September’s Lending Impact and Borrower Stories

In this month’s post, find out how your lending has helped businesses across the UK achieve their goals. See borrower Jim in a BBC documentary next week, watch investor Jan meet up with a kitesurfing business she lent to, and read our ideas for an amazing Oktoberfest.

A great month for
Jim, Managing Director at Channel Group, who’ll feature on Saving Lives at Sea on Tuesday next week. The BBC documentary series follows the Royal National Lifeboat Institution and the ordinary men and women who race to the rescue within minutes of a cry for help. We caught up with Jim last month to find out how Funding Circle investors, like you, have helped grow his outdoor activity business.

Watch our new video as Jan, a Funding Circle investor, heads to Worthing to meet Christine and have her first kite surfing lesson! Find out how your lending helped Christine pursue her dreams and set up The Kite, Surf & Sup Co.

Kitesurf Jan

Oktoberfest: raise a glass to these 4 glorious breweries!

Need some inspiration this Oktoberfest? Read about some great breweries which, thanks to the help of Funding Circle investors, were able to grow their business and continue offering a fantastic service for all of us to enjoy.

August’s Lending Impact and Borrower Stories

In case you missed it, here’s last month’s post, when we met husband and wife team Peter Robinson and Tracy Pound, and enjoyed the last of summer at Britain’s best beaches.

Up next

At the beginning of October, we’ll publish ‘Your October Review – Insight and Analysis’ including statistics from across the platform and helpful tips to make the most of your investment.

As always, if you have any questions or comments our dedicated team are here to help. And if you have any further suggestions we’d love to hear them.

Enjoy lending, the Funding Circle team

Windsurfing world-champion is riding towards success

Growing up by the stunning south coast of England, Christine Johnston’s love for windsurfing started at an early age. “My dad got me into windsurfing and I got quite hooked quite quickly.” she explains. Since then, Christine has won eight national titles and most impressively, won the World Windsurfing Championships in 2003.  

After finishing her competitive windsurfing career in 2008, Christine worked at an office job for five years, but found the work tiresome and dull. As an individual with an ambitious personality and a huge passion for watersports, she decided to quit her job and pursue her dream of becoming a kitesurfing instructor. One year later, after Christine completed her kitesurfing instructor course, she took her learnings into practice and founded KiTE SURF & SUP Co, a kitesurfing school and online shop based in beautiful Brighton and Worthing in 2014.

After two years of steady and successful growth, Christine wanted to grow her online shop and update the website to help develop her company even further. In order progress with these plans, she received fast financial support from 126 Funding Circle investors in March 2016 who wanted to see her business thrive.

In this short video, learn more about Christine’s passion for teaching kitesurfing:

Are you interested in lending to businesses like KiTE SURF & SUP Co?

Lend alongside 65,000 investors and support small businesses across the UK by signing up online today. You can use our investor information guide to help you get started and there are thousands of loans which you can be a part of, making it quick and easy to build a diversified portfolio. Remember, by lending to businesses your capital is at risk.


Looking to expand your business?

More than 27,000 businesses in the UK have accessed finance from Funding Circle, helping with cash flow, refurbishment, hiring staff and much more. You can check if you qualify for a business loan online in just 30 seconds.

Read between the lines: pensions and retirement

Each month we will be bringing you a regular column from Simon Read, a personal finance expert with extensive experience in helping people make the most of their money. In his last piece, Simon looked at the impact of making small savings each month.

Do you know when you’re going to retire? It may seem a long way off, but if you don’t get your finances in order, it’ll be even further away. Why? Because if you don’t have a decent nest-egg to draw on, you won’t be heading for a happy retirement – just a struggling one.

And if you think you can rely on the state to support you when you give up working, think again. At present the state pension payout is just £159.55 a week. That works out at £8,296.60 a year.

Do you think you could survive on that when you retire? Some people have to, but you won’t if you save some extra cash to see you into a reasonably wealthy retirement.

Before I suggest some ways to do that, it’s also worth pointing out that the state retirement payout age is rising. What age do you think you will qualify, bearing in mind that the age is now the same for men and women?

