finance, we may still be able to help you with an unsecured loan up to £350,000 with a personal guarantee, or a secured loan up to £1 million.

Get an instant quote online or speak to our dedicated team today on 0800 048 8747.