The Funding Circle ISA – latest news

As you may be aware, the government launches the Innovative Finance ISA in the new tax year, which will enable you to earn tax-free returns by lending to businesses directly through Funding Circle.

In order to launch an Innovative Finance ISA, all peer-to-peer lending platforms are required to be fully authorised by the regulator, the Financial Conduct Authority (FCA).  We have been working closely with the FCA on our submission and our work with them is progressing well. The FCA is close to completing their review process with us, however it will not be completed in time to launch the Funding Circle ISA on April 6, the first day of the new tax year.

We are excited to launch the Funding Circle ISA as soon as we have received full authorisation from the FCA and been approved as an ISA manager by HM Revenue & Customs, and are working closely with the FCA as it completes its review. We will keep investors updated with expected timings for launch of the ISA over the next few weeks.

In the meantime, we are pleased there are other ways investors can earn tax-free returns through the Funding Circle marketplace. Investors in the UK can hold shares in the Funding Circle SME Income Fund through either their existing Stocks & Shares ISA or Self Invested Personal Pension.

The Funding Circle SME Income Fund provides access to a diversified portfolio of Funding Circle loans across Funding Circle’s global geographies in the UK, USA, Germany, Spain and the Netherlands. The target Net Asset Value total return is 8-9% per annum, and the annual target dividend yield is 6-7 pence per share. For further information on the Funding Circle SME Income Fund, please visit the website: www.fcincomefund.com. Actual return may be higher or lower as by lending to businesses, your capital is at risk.

Information on the Funding Circle SME Income Fund can also be found on our blog.

Please contact your financial adviser with any questions about including shares in the Funding Circle SME Income Fund within your Stocks & Shares ISA or Self Invested Personal Pension.

The Funding Circle team

*This blog post is provided for information purposes only and is not intended to be construed as an offer, invitation or inducement to engage in investment activity in relation to – or a financial promotion of – Funding Circle SME Income Fund. Funding Circle does not give investment advice or recommendations and this blog post should not be relied upon as such*

Did you help 167 businesses access finance last week? | Weekly Lending Review

Week 13: 21 – 24 March

Last week, you and other investors helped 167 businesses across the UK access £13.2 million through the Funding Circle marketplace. Of the new loans listed, the South East was the most popular business location, and property & construction was the most popular sector.

New loans available to you

There are currently 46 loan requests on the marketplace, and thousands of loan parts available for you to buy which will help you become diversified.

The total value of new loans listed on the Funding Circle marketplace was £13,839,420 averaging at £79,233 per loan. The largest loan value was £407,620 and the smallest loan value was £5,000.

Business loans available to bid on:

Gross interest rates are before fees and estimated bad debts. Your actual return may be higher or lower as by lending to businesses your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 21-Mar represents the week of 21st – 24th March.

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 (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 13-16 yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 13-16 loans listed

Listed loan value per week

WLR 13-16 loan value

Total amount lent

WLR 13-16 amount lent

Loan parts available to buy from other investors

WLR 13-16 loan parts

News you should know

We’re very much looking forward to the launch of the Funding Circle Innovative Finance ISA next month. We are hoping to have full authorisation from the regulator soon which will enable us to apply to become an ISA Manager. You can keep up to date with progress and join the conversation about ISAs on the forum.

Loans defaulted last week

Property rental business. Loan 9742. Risk band C

This Devon business has been running since 2011 and has been placed into liquidation.

Builder. Loan 18106. Risk band B

This West Lothian business was established in 2011 and has become unresponsive after missing repayments.

Shop. Loan 5695. Risk band B

This Kent business has been running since 2011 and was placed into liquidation in August.

Machinery specialist. Loan 1762. Risk band C

This Oxfordshire business was established in 1981 and was placed into liquidation in March.

Clothing designer. Loan 16690. Risk band A+

This London business has been running since 2011 and was placed into administration in March.

Care home. Loan 7538. Risk band C

This Hull business was established in 2009 and was placed into administration in February.

Saddle fitting specialist. Loan 5801. Risk band C

This Hampshire business has been running since 2005 and is being placed into insolvent liquidation.

Engineer. Loan 17506. Risk band A

This Hampshire business was established in 1992 and has become unresponsive after missing repayments.

Training company. Loan 3618. Risk band A

This Ayrshire business has been running since 2007 and is four months in arrears.

Builder. Loan 12382. Risk band A

This Somerset business was established in 2010 and is being placed into insolvent liquidation.

Garden centre. Loan 15131. Risk band E

This Gloucestershire business has been running since 2012 and has ceased trading.

Our collections and recoveries team are working to recover the outstanding amounts for all of the loans described above and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, the Funding Circle team

 

Egg-cellent Easter treats & updated T&Cs | Weekly Lending Review

Week 12: 14 – 18 March

Looking for tasty Easter treats to spoil your friends and family? We’ve put together a list of egg-cellent gift ideas manufactured by Funding Circle borrowers across the UK, including milk chocolate mini eggs made in Preston and Easter hampers from Warwickshire.

New loans available to you

There are currently 38 loan requests on the marketplace, and thousands of loan parts available for you to buy.

The total value of new loans listed on the Funding Circle marketplace was £15,921,660 averaging at £68,146 per loan. The largest loan value was £452,180 and the smallest loan value was £5,220.

Business loans available to bid on:

Gross interest rates are before fees and estimated bad debts. Your actual return may be higher or lower as by lending to businesses your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 14-Mar represents the week of 14th – 18th March.

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 (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 12-16 yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 12-16 loans listed

Listed loan value per week

WLR 12-16 loan value

Total amount lent

WLR 12-16 amount lent

Loan parts available to buy from other investors

WLR 12-16 loan parts

News you should know

Helping businesses finance more of their requirements

Since launching in 2010, we’ve extended the types of loans we offer to help more UK businesses access the finance they need to grow. This week we’re updating our Investor T&Cs to allow us to facilitate loans at different risk bands to the same borrower. Read more about the update on the blog, however there is nothing you need to do.

Loans defaulted last week

Fitness equipment specialist. Loan 12524. Risk band C

This Mid Glamorgan business has been running since 2012 and is 3 months in arrears.

Engineers. Loan 7030. Risk band B

This South Yorkshire business was established in 2003 and has proposed a Company Voluntary Arrangement.

Chauffeurs. Loan 14234. Risk band E

This London business has been running since 2012 and has become unresponsive after missing repayments.

Cinemas. Loan 11431. Risk band C

This Mid Glamorgan business was established in 2012 and has become unresponsive after missing repayments.

Marketing agency. Loan 5137. Risk band D

This Merseyside business has been running since 2010 and has been placed into liquidation.

IT services. Loan 3349. Risk band A+

This London business was established in 2006 and has become unresponsive after missing repayments.

Manufacturer. Loan 3905. Risk band D

This Powys business has been running since 2008 and is being placed into liquidation.

Estate agents. Loan 3617. Risk band B

This South Yorkshire business was established in 2006 and has become unresponsive after missing repayments.

Bike shop. Loan 11325. Risk band B

This Surrey business has been running since 2012 and has become unresponsive after missing repayments.

Construction product supplier. Loan 10938. Risk band B

This Worcestershire business was established in 2009 and has been placed into liquidation.

Recruitment agency. Loan 8127. Risk band B

This Greater Manchester business has been running since 2009 and has been placed into liquidation.

Stove specialist. Loan 13481. Risk band A

This West Yorkshire business was established in 2013 and has been placed into liquidation.

Dentist. Loan 11349. Risk band B

This West Midlands business has been running since 2011 and has become unresponsive after missing repayments.

Property refurbishment company. Loan 15406. Risk band B

This Surrey business was established in 2008 and has been placed into liquidation.

Lending to businesses can deliver attractive returns, while helping businesses access the finance they need to grow. However, from time-to-time some businesses will be unable to repay their loan, which is why lending a small amount to lots of different businesses is so important. Watch our 90 second diversification video below to find out more. Remember, by lending to businesses your capital is at risk.

Our collections and recoveries team are working to recover the outstanding amounts for all of the loans described above and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, the Funding Circle team

Helping businesses finance more of their requirements

Over the course of the past 5 years, we have extended the types of loans we offer to help more small businesses access finance. As businesses increasingly look to Funding Circle first, we want to help them finance more of their requirements through the marketplace.

This week we are updating clause 10 of our Investor Ts&Cs (and the relevant loan conditions stated at the end of this blog) to enable us to facilitate loans at different risk bands to the same borrower, to reflect the risk of each individual loan.

This means that in the event of a default, recoveries will be distributed according to the type of security a loan has. This will apply for new loans taken out after the Ts&Cs have been updated on 23 March 2016. Tomorrow, you will be required to re-accept the loan conditions before placing a bid, to ensure you are aware of what these updates mean going forward.

What’s changing?

Borrowers at Funding Circle can already have multiple loans, and from tomorrow, these loans can be in different risk bands if there is different security. For example, a business may need two loans; one for working capital with a director’s guarantee, and one for a commercial mortgage, secured over a property.

Security

Security may relate to one loan, or be “all monies” which means that subsequent loans have the benefit of the same security. Security may also relate to a specific fixed asset, such as a property, or be floating over all of the assets of the business.

Updates to clause 10

The updates to clause 10 will clarify how we will act in respect of 1) recovery strategy and 2) the priority of recovery distributions for multiple loans.  

What does this mean if a loan defaults?

1)When a loan is defaulted, different strategies may be taken to recover money, depending on the security type.

For example, investors who have loan parts with a fixed charge on a property, may want that property sold as quickly as possible by a receiver; whereas investors who have a floating charge may wish to hold out for a buyer of the whole business because this may provide some equity to the property that they can benefit from. In this example, Funding Circle will act in the interests of the investors with the benefit of the fixed charge in priority to the investors who have the benefit of the floating charge.

2)The updates to clause 10, effective from 23 March 2016, will determine the priority of recovery distributions and these will be:

  • first, fixed charge security on specific loans will rank ahead of all monies security;
  • second, property loans will state how the security will be applied if there is more than one loan to the borrower; and
  • third, where there is more than one loan benefiting from all asset security then the distributions of the loans will be equal.