Yes, it did use to be 65 for men and 60 for women but that’s changed. If you’re not due to retire before November next year the qualifying age will be 65 for both genders.

By October 2020 the age climbs to 66 and it rises again to 67 by 2028, that will hit anyone who is 56 or older already.

For younger folk the age is likely to climb again to 68 from 2037 – which means anyone born after 1969 will have to wait an extra year for the state pension. And there will be continual rises in the future which could mean your kids will have to wait until age 70 or older to qualify.

What that process underlines is that it’s up to you to ensure you have enough money in retirement to ensure a decent quality of living. How you do that is up to you. But don’t be put off by the word ‘pension’ – it’s simply a savings scheme with a specific purpose, to give you some cash when you get older and stop working.

You don’t have to save for retirement into a traditional pension scheme. Indeed if you want some flexibility about when you retire there’s an argument for saving elsewhere. In fact many people fed up with the returns from traditional pension managers prefer to invest their retirement cash themselves, whether that’s in stocks and shares, property, peer-to-peer or other type of opportunity.

Saying that, if you work for a company, it has to offer you a workplace pension and that is almost certainly worth using. That’s because many companies match your own contributions as well as there being tax relief on every pound you put in. So if you’re a 40% taxpayer, your pound is matched by your company and taking account of the tax benefit, every pound is immediately worth £2.40 to your pot.

But even though that sounds great, you should be planning other ways to build up your retirement pot. Think about it this way: how much do you want to live on when you give up work? Would £30,000 do?

Earlier this year, consultants at Hymans Robertson worked out how much you’d need to save a month to achieve that target. Because of the earnings you make from compound interest, the amount climbs dramatically the older you are when you start saving.

The actuaries reckoned a 25-year-old would need to save £342 a month, while a 35-year-old would need to stash away more than £500. If you’re 45 and haven’t started saving for retirement, your figure would be more than £1,000 a month.

Sobering, isn’t it? The simple truth is that the sooner you start planning for your retirement, the better life you’ll be able to have when you give up work.

Your pensions planning checklist:

1 – Pick the age you’d like to retire

2 – Plan how much you’d like to live on when you retire

3 – Work out how much you need to save per month

  • Check your state pension age, but remember this may change if you are still young
  • If you have a company pension, find out what their contribution is and how it is managed
  • Use a pensions calculator to see what savings you need to make
  • If you need a boost, look at your investment options, and how much interest you could earn

Other resources:

The views expressed here belong to the author and do not represent those of Funding Circle. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice.

The information and views contained here are provided solely for informational purposes and should not be construed as legal, tax, regulatory, accounting or investment advice, or as a recommendation or an offer or invitation by Funding Circle.

To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, such information contained here.

If you have any questions, please speak to your professional adviser or seek independent specialist advice.

Your September Review – Insight and Analysis

Your September Review

On 18th September we’re launching an exciting new lending experience to make lending to businesses through Funding Circle simpler, better and fairer for all investors. Read about the two new lending options on our blog or dive in to your monthly analysis below.

Last month, you and other investors helped businesses to take new opportunities, create new jobs and drive energy into the UK economy — thank you for your continued support!

August industry news

Written up in Bloomberg, Funding Circle co-founder and CEO Samir Desai met borrower By the Horns brewery to find out how the EU referendum has affected their business. Read this and more in last month’s industry news.

Monthly trends

These graphs show the most recent activity on our platform.

You’ve helped more than 8,500 small businesses access finance in the last 6 months…

Number of loans September

Totalling over £605 million lent

Value of loans

August 2017 sector breakdown

Amount lent to each sector

August sector

August 2017 regional breakdown

Amount lent to each UK region

Region August

Loans defaulted last week

As part of lending to businesses, a small percentage will not be able to fully repay their loan. This is known as bad debt and is a normal part of business lending. We believe diversification, where you lend no more than 1% of your total to each business, is the best way to reduce the impact this has on your return. You can diversify automatically using our Autobid tool.

Each week, we publish a list of the loans being defaulted on the Customer support section of our website under ‘Announcements.’ To see a breakdown of the loans defaulted last week simply click on loans defaulted 31st September 2017.  For further information on why Funding Circle defaults loans you can read our FAQ here.

Collections and recoveries

How it works

You can also read more about how our collections and recoveries process works (part one and part two) on our blog.

Up next in September, we’ll be looking at the impact your lending is having on the UK economy and bringing to life some of the businesses you’ve helped access finance.

As always, if you have any questions or comments our dedicated team are here to help. And if you have any further suggestions we’d love to hear them.

Enjoy lending, the Funding Circle team

*The current estimated return is a weighted estimate of the annual return after fees and bad debts that investors could earn from lending money to businesses seeking loans today. 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 3000 loans accepted on the marketplace. The average return is weighted by loan amount, compounded and before tax. The return is updated daily. See the full calculation here.

This blog is a general summary, and should not replace financial advice tailored to your specific circumstances. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice. If you have any questions, please speak to your professional advisor or seek independent specialist advice.


A not so quiet summer. August industry news

Aegon eyes £160m deal for small businesses – the Times

Last month we were pleased to announce a strategic long-term partnership with Aegon to support the growth of UK small businesses. In the first 12 months of a four years program, the initial £160 million investment will help around 2,600 businesses, creating up to 6,400 new jobs. Stephen Barclay, Economic Secretary to the Treasury said, “This partnership with one of the UK’s largest FinTech firms is further proof that the UK remains the global leader in FinTech.” Read more in CityAm. Also, tune in on Bloomberg (skip to 34:00) to hear our CEO and co-founder Samir discuss the news and his vision for the future of small business lending.

London Craft Brewer Rides Out Brexit With Hoppy Ales and Hope – Bloomberg

By the Horns Brewery is an excellent example of a thriving business that has gone for growth thanks to accessing finance through online lending. The trendy brewery’s loan was funded by the European Investment Fund through our platform, which allowed the team to invest in a new bottling line. Samir recently met with the business owner, Alex Bull, who took him on a tour of his site and discussed how Brexit is affecting his business. With the pound at record lows, British goods are cheaper to export overseas. Read the full story in Bloomberg and learn about the importance of retaining access to capital post Brexit.

Debunking the peer-to-peer lending myths – CityAM

As online lending continues to develop, a range of recurring questions have arisen such as: ‘will platforms suffer in an economic downturn?’ and ‘what will happen when interest rates rise?’. Various platforms have conducted stress tests to reveal what could happen to investor returns in times of economic stress, including us. Our results predict that in a deeper and longer-lasting recession than 2008, investor returns are likely to remain attractive. Although as always, capital is at risk. Read more about the potential future growth of the industry in Forbes.

Funding Circle is kicking off a marketing bonanza with a Great British Bake Off TV ad – Business Insider

Shortly after the exciting introduction of our fresh new look, we launched a TV advertising campaign that celebrates those who are Made to do More. Premiered during the Great British Bake Off last week, our TV ads will allow us to reach a wider audience and help bring more amazing businesses to the platform that need your continued support. You can see both adverts on our blog. Feel free to like, share and help us spread the word, so we can continue to help businesses and investors across the UK go further.

Funding Circle simplifies its investment protocol – Business Insider

And finally, as we announced on 21 August, we will launch a significantly improved and upgraded version of our existing Autobid and Autosell lending tools on 18 September, and the option to manually choose which businesses to lend to will be withdrawn. This change comes with the aim of creating a level playing field for all investors and making lending simpler, better and fairer for all. We appreciate that this is a significant change so if you have any questions or concerns, please provide us with your thoughts here. For more information, check out our blog or read more in AltFi.


Removing manual bidding – your questions answered

Last week we announced some improvements to how lending and selling through Funding Circle will work, with the aim of making lending simpler, better and fairer for all investors. 

Since then, we’ve been listening to your feedback and have put together answers to the most frequent questions you’ve been asking.

Your account from 18th September

If I don’t choose a lending option, can I still use my Funding Circle account from 18th September?

If you are an Autobid user, you will automatically continue to lend to businesses from 18th September and you do not need to select a lending option.

If you do not use Autobid you will need to select a lending option in order to continue lending to businesses from 18th September. If you do not select a lending option you can continue to login to your account, view your existing portfolio and withdraw your available funds, however you will no longer lend to any more businesses.

From 18th September, you will need to accept the new Terms and Conditions in order to continue using your Funding Circle account.

Will I be able to pause lending, or will it always be turned on?

You will be able to pause your lending at anytime. Your repayments will not be lent to more businesses until you turn lending back on.

What happens to my existing loan parts?

The changes we are making will only affect lending to businesses from 18th September, and will not affect any existing loan parts you own. You will continue to receive repayments from existing loan parts from 18th September, even if you do not choose a lending option.

How can I change my lending option?

  • Before 18th September: If you are not being transferred to a lending option (for example if you don’t currently use Autobid) you will be able to select an option the next time you log into your Funding Circle account. You can change your lending option by navigating to the Autobid page and following the link.
  • On and after 18th September: you will be able to change your lending option at anytime. Your choice of lending option will only affect any new lending, and will not change existing loan parts you own.

Selling loan parts

How will the secondary market work?

  • Before 18th September: On 21st August we launched a sell page that simplifies how investors buy and sell loan parts. You can sell your loan parts by going to the sell page and telling us how much you’d like to withdraw. We’ll list a selection of your loan parts for you approximate to that value. Once they’ve sold, the loan parts will appear as available funds which you can transfer to a nominated bank account. We have also removed the 0.25% fee to sell your loan parts. You will be able to sell individual loan parts and set a premium or discount up until 18th September.
  • On and after 18th September: Any remaining loan parts listed for sale at a premium or discount will be delisted and the option to sell loan parts individually will be withdrawn. All loan parts listed from 18th September will be sold at par value. All investors will buy existing loan parts sold by other investors, based on their lending preference.

Can I still buy or sell individual loan parts?

From 18th September you will no longer be able to buy individual loan parts from other investors, or sell individual loan parts to other investors.

Will I be able to sell loan parts that are larger than £100?

Yes. The new tool will only split your lending to a single business into smaller parts of £100 when lending to new businesses. You may still sell loan parts larger than £100 to other investors, providing they are no larger than 0.5% of the buyer’s portfolio.

Your new lending options

Will I be well-diversified by lending 0.5% of my portfolio to each business?

Since 2010, every investor who has lent no more than 1% of their portfolio to a single business for at least a year has made a positive return, with 92% earning at least 5% a year after fees and bad debt. This increases to 93% when an investor lends no more than 0.5% of their portfolio each time.

There are no guarantees with any form of investment, but lending 0.5% to each business will provide you with a very well-diversified portfolio. You can see this from the graph below, which shows the annualised return earned by 95% of investors lending for at least one year, by the number of businesses lent to.

Data is correct as of 1st July, and past performance is not a guarantee of future returns. Remember, by lending to businesses your capital is at risk.

Will I be able to choose the loan term of the business I lend to?

Our aim is for you to build a well-diversified portfolio and have the best chance of earning a stable return by lending to a wide range of businesses. Over the past seven years we have built up a large database of historical loan performance and have found there to be no significant difference in how businesses perform by loan term. In addition, if you do want to access your money early you can sell your loan parts to other investors and there is no cost to do so.

Will I now be investing in a fund?

No. By lending through Funding Circle you always lend directly to your own individual portfolio of businesses and no investor account is the same. This will not change as you will continue to enter into loan contracts directly with each borrower you lend to, so you are only exposed to the performance of those borrowers. This is very different to a fund where your money would be pooled together with all other investors and the return investors receive depends on the overall performance of the fund.

Funding Circle ISA

When are you launching a Funding Circle ISA?

We will be launching the Funding Circle ISA this tax year. Given we expect the Funding Circle ISA to be popular, we plan to launch it at a time to suit demand from both investors and borrowers. This will allow us to manage liquidity on the platform and help investors to earn attractive, stable returns.

Can I transfer my existing loan parts into the Funding Circle ISA?

No. For regulatory reasons, you will not be able to transfer any existing loan parts you own into a Funding Circle ISA. You will need to withdraw funds to your nominated bank account, before transferring them into your Funding Circle ISA.

If you can’t see your question here, you can find more information about your new lending experience in our FAQ.

Enjoy lending,

The Funding Circle team