The Funding Circle ISA is on its way!

We’re excited to announce that from Thursday 30th November we will start rolling out the ISA account to all current investors. This means soon you will be able to earn attractive, stable returns tax-free.

How will the ISA account work?

The Funding Circle ISA will work just like your existing Funding Circle account, while also providing you with:

  • A boost to your earning power – the interest you earn with an ISA is tax-free. As an example, if a higher rate taxpayer lends £20,000 through the Funding Circle ISA and earns a one-year return of 7.5* after fees and bad debt, their post-tax earnings after one year could increase from £900 to £1,500.
  • Flexibility the ISA account is a flexi-ISA. This means you can withdraw any available funds without affecting your annual £20,000 ISA subscription limit, providing you transfer them back in by the end of the tax year.

     

  • A simple investment experiencecreating an ISA account takes just a few minutes, and can be opened from your existing Funding Circle account using the same login details. Once opened, choose one of our two lending options and start lending.

     

  • An easy way to build a well-diversified portfoliowe recommend lending £2,000 or more, so you can spread your funds across at least 100 businesses for a more stable return. If you would like to start with less, we are introducing an initial minimum card transfer of £1,000 when opening an ISA account or a new Classic account.   

     

  • No fees to access your money – as with your existing Funding Circle account there are no fees for selling your loans

     

As part of this process we’re also renaming existing Funding Circle accounts as the Classic account. Remember, by lending to businesses your capital is at risk, while tax rules and relief can change depending on your personal circumstances.

Providing every investor with the best possible lending experience

Based on the conversations we have had with investors, we expect the ISA to be popular. To manage this interest in the fairest way, and to ensure there are enough lending opportunities on the platform for all investors to continue earning attractive, stable returns, we will be opening up the ISA Account to all current investors (those who created an account before 23rd November) in the following order:

  • Investors who are actively lending (have lent to a business since 1st May 2017)
  • Investors not actively lending but who have previously transferred in funds
  • Investors who have not previously transferred in funds
  • New investors and those who have opened a Classic account after 23rd November 2017

We will open the ISA to each group of investors in the order their account was created. We will keep you updated on our progress over the next few months.

We’ll email you when your ISA is ready to be opened

Once you’ve received your email confirming you can now open your ISA, you’ll be able to login to your account through our website and create an ISA account in a few easy steps, subject to eligibility criteria:

To help manage demand, initially you won’t be able to transfer any existing ISA subscriptions you hold to your ISA account. You will be able to transfer your Funding Circle ISA to another ISA provider, although it’s important to remember that loan parts that can’t be sold won’t be transferred and will no longer be eligible for tax-free interest.

Once all current investors have had an opportunity to create an account, we will launch the ISA to new investors. Following this, we will start to rollout the ability for you to transfer in existing ISA subscriptions.

Although you can manage both an ISA account and a Classic account using the same login, it’s important to remember they are separate accounts that will lend to a separate portfolio of loans.

Transferring loan parts from your Classic account to your ISA account

Due to regulatory restrictions, you are unable to transfer loan parts directly from your Classic account to your ISA account. However you can sell your loans quickly and easily to other investors, providing they aren’t late or experiencing any credit issues, before withdrawing your funds to a UK bank account and then transferring them to your ISA.

We’re pleased to be able to provide you for the first time with attractive, stable returns tax-free. You can find out more about the ISA account, and register your interest if you are not currently lending through Funding Circle, here. More information can also be found in our FAQs. If you have any questions please get in touch.

Enjoy lending,

The Funding Circle team

*The projected return is an estimate of the annual return, after fees and bad debts, that a diversified investor could earn by lending through the Balanced lending option as of 23rd November, 2017. You can see how the return is calculated here. Your actual return may be higher or lower, and by lending to businesses your capital is at risk.

November’s Lending Impact and Borrower Stories

.NovemberInvestorImpact

In this month’s Lending Impact, watch our latest case study video of The Strings Club, check out the article most read by our business community, and find out how you can prepare for The Ashes with five Funding Circle borrowers.

ThisMonthsTopArticle

Do you work harder than Mark Zuckerberg?