This is a natural next step of the marketplace and will allow us to help more businesses with different finance needs whilst also being fair to investors.

Loan conditions

Along with the investor and borrower T&Cs, the loan conditions (in relation to new loans only) will be updated to reflect these changes:

  • clause 2.4: changes to clarify that it applies to loans in arrears;
  • clause 3.2: changes to provide that interest at the contractual rate calculated on a daily basis continues to apply to any outstanding sums after the contractual term has ended;
  • clause 4.2(o): this clause has been added to enable the loan to be terminated in the event of a material adverse change in the financial condition of the borrower or any guarantor;
  • clause 7.2: changes to enable Funding Circle or its agent to inspect a borrower’s property or security; and
  • clause 10.3: changes to ensure consistency with borrower Ts&Cs and guarantee.

Changes to Privacy Policy

We have also taken this opportunity to make some small updates to our privacy policy.  The changes will be to:

  • clarify how and when we process your personal data by giving additional examples;
  • better signpost certain rights afforded to you;
  • better explain how we run our business;
  • confirm our expectations as to the maintenance of the security of your login and account details.

If you have any questions about these changes please contact us, and we will be happy to help.

The Funding Circle team

Did you help a 96 year old chocolate factory in Preston expand?

Easter is fast-approaching and we can’t wait to munch through copious amounts of chocolate (and it’ll be almost guilt free if we’re supporting UK businesses at the same time!).

In preparation for the four day weekend, we visited Beech’s Fine Chocolates who’ve been manufacturing high quality gourmet chocolates from their base in Lancashire since 1920. The chocolates they produce, including  brazil nuts, bars and creams, are sold in a range of high street stores, including Waitrose, John Lewis, Harrods, Booths, and Mr Simms.

The business recently took part in a BBC documentary called ‘Who’s the Boss?, and business owner Andrew Whiting told us he’s been overwhelmed by positive comments from viewers about the passion and culture of his team. A number of the Beech’s staff have worked at the factory for decades, like Barbara, pictured below, who’s coming up to 50 years!

Barbara employee at Beechs

Geraldine and John Aughton, who’ve been lending to businesses through Funding Circle for the past few years, met the Beech’s team while taking a tour round the factory. Geraldine, who lent to Beech’s, said she’s particularly attracted to companies who are from the North West because that’s where she lives.

In January 2016, Beech’s Fine Chocolates took out a £250,000 loan through the Funding Circle marketplace to keep up with high demand. In this short video you’ll hear from business owner Andrew, meet investor Geraldine and get a sneak peek inside the factory:

We’ve helped more than 15,000  businesses in the UK, US and Europe access finance for a range of finance needs. You can check your eligibility online in just 30 seconds.

 

How do Funding Circle returns compare to other investments? | Weekly Lending Review

Week 11: 7 – 11 March

In the latest edition of our ‘digging into the data’ series, we look at the historical performance of returns at Funding Circle over the last four years compared with other investments, and the tax investors will save if they take advantage of the new Innovative Finance ISA at Funding Circle. Find out more in this article.

New loans available to you

There are currently 37 loan requests on the marketplace, and thousands of loan parts available for you to buy.

The total value of new loans listed on the Funding Circle marketplace was £17,460,660 averaging at £78,627 per loan. The largest loan value was £450,000 and the smallest loan value was £5,000.

Business loans available to bid on:

 

Gross interest rates are before fees and estimated bad debts. Your actual return may be higher or lower as by lending to businesses your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 7-Mar represents the week of 7th – 11th March.

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 (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)
WLR 11-16 Yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 11-16 loans listed

Listed loan value per week

WLR 11-16 loan value

Total amount lent

WLR 11-16 amount lent

Loan parts available to buy from other investors

WLR 11-16 loan parts

News you should know

Egg-cellent Easter treats from local UK businesses

Looking for tasty Easter chocolate treats to spoil your friends and family? We’ve put together a list of 5  Easter treats from Funding Circle borrowers, including milk chocolate mini eggs made in Preston and Easter hampers from Warwickshire.

Loans defaulted last week

Hauliers. Loan 8433. Risk band A

This East Yorkshire business has been running since 2000 and is being placed into liquidation.

Accountants. Loan 9147. Risk band A

This County Armagh business was established in 2014 and is proposing an Individual Voluntary Arrangement.

Auctioneer. Loan 16794. Risk band A+

This Cheshire business has been running since 2010 and and has become unresponsive after missing repayments.

Recycling company. Loan 4642. Risk band B

This Cheshire business was established in 1962 and is in the process of being placed into liquidation.

Retail business. Loan 4819. Risk band A

This Somerset business has been running since 2000 and is nearly 5 months in arrears.

Software specialist. Loan 13815. Risk band D

This Cheshire business was established in 2012 and has ceased trading.

Office supplies. Loan 13214. Risk band A

This Berkshire business has been running since 2012 and has breached their loan contract.

Our collections and recoveries team are working to recover the outstanding amounts for all of the loans described above and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, the Funding Circle team

6 reasons to choose Funding Circle for your Innovative Finance ISA | Weekly Lending Review

Week 10: 29 February – 4 March

We’re gearing up for the launch of of the new ISA in just under a month! We’ll be confirming more details on how you can open your Funding Circle ISA over the coming weeks, but ahead of the launch, we’ve put together 6 key reasons why we believe Funding Circle is the best platform for your new Innovative Finance ISA.

For the latest ISA news from Funding Circle, click here.

 

If you have any questions please contact our customer service team who will be happy to help.

Like what we do? Vote for us!

Have you received excellent customer service from our Customer Relations team? Please vote for us in the Moneywise Customer Service Awards 2016.

New loans available to you

There are currently 42 loan requests on the marketplace, and thousands of loan parts available for you to buy.

The total value of new loans listed on the Funding Circle marketplace was £19,309,860 averaging at £78,591 per loan. The largest loan value was £480,000 and the smallest loan value was £5,000.

Business loans available to bid on:

Gross interest rates are before fees and estimated bad debts. Your actual return may be higher or lower as by lending to businesses your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 29-Feb represents the week of 29th February – 4th March.

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 (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 10-16 yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 10-16 loans listed

Listed loan value per week

WLR 10-16 loan value

Total amount lent

WLR 10-16 amount lent

Loan parts available to buy from other investors

WLR 10-16 loan parts

News you should know

Former Executive Board Member of the European Central Bank joins Funding Circle

We’re delighted to welcome high profile German economist and policy-maker Jörg Asmussen, former Executive Board Member of European Central Bank, as the newest member of the Funding Circle board. Read more about the appointment on the blog.

Loans defaulted last week

Restaurant. Loan 13488. Risk band A

This Surrey business was established in 2011 and is three month in arrears.

Building conservation. Loan 2194. Risk band B

This Edinburgh business has been running since 2001 and has been placed into provisional liquidation.

Engineers. Loan 6403. Risk band C

This Tyne and Wear business was established in 2010 and been dissolved by Companies House.

Interior designers. Loan 8940. Risk band C

This London business has been running since 2008 and is being placed into liquidation.

Marketing agency. Loan 14106. Risk band D

This London business was established in 2002 and has ceased trading.

Mattress manufacturer Loan 8701. Risk band A

This Leeds business has been running since 2006 and has been placed into administration.

Our collections and recoveries team are working to recover the outstanding amounts for all of the loans described above and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, the Funding Circle team

How to talk to your clients about Funding Circle

Funding Circle can help you grow your business by offering fast and flexible finance options for you and your clients. You can earn a competitive commission too!

However, your clients don’t always have time to chat as they’re busy running small businesses. You might only have a few minutes – sometimes only a few seconds – to make your pitch. So what’s the best way to explain Funding Circle?

We’ve put together some suggested answers for the three most common questions to help you get more deals away this month. There’s also our white label flyer which you can personalise and send to clients.

What is Funding Circle?

“Funding Circle is the world’s leading marketplace for business loans, where people and organisations can lend directly to small businesses. They provide a quick and simple service, with a decision typically made within 48 hours and funds transferred soon after.”

How do I apply?

“I’ll begin by checking your eligibility and running a soft pull on your credit history – this will not affect your credit score. I can then submit your full application, including your latest filed accounts and 3 months’ business bank statements. If you qualify, you’ll typically receive an offer within 2 working days and the funds can be drawn down within a week – quicker than organising a meeting with the bank!”

Why should I accept an offer for a Funding Circle loan?

“Funding Circle’s short term business funding is a smart way for an established business, like yours, to access capital. Monthly repayments will allow you to plan ahead and use the capital to invest in your company’s growth. There’s also no early repayment fees should you decide to pay back the loan ahead of time.”

Top talking points

  • Have you heard of Funding Circle, an increasingly popular source of business funding? 1,900 UK businesses have already accessed finance through Funding Circle in 2016!
  • If approved, I can get you funding in a week
  • If you qualify, interest rates start at 6%
  • Since launching in 2010, investors have lent more than $2 billion to 16,000 businesses in the UK, US, Germany, Spain and the Netherlands through Funding Circle

For more information about rates and fees download our rate card.

Have a question?

If you are unsure about any of the above or would like to discuss how we can help, our dedicated team are more than happy to help. Call 020 3667 2208 or email introducer@fundingcircle.com. You can also download our full introducer guide to Funding Circle.

Digging into the data: how returns at Funding Circle compare to other investments

In this edition of ‘digging into the data’, we look at the historical performance of returns at Funding Circle over the last five years compared with other investments and peer-to-peer lending platforms. We also look at the tax investors will save if they take advantage of the new Innovative Finance ISA at Funding Circle, which is due to launch next tax year (2016/2017).

Funding Circle compared to other investments

First, we wanted to examine how the cumulative, or compounded, Funding Circle return compares to other investments, including equities and corporate bonds.

Funding Circle cumulative return vs. other investments

Source: FTSE 100 total returnsBloomberg Global Corporate Bond index (BCOR), Funding Circle

Looking at historical returns between 2011 and 2015, we can calculate that lending through Funding Circle during this time delivered a better cumulative return than investing in the FTSE 100 and corporate bonds. Investors earned an average cumulative return of 37% at Funding Circle, compared to 27% on the FTSE 100 and 12% in corporate bonds.

We can also see that the average cumulative Funding Circle return is more stable than investing in equities, which carries a larger risk of volatility in the short term.

It’s important to add that although other investments may have yielded lower returns on average over the last four years, they have other attractive characteristics such as providing a diversified portfolio across risk return profiles. Past performance is also not necessarily a guide to future returns, and your capital is at risk with any type of investment, including peer-to-peer lending.

Funding Circle returns versus other peer-to-peer lending platforms

Digging into the data in more granular detail, we examined how returns at Funding Circle have compared to two UK peer-to-peer lending platforms.

Because peer-to-peer lending is still relatively new, only a few platforms have a loanbook mature enough to indicate consistent returns. Therefore for this calculation, we looked at platforms (P2P1 and P2P2) which have originated over £1 billion of loans, and weighted the historical returns by amount lent in each year.

Funding Circle weighted return vs. other p2p platforms

Source: Peer-to-Peer Finance AssociationFunding Circle

Again it is important to note that past performance is not necessarily a guide to future returns, and your capital is at risk with any type of investment. Not all platforms operate in the same way and it’s important that each investor chooses the platform that is right for them.

However based on this, Funding Circle has delivered the highest of any major peer-to-peer lending platform.

This data includes our 2011 cohort (£17.3 million of lending out of £1.1 billion) which did not perform in line with expectations. If you remove this cohort, the weighted return between 2012 and 2014 increases to 7.06%. The data doesn’t include the 2015 cohort because it has not yet seen a full 12 months of performance. For more information on how individual cohorts perform against expectations, visit our statistics page.

How much tax could you save by lending through an Innovative Finance ISA at Funding Circle?

With the new ISA season just around the corner, and investors looking to make the biggest tax savings they can, the Innovative Finance ISA will be an attractive proposition for some.

If you decide to use your ISA allowance of £15,240 to lend to businesses through Funding Circle across 5 years at the current estimated return of 7.3%, you could earn an estimated £6,335 in interest, resulting in a total pot of £21,676.

By lending through a Funding Circle ISA account, you could save £1,334 as a basic rate taxpayer and £2,692 as a higher rate taxpayer.

As with all projections, the nature of modeling is that it provides an estimate.

Conclusion

At Funding Circle you can earn attractive returns and fuel the UK economy by lending directly to British businesses. To help maximise returns, investors should lend small amounts to lots of different businesses. Since Funding Circle opened its doors in 2010, every investor who has lent no more than 1% of their portfolio to at least 100 individual business has earned a positive return, and 92% have earned at least 5%.*

It’s only a few weeks until the launch of the Innovative Finance ISA so we hope you found this analysis useful. If you have any questions about these calculations, please join the conversation over on our forum.

Enjoy lending,

The Funding Circle team

 

Notes

* This data is based off actual returns for people lending for at least 1 year. For more information, visit our statistics page.

Sources

Peer-to-Peer Finance Association

FTSE 100 total returns

Bloomberg Global Corporate Bond index (BCOR)

Returns table 1

Returns table 2

Returns table 3

Former Executive Board Member of the European Central Bank joins Funding Circle

Today we’re very pleased to announce the appointment of Jörg Asmussen to the Funding Circle board.

Jörg, a German economist and policy-maker has held a number of high-profile positions, most recently as State Secretary at the German Ministry of Labour and Social Affairs, Executive Board Member of the European Central Bank (ECB) and State Secretary at the German Ministry of Finance. We are extremely excited to be welcoming Jörg to the team.

Our ambition at Funding Circle is to build a global exchange where any investor, big or small, can lend to small businesses. Jörg’s experience and expertise will be very useful as we grow across the UK, US and Europe.

Commenting on joining the team, Jörg said: “I am pleased to join Funding Circle’s Board. The company operates at the frontier of innovation in financial services, providing business loans to small businesses in a transparent, easy to access and efficient manner, thereby helping to finance growth and create jobs. I am impressed by the high professionalism of the management team of Funding Circle and the soundness of the company’s operations throughout the whole value chain, providing a financially sound alternative for investors.”

Investors at Funding Circle continue to play a very important role in helping to rewire the financial services ecosystem by lending directly to thousands of businesses, helping them to grow. To date, you have helped to lend more than £1 billion to 13,000 businesses in the UK alone, creating an estimated 50,000 jobs.

The announcement marks another important step for Funding Circle, and you can read the full press release hereWe’re also talking about today’s news on our forum.

The Funding Circle team

If you could reinvent a bank today, would you? February industry news.

Newspapers - Copy

The never-ending story: Europe’s banks face a frightening future

As bank profits continue to fall and layoffs continue to increase, this Bloomberg piece looks at how the banking world has changed since the financial crisis, not to mention the challenges still faced. With the proliferation of technology start-ups that are able to cut out the traditional middle man by linking supply directly with demand, our CEO Samir Desai asks: “if you could reinvent a bank today, would you?”

P2P sheds ‘alternative’ label and moves into mainstream

Thousands of businesses have benefitted from marketplace lending across the country, such as Funding Circle borrower, James Chocolates. This chocolate extraordinaire explains how they went through all of the same processes as a bank in order to borrow from investors like you, however the speed and simplicity of using a platform like Funding Circle was incomparable to the experience they had with high street banks. James Chocolates is backed by over 2,500 individual investors that have helped his business to grow and flourish. Make sure to check out his marvellous shop here ahead of Easter.

Funding Circle’s Sam Hodges: ‘Everyone has a plan, until you get hit in the teeth’

Sam Hodges, Managing Director of Funding Circle US, offers his best advice for first-time entrepreneurs. He discusses his biggest mistakes at the beginning of his career and useful advice that he received. Sam advises: “Don’t rush things. If you’re smart and passionate, success will follow.”

Peer-to-peer lending doubled to £2.2bn in 2015 as industry awaits launch of P2P ISA

As the countdown to the new tax year continues, peer-to-peer lending platforms are getting ready for the introduction of the ‘Innovative Finance ISA’ (IFISA) which is scheduled to launch 6th April. This is a seminal moment for our industry as it will allow you to earn tax free returns on lending up to £15,240 per year. For things to consider ahead of opening an IFISA, check out our latest blog post. You can also read more about ISAs in the Financial Times, Daily Mail and Independent. If you have any questions in the run up to launch, please email our customer relations team at contactus@fundingcircle.com or call us on +44 (0) 207 401 9111.

Peer-to-peer lending: everything you need to know about the leading websites  

For a useful overview of the leading platforms in this space, take a look at this Telegraph piece. Since all platforms are different, it’s essential that you understand how each one works and the potential risks involved before lending your money. Remember, your capital can go down as well as up.

Range of investors behind a quarter of loans on peer-to-peer websites

The latest alternative finance benchmarking report from the University of Cambridge and Nesta shows that a wider range of investors are becoming involved in marketplace lending – from retail investors, to government, to financial institutions such as banks and pension funds. This is welcome news – having a diverse mix of investors at platforms will ensure they are sustainable in the long run, which will help to protect small businesses in a future economic downturn.

City grandee Lord Turner warns on peer-to-peer lending risks

And finally, you may have seen recent articles about the industry that stemmed from Lord Turner’s comments, a former chairman of the Financial Services Authority. As peer-to-peer lending matures, we welcome increased scrutiny of the sector and embrace it as an opportunity to show that Funding Circle’s platform and processes are robust, stable and transparent. Our loanbook has been independently stress tested by the same people who stress test the high street banks. The report found that even in the most extreme economic conditions (which the Prudential Regulation Authority set in 2014 at the time they stress tested the high street banks), average annualised returns for Funding Circle investors would remain above 5.5%. Read more here. 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.

6 reasons why Funding Circle is the best place for your Innovative Finance ISA

Soon you’ll be able to earn tax-free returns at Funding Circle, thanks to the launch of the new Innovative Finance ISA. Currently you are able to split your annual allowance of £15,240 between a cash ISA and a stocks and shares ISA, and new for the 2016 tax year, you’ll also be able to open an Innovative Finance ISA (IFISA).

We’ll be confirming more details on how you can open your Funding Circle ISA over the coming weeks, but ahead of the launch, we wanted to share 6 key reasons why we believe Funding Circle is the best platform for your new Innovative Finance ISA. For the latest ISA news from Funding Circle, click here.

1. You can earn an estimated annual return of 7.1% lending to British businesses

ISAs enable you to make tax-free returns on your money, but with only one Innovative Finance ISA available to subscribe to every year, it’s important to maximise the tax benefits of any investments you hold.

The current estimated return at Funding Circle is 7.1%* which is the highest estimated return across all of the major platforms, enabling you to maximise your tax-efficiency and save the most tax.  

If a higher rate taxpayer lent £10,000 through Funding Circle with an average return of 7.1% after fees and bad debts, their earnings, after deduction of income tax at 40%, would be approximately £426 after one year. By taking advantage of the new Funding Circle ISA, those earnings would increase to £710.

Since launching in 2010, investors have collectively earned more than £72.5 million in interest, after all fees and bad debts have been deducted. Data correct as of 8 March 2016.  

2. Your lending helps British businesses grow

By lending directly to UK businesses through Funding Circle, you can earn attractive returns whilst also having a real impact on the growth of the UK economy. To date, Funding Circle investors have helped more than 15,000 businesses access finance.

Independent research by think-tank Nesta found that an average business borrowing through Funding Circle employs approximately 10 people, and increases headcount by 30% within 12 months of successfully accessing finance.

3. You can diversify your funds across thousands of borrowers

More than 15,000 businesses have taken out loans over the last 5 years, which means there are more lending opportunities for investors at Funding Circle than any other small business lending marketplace in the UK.

By lending as little as £20 to each business, you can spread your money across thousands of borrowers. Not only does this help more businesses to grow, but your investment will also be diversified, helping you to earn a more stable return by managing risk effectively.

To be diversified, we encourage:

  1. Lending to at least 100 businesses;                                                                                             2. Lending no more than 1% of your total investment to each business.

As of January 1st 2016, every investor who has followed these 2 simple steps has earned a positive return, and approximately 92% have achieved a return of at least 5% after fees and bad debt^. Past returns are not necessarily a guide to future returns as by lending to businesses, your capital is at risk.

4. You have options to access your money early

There may be times when you want to access your money before the end of a loan term, and the marketplace provides a way for you to do this. You can access money early by selling loan parts to other investors for a 0.25% fee. More than £175 million of loan parts have been traded so far.

It’s worth noting that your ability to sell loan parts is not guaranteed, and largely relies on demand from other investors to buy them. You can also withdraw your monthly repayments  whenever you wish.

5. Our robust credit models have been stress-tested by a leading consultancy

Alongside our strong track-record and experienced team of in-house risk experts, we publish all information regarding bad debts on our statistics page so you can see how loans perform against expectations. The current bad debt rate is 1.5%, compared to the annual estimate of 1.7%.

We also commissioned independent stress testing of our loanbook (all Funding Circle loans) to estimate how loans would perform in the case of an extreme economic downturn. A leading consultancy, who stress test banks, built a stress testing model for us and applied their model to our loans. The results were positive, estimating a fall in the overall annualised return investors would earn, after fees and bad debt, to 5.6%.

It is important to note however that past performance is not necessarily a guide to future performance, and the nature of modeling for future economic events is that it is an estimate.

6. A commitment to transparency

We believe transparency is a crucial part of lending so we publish the full historical performance of all loans on our statistics page. This includes details on the total amount lent and repaid, average interest paid across all loans, and details of any bad debts. Additionally, we think it’s important investors can see exactly who they’re lending to. You can see details about every borrower including financial performance and sector, and you have the opportunity to ask businesses questions before lending to them.

Enjoy lending 

We hope you found this post useful. We’ll be publishing more information over the coming weeks about ISAs, including how Funding Circle returns compare with other investments; as well as updating you on when and how you can open your Funding Circle ISA account.

If you have any immediate questions, please feel free to leave comments below or join us on our forum where we’ll be discussing ISAs in more detail.

The Funding Circle team

*The current estimated return is an estimate of the annual return after fees and bad debts that investors could earn from lending money to businesses seeking loans today (8th March 2016). It is calculated by taking the gross interest rate less fees and estimated bad debts that will occur in the future for each of the last 100 loans accepted on the marketplace. The average return is compounded and is updated daily.
^This is based on the 21,086 investors who have been lending for at least 1 year and have been at the stated level of diversification for at least 75% of the days they have been lending (44.3% of all active investors).This data is based off actual returns for people lending for at least 1 year and does not include future expected losses. Remember, past returns are not necessarily a guide to future returns.

Easter treat ideas from local UK businesses

To help make your Easter extra special this year, we’ve put together a list of 5 tasty Easter treats from small UK businesses. These fantastic companies from across the country have grown and flourished, thanks to your support.

5. Planning an Easter egg hunt?

Beech’s Fine Chocolates has you covered with delicious Milk Chocolate Mini Eggs. Or grab the Milk Chocolate Bunny Family so you can enjoy with the entire household. The company, who borrowed £250,000 in January 2016 to keep up with high demand, are expecting a visit from us next week – so keep an eye out for a video on blog soon. They’ve also been included in a BBC programme called ‘Who’s the Boss.’

4. Can’t decide on just one goody?

Pick up an Easter Hamper from D&D for a selection of delicious chocolates. The chocolatiers, who borrowed over £11,000 from 1,256 investors in 2014, also make a wide variety of carob sweets, a healthy chocolate alternative, and used the loan to purchase a larger fridge to cope with the high interest in these scrumptious goods.

Screen Shot 2016-03-04 at 10.55.123. Grab a friendly treat for the little ones.

With a choice of white or milk chocolate, these handmade chocolate Rabbit Lollies from Choc Affair are the perfect treat for kids (or adults). Choc Affair, who came to Funding Circle back in July 2013, also supply a range of unique flavoured chocolate bars such as Lime & Lavender, Raspberry & Rose, Lime & Sea Salt and Orange & Geranium. Divine!

2. Do you love organic and fairtrade sweets?

If you do, Luxury Truffles from Naturally Good Food are a must try for you! The truffles are hand-rolled, dipped and tumbled in milk chocolate flakes and finished with a delectable champagne centre. They also stock an organic and gluten free Cheeky Orange Bar which is suitable for vegans.

1. A unique spin on the classic Easter egg.

And our number 1 Easter goody is the Milk Chocolate Easter Egg from Hamilton’s Chocolates. Handmade with heavenly chocolate, they are guaranteed not to disappoint! In February 2014, Hamilton’s Chocolates used their business loan to purchase additional equipment so they could create different types of tempting goodies.

Looking for more inspiration?

Read through our other gift ideas supporting small businesses.

Do you want to grow your business?

We’ve helped more than 15,000 businesses in the UK, US, and Europe access finance for a whole range of needs. You can apply online in 10 minutes, and you’ll hear back from our team within 2 working days.

Enjoy Lending. The Funding Circle Team

Picture story: 3 steps to overcoming a financial pickle

Inspired by the glamour and excitement of Awards season we visited production company Pickle Jar Films at their studio in North East London earlier this month. The business is run by husband and wife team Liz Robinson and Kevin Hylands, who have over two decades of experience working on hit television shows for major UK broadcasters.

The couple set up the business in 2013, working around their hectic TV production schedules out of their spare bedroom until they were ready to go live, and traded creative skills with friends to build the business. Liz told us, “a great friend of ours builds websites, so we made him a film and he helped set up our website.”

Since launching, the pair have produced videos for a range of clients, from Universal Music to Mr Porter. They’ve even produced promo videos and music films for Genesis Publications featuring Ronnie Wood, Paul Weller and Jimmy Page.

The business has grown year on year, and needed a cash injection to kick-start 2016 and attract new clients. However, the prospect of borrowing money seemed quite daunting and the couple had been disappointed when it took several weeks to secure a workable overdraft. A client and close friend, who runs bespoke jewellery design company Tatty Devine, had used Funding Circle and suggested it might work for Pickle Jar Films too.

In January 2016, Liz and Kevin took out a £15,000 loan through the Funding Circle marketplace, describing the process as “easy and quick,” to expand operations. In this picture story, Liz and Kevin discuss their experience of Funding Circle and you can see some behind the scenes images of filming:

Pickle jar films a london production company

Pickle jar films husband and wife team

pickle jar films memorable business

pickle jar films clients

pickle jar films documentary style films

pickle jar films oxfam laura ashley

pickle jar films funds marketing strategy

pickle jar films family business

pickle jar films trading for two years

3 steps to applying for a business loan at Funding Circle

  • 10 minutes: create a full application online and you’ll be assigned a dedicated account manager
  • 2 working days: receive an answer from a decision maker
  • 7 days: your loan is listed on the marketplace and funded by investors

We’ve helped more than 15,000 businesses in the UK, US and Europe access finance for a range of finance needs. You can check your eligibility online in just 30 seconds.

Record lending week & The Sunday Times 100 Best Companies | Weekly Lending Review

Week 9: 22 – 26 February

We’re really pleased to have made it onto The Sunday Times 100 Best Companies to work for list for the second year running! Do you have friends or family who’d like to work at Funding Circle? You can see a list of our current vacancies here.  

New loans available to you

There are currently 32 loan requests on the marketplace, and thousands of loan parts available for you to buy.

The total value of new loans listed on the Funding Circle marketplace was £15,452,380 averaging at £80,502 per loan. The largest loan value was £509,260 and the smallest loan value was £5,000.

Business loans available to bid on:

Gross interest rates are before fees and estimated bad debts. Your actual return may be higher or lower as by lending to businesses your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 22-Feb represents the week of 22nd – 26th February.

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 (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)
WLR 9 - yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR - 9 - loans listed

Listed loan value per week

WLR 9 - loan value

Total amount lent

WLR 9 - amount lent

Loan parts available to buy from other investors

News you should know

T&Cs

We’ve made some minor wording changes to our T&Cs for investors (specifically clauses 1.1, 1.2 and 5.1), to clarify the contractual relationship between each investor and the borrower when a loan is made. Please view our updated terms and conditions, or contact a member of our customer relations team if you have any questions.

Loans defaulted last week

Air conditioning specialist. Loan 7339. Risk band C

This Surrey business was established in 2007 and was placed into liquidation in January.

Motorhome showroom. Loan 10058. Risk band C

This Swansea business has been running since 2007 and is being placed into creditors’ voluntary liquidation.

Training company. Loan 7705. Risk band B

This Glamorgan business was established in 2010 and are proposing a company voluntary agreement.

Meat wholesaler. Loan 2751. Risk band B

This Manchester business has been running since 2005 and was placed into administration in December.

Street lighting installer. Loan 5339. Risk band A

This Kent business was established in 2010 and has become unresponsive after missing repayments.

Mechanic. Loan 13688. Risk band D

This Swansea business has been running since 2011 and was placed into creditors’ voluntary liquidation in December.

Motor bike saleroom. Loan 5679. Risk band B

This Lancashire business was established in 2010 and has become unresponsive after missing repayments.

Solicitor. Loan 3522. Risk band A

This Tyne and Wear business has been running since 2010 and has become unresponsive after missing repayments.

Solicitor. Loan 6817. Risk band D

This Lanarkshire business was established in 2014 and is three months in arrears.

Baking and party suppliers. Loan 13605. Risk band A

This Ayrshire business has been running since 2010 and was placed into liquidation in December.

Wood burning stove installer. Loan 13614. Risk band C

This North Yorkshire business was established in 2012 and was placed into liquidation in January.

Print company. Loan 14987. Risk band D

This Surrey business has been running since 2006 and is being placed in creditors’ voluntary liquidation.

Mechanic. Loan 9018. Risk band D

This Dorset business was established in 2014 and is three months in arrears.

Clothing manufacturer. Loan 14625. Risk band A

This West Midlands business has been running since 1993 and was placed into administration in February.

Lending to businesses can deliver attractive returns, while helping businesses access the finance they need to grow. However, from time-to-time some businesses will be unable to repay their loan, which is why lending a small amount to lots of different businesses is so important. Watch our 90 second diversification video to find out more. Remember, by lending to businesses your capital is at risk.

Our collections and recoveries team are working to recover the outstanding amounts for all of the loans described above and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, the Funding Circle team