Consider yourself a hard worker? Find out how your working week stacks up against the likes of teachers, pilots, professional footballers, small business owners and corporate CEOs in our blog.

NovemberSuccessStory
StringsClub

In our latest case study video, meet Amy, Director of The Strings Club. In 2012, Amy set up the business with one simple mission: to educate and inspire children through music. Watch the video to find out how your lending has helped Amy grow and develop her business, which is now an award-winning musical education group for children aged 4-11. 

Watch The Ashes like a true Lady or Gentleman

With the start of one of sport’s greatest rivalries this Thursday, we’ve put together a list of five businesses that will help you celebrate The Ashes in a true English manner. All of these businesses were able to expand and develop thanks to your lending. Dive in here.

October’s Lending Impact and Borrower Stories

In case you missed it, here’s last month’s post, where we met Tom & Sian, the Founders of Bobbin Bikes, and listed our top five essentials to prepare for Bonfire Night.

Up next

At the beginning of December we’ll publish our Insights and Analysis blog to review November’s activity. This will  include 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

Are you Made to do More?

made to do more

Small business owners have a restless spirit. They have the courage to stand up and go their own way and say “I can do this”. We’re here to help them go further, and we want to support everyone who has that vision. Over half of Brits (56%) think they have the skills to run their own business, but only 13% believe they’re entrepreneurial. If everyone really believed they were Made to do More, we could boost the economy and ignite even more opportunities.

Time to believe

We want to celebrate the big thinkers and the tenacious workers, the people who get up and decide to tackle something new, to give them the belief to take that leap and go their own way.

By realising your own unique attributes and perspective you’ll find the seeds for your future success. If you don’t see yourself as an entrepreneur, you’re in good company, as only 26% of business owners consider themselves entrepreneurial. You don’t need a vision for an empire, just a spark, an idea, and the belief to see it through.

Life would be boring if we all saw things the same. See how your perspective shapes your potential.

From determination and hard graft to passion and creativity, everyone has unique personality traits which give them the potential to succeed. Do you know what yours are?

Our personality test on Facebook can tell you where your talents lie. It’ll help you decide if you’re more of a Business Creative than a Planner, and understand how you can use your attributes to thrive as a business owner.

Head to our Facebook page to take the test

What do you see?

Look at these images and tell us what you see.

 

Now have a look again – do you see something different? What about your friends, family, colleagues? You’ll be surprised what they say.

 

made to do more

 

Do you see a skull first? If so, you’re a Business Creative. You have an exceptional ability to adapt and react to any business situation. You’re intrinsically motivated to succeed within the workplace and will be at the forefront of how a company develops. Your ideas are ready to take you to the next step.

Or do you see a light bulb? If so, you’re a Big Picture Thinker. You’re reliable and always have a plan in place to get the job done. You solve complex problems by using your instincts to work towards your end goals, and don’t necessarily worry about all the details. No business can truly succeed without this type of thinking.

made to do more

 

Do you see cloth? If so, you’re a Big Picture Thinker. You’re reliable and always have a plan in place to get the job done. You solve complex problems by using your instincts to work towards your end goals, and don’t necessarily worry about all the details. No business can truly succeed without this type of thinking.

Or maybe you see a dog? If so, you’re a ‘Go To’ Person. As everyone’s best friend you’re able to get your colleagues to achieve heights they thought they never could. You’re emotionally intelligent and energetic, so naturally fall into a leadership role.

made to do more

 

Do you see a crocodile? That indicates you’re a Business Creative. You have an exceptional ability to adapt and react to any business situation. You’re intrinsically motivated to succeed within the workplace and will be at the forefront of how a company develops. Your ideas are ready to take you to the next step.

Or do you see an island? If so, that might mean you’re a ‘Go To’ Person. As everyone’s best friend you’re able to get your colleagues to achieve heights they thought they never could. You’re emotionally intelligent and energetic, so naturally fall into a leadership role.

made to do more

 

Does a lynx jump out at you first? If so, you’re likely to be a Big Picture Thinker. You’re reliable and always have a plan in place to get the job done. You solve complex problems by using your instincts to work towards your end goals, and don’t necessarily worry about all the details. No business can truly succeed without this type of thinking.

Or does a bird stand out more? If so, you’re a ‘Go To’ Person. As everyone’s best friend you’re able to get your colleagues to achieve heights they thought they never could. You’re emotionally intelligent and energetic, so naturally fall into a leadership role.

made to do more

 

Do you see a mother? If so, you’re a Big Picture Thinker. You’re reliable and always have a plan in place to get the job done. You solve complex problems by using your instincts to work towards your end goals, and don’t necessarily worry about all the details. No business can truly succeed without this type of thinking.

Or do you see a baby? If so, you’re a ‘Go To’ Person. As everyone’s best friend you’re able to get your colleagues to achieve heights they thought they never could. You’re emotionally intelligent and energetic, so naturally fall into a leadership role.

Looking to expand your business?

More than 30,000 businesses in the UK have accessed finance through Funding Circle. You could boost your cash flow, refurbish premises, hire staff and much more. Check if you qualify for a business loan in just 30 seconds.

Want to lend to businesses across the UK?

Make a return and a difference by supporting small businesses. It’s quick and easy to open your account and build a diversified portfolio. Lend alongside 73,000 investors and support the UK economy by signing up online today. Remember, by lending to businesses your capital is at risk.

Watch The Ashes like a true Lady or Gentleman

Swap your turkey for a duck, your snowman for a nightwatchman, and make sure you’ve got your sledging boots ready to go – it’s time for The Ashes. With the start of one of sport’s greatest rivalries this Thursday, we’ve put together a list of businesses to help you celebrate in a true English manner. Each one has been able to grow or develop thanks to your lending.

Sticky pudding not a sticky wicket

Reaching the tea interval can be crucial for a batsman, and it’s an exciting moment for spectators too. We’d recommend upping your tea time credentials with something suitably scrumptious from Country Puddings in Cumbria. Lynne Mallinson, who borrowed £30,000 in 2012, started out baking from her farmhouse kitchen. Lynne has now gone on to win countless Taste Awards. As they say, the proof is in the pudding…

BritishTea

Bubbles on the boundary

If you find yourself on the boundary or even just at home chatting cricket with friends, celebrate like a true lady or gent with a glass of bubbly from Love Champagne. Established in 2007, the champagne specialists sell types for all occasions from their base in Shropshire. To expand their product range, Love Champagne have borrowed over £150,000 since 2016.

Strawberries as crisp as a new ball

A delight all year round, the great British strawberry will bring a touch of summer to your winter ashes. A traditional staple for any Englishman, they’ll help ease the pain of that inevitable top-order collapse. Stock up on your supplies from Annie’s Fruit Shop, who’ve borrowed over £240,000 across 4 loans since 2015, to create a truly delicious dish. Eton mess anyone?

BritishBulldog

Get yourself a hat-trick

Top off your cricket attire with a traditional hat from Laird Hatters, perfect for the pavilion or the stands. Whether you’re looking for a fedora or a flat cap, you’ll find something to suit your style. With rich colours and top quality British cloth, you’ll not only feel great, but you’ll most definitely stand out. To expand their range of handmade hats, Laird Hatters have borrowed £140,000 across 2 loans since 2013.

Become the next Joe Root

If all the cricket commotion has you feeling inspired, why not buy your own cricket gear from The Cornish Cricket Company? A step up from the sticks of rhubarb they practice with in Yorkshire, they sell a variety of gear and even offer coaching. To expand their business and hire more staff, The Cornish Cricket Company borrowed over £50,000 in 2017.

Are you interested in lending to businesses like these?

Lend alongside 73,000 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 30,000 businesses in the UK have accessed finance from Funding Circle. You could boost your cash flow, refurbish premises, hire staff and much more. Check if you qualify for a business loan online in just 30 seconds.

You’re helping to inspire children through music

TheStringsClub

Meet Amy, a musician, teacher and entrepreneur. Amy graduated with a degree in music from Birmingham University. She then went on to become a violinist and violin teacher in London, and was shortly looking for new ways to bring music into the lives of those around her.

With a strong belief in the positive power of music, Amy decided to set up a camp for children aged 4-11 in the school holidays. In 2012, the very first Strings Club was launched just behind Camden market. With six budding string players eager to learn, the session was an instant hit. At the end of the course a parent asked “When’s the next one?” and the business snowballed from there.

Five years on, Amy now runs 6 Strings Clubs across the country, with plans to open in Bristol and Cheshire in 2018. Due to the ever growing popularity of these courses, Amy borrowed from Funding Circle in January 2017 to keep up with demand and expand her business into new areas. “The loans allowed me to expand my business, hire new staff, buy more equipment and launch a marketing campaign. Overall, the experience was very efficient and very helpful” says Amy.

In this short video, meet Amy and hear more about her passion for music and teaching.

Want to lend to businesses like The Strings Club?

Lend alongside 73,000 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 30,000 businesses in the UK have accessed finance from Funding Circle. You could boost your cash flow, refurbish premises, hire staff and much more. Check if you qualify for a business loan online in just 30 seconds.

Autumn Internationals: around the world with Funding Circle borrowers

Rugby fans of the world unite. It’s a long time since a school boy with “a fine disregard for the rules of football” picked up the ball and ran, and the global game is as exciting as ever. Now the Autumn Internationals are in full swing (low, sweet chariot….) we’ve made a list of 4 Funding Circle borrowers to celebrate the coming together of rugby playing nations from around the world. Thanks to investors like you these businesses have been able to grow and prosper.

Eat authentic Argentinian in London

Established in 2007, Buenos Aires has 5 steakhouses in London and the South East which represent Argentina with ‘passion and pride.’ The restaurant serves traditional Argentine cuisine, including meat straight from Las Pampas cooked on an authentic barbecue. They borrowed £80,000 back in 2014 to open a new site in Richmond. Everything you need to be fighting fit to watch a Pumas game!

Sushi

Taste the Orient in Newcastle

Save the airfare and sample hundreds of Japanese dishes at St Sushi in Newcastle City Centre. Dishes range from soup noodles to bento boxes and everything in between. The toon’s favourite sushi spot opened in 2006, and recently borrowed £106,000 to refurbish. Healthy and delicious, it’s tastier than a Japanese World Cup run.

Indulge in an Italian in Windsor

The Quagliozzi family  have been serving fresh and delicious dishes from their native Naples since 2009. They now have 4 restaurants for you to choose from including Viva L’Italia and the Italian Steakhouse. Book a table and talk tactics with your nearest and dearest while enjoying some superb spaghetti. More than 800 investors, like you, have helped the family business open a new Italian supermarket too!

wine

Stock up on South African Sauvignon Blanc

According to the Cambridge Wine Merchants, who borrowed over £200,000 to expand, white wines from South Africa are fast overtaking reds in terms of international respect. Stock up on wines to watch the Springboks this Autumn from one of their 7 shops in Cambridgeshire or buy online. Started in 1993, they’ve won ‘Merchant of the Year’ at the International Wine Challenge (the world’s biggest wine competition) and three times been voted the UK’s No. 1 Independent Drinks Retailer. If you’re South African, maybe get an extra bottle to help forget the defeat to Ireland.

Are you interested in lending to businesses like these?

Lend alongside 72,000 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 29,000 UK businesses have accessed finance through 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.

Digging into the data: Stress testing the businesses you lend to

At Funding Circle, our aim is to build a sustainable platform that allows you to earn attractive, stable returns by lending directly to creditworthy businesses. To help achieve this, we rigorously prepare so you can have confidence in your portfolio remaining resilient during every stage of the economic cycle. Part of these preparations include regular stress-tests of the businesses you lend to, and we wanted to share the results of our most recent test with you.

What is a stress test?

Stress tests allow organisations to estimate how their assets are likely to perform during adverse economic periods. These tests form an integral part of any prudent risk management strategy, as they allow us to simulate what could happen to your returns during tough economic conditions, such as a recession. A recession is characterised by a sustained period ‒ typically two consecutive quarters ‒ of negative GDP growth.

What did we do?

We have built on previous tests carried out on the Funding Circle loanbook, in both 2014 and 2016, to make this year’s test the most sophisticated yet. Using more than 25 years of UK insolvency and macroeconomic data, alongside 7 years of small business lending data, our experienced credit risk management team have created a bespoke stress testing model. By applying the same scenario used to stress test the UK’s leading banks to this model, we can estimate how a major recession might impact the returns earned by Funding Circle investors.

Methodology

The starting point for any stress test is to create a number of example portfolios and establish how we expect those loans to perform if the UK economy remained stable. We call this our base scenario. It’s also important to note that we aren’t stress testing any individual loans, instead looking at how overall portfolios would react under stressed conditions. We created two example portfolios:

  • Portfolio A – representing an existing investor, comprising all outstanding small business loans in the Funding Circle loanbook (as of June 2017).
  • Portfolio B – representing a new investor, comprising all small business loans made on the Funding Circle platform in the first six months of 2017.

In our base scenario we would expect Portfolio A to earn an annual return of 6.7%, and Portfolio B to earn 6.8%, after fees and bad debt but before tax.

We then simulated the effects of a recession to these two portfolios. This simulation is called a stress scenario, and it shows what could happen to returns if the UK were to enter a period of severe recession.

This year we haven’t included secured property loans within our example portfolios. This is because these loans make up an increasingly diminishing proportion of the Funding Circle loanbook (less than 10% as of June 2017). More information on how secured property loans could perform in a downturn can be found in last year’s blog.

Building the Funding Circle stress testing model

It’s important that our model accurately reflects how changing economic conditions impact the returns earned by Funding Circle investors. To do this we established a mix of key economic indicators, including inflation, unemployment and interest rates. Carefully combining the right mix and weighting of indicators allows us to estimate how small businesses react to changing conditions.

The chart below shows how closely the overall UK small business insolvency level (the number of businesses who are unable to repay their debts) tracks the insolvency level estimated by our model. This is especially true when looking at the last two major UK recessions, in 1990 and 2008.

Source: Office of National Statistics

This high degree of correlation gives us confidence that changes to our mix of economic indicators closely estimate how small businesses in the UK would react during a stressed scenario. As the Funding Circle loanbook is well-diversified across regions and sectors, and broadly reflects the overall make-up of small businesses in the UK today, we can expect that businesses you lend to will react similarly.

It’s worth noting that businesses that have been trading for at least two years, like the ones you lend to, experienced a lower than average insolvency level during the 2007/08 recession. Businesses borrowing through Funding Circle are on average 10 years old. In addition, approximately half of the businesses in the Funding Circle loanbook successfully traded through that recession, further highlighting their resilience.

Timing of a recession

It’s also important to consider the timing and duration of any stressed scenario when measuring its impact on small businesses. Defaults are not spread evenly over the life of a portfolio of loans, typically starting approximately four to six months after the loans are made, and decreasing again as the outstanding amount to repay falls. In addition, all of our small business loans amortise. This means borrowers pay back a proportion of their principal along with interest each month. The timing and duration of a recession, along with amortisation, reduces the impact of a recession on older portfolios of loans. You can see this from the illustrative graph below, showing what happens to the base default rate when you apply a recession to a portfolio of loans after 18 months:

You can see that the earlier a recession starts, the more significant impact it has on a portfolio of loans.

PRA scenario and results

We tested our example portfolios against the Prudential Regulation Authority’s (PRA) 2017 stress test scenario. This is the same test currently being undertaken by all major UK banks. The PRA scenario provides a range of macroeconomic changes designed to simulate a severe UK recession. By applying these changes to our stress testing model, we can estimate how our example portfolios would be impacted.

The chart above shows that the PRA scenario (in orange) simulates a recession more severe than experienced by small businesses in 2007/08. This recession would start immediately (June 2017), and last for 60 months. During the stressed period our model estimates that the default rate for small businesses would increase by 1.9x. In addition we have also assumed that the recovery rate on defaulted loans would reduce by 40%. The table below* shows how our two example portfolios would be impacted.

Even during this severe recession both our example portfolios remain resilient, although Portfolio B is affected slightly more due to the timing factors discussed previously.

Looking in more detail at how the returns experienced by Portfolio B change throughout the stressed period, even at the point where defaults are at their highest the projected return remains above 3.5% per year after fees and bad debt, but before tax.

When simulating a recession similar to 2007/08, the projected annual returns for our example portfolios after fees and bad debt but before tax are 5.3% for Portfolio A, and 4.9% for Portfolio B.

Validating our results

We wanted to ensure our stress testing model stands up to scrutiny, so you can have confidence that we’ve approached our work in the right way. To help us do this, we asked a leading financial consulting firm, True North Partners, to conduct an independent review of our stress testing and return forecasting models. They have confirmed that the methodology used was valid, and the results based on this methodology are an accurate representation of how your returns could be affected by an economic downturn.

Actively monitoring the economic climate

The results of our test assume that in a stressed scenario, Funding Circle would take no action to mitigate losses. However, we have a number of processes in place to help anticipate and react to worsening economic conditions. In addition to closely monitoring the performance of the loanbook, we also track external macroeconomic conditions to help us identify when a downturn may be approaching. If there were signs that conditions were worsening, we would adjust our credit assessment process to price in some of its effects of on new loans. You can read more on how we assess businesses on our blog.

Conclusion

We hope you’ve found this information useful. We’re committed to helping you earn an attractive, stable return that remains resilient even during the toughest times. You can read more about the performance of Funding Circle loans on our statistics page. If you have any questions please don’t hesitate to get in touch.

Enjoy lending,

The Funding Circle team

* GDP = Gross Domestic Product

CPI =  Consumer Price Index

BOE = Bank of England

** You can see how projected returns are calculated here.

  

 

Earning for your retirement. October industry news

Peer to peer: Can you really get returns of 10%? – Moneywise

In a world of stagnant interest rates, peer-to-peer or direct lending platforms are offering people the opportunity to lend directly to borrowers so they can benefit from more of the return. By using a platform as a middleman, investors can enjoy more attractive returns, and businesses typically benefit from lower rates. In this piece, Moneywise interviewed a handful of investors to discuss their experiences across various platforms. Funding Circle investor Alison said, “…even if bad debts increased I still think I’d be earning more than going somewhere on the high street. I feel very comfortable with the risk I’m taking.” As you know, when you lend your capital it at risk.

6 steps you can take in your 20s to help you retire before 60 – Forbes

Retirement might not be on your mind just yet, but it’s never too early to start planning to ensure that you’re in the best financial position possible when the time comes. There are many different ways to start preparing yourself – big and small – depending on what you want to achieve, such as keeping better track of your spending or investing your spare cash. Simon Read, a personal finance expert, took an in-depth look into the topic and outlined some tips and tricks to take into consideration. Have a read on our blog.

How to start a business for next to nothing: Seven steps to getting your idea off the ground – Daily Mail

We all know that getting your business off the ground can be difficult, which is why the satisfaction and reward you feel once it begins to grow is that much sweeter. From managing growing pains and finding the right office space, to knowing when it’s the right time to take out a loan, every business owner is bound to face some hurdles along the way. In this article, learn how to tackle these challenges head-on and get back to doing what you do best: running your thriving business.  

This £4 billion problem stunting small business growth – City AM

When an exciting opportunity presents itself that has the potential to take your business to its next stage of growth, being able to get the right financial support is crucial. Every year, tens of thousands of small businesses struggle to access finance from the banks, according to figures from the British Business Bank. The rise of alternative funding sources, such as direct lending platforms, have given business owners much more choice and control over their development. With access to fast, fair and personalised finance that takes just days, more and more businesses are able to go even further.

London’s most influential entrepreneurs 2017 – Evening Standard

And finally, we’re pleased to see our co-founder Samir listed as one of London’s most influential entrepreneurs in 2017, alongside many other bright and motivated individuals. It remains evident that despite the backdrop of uncertainty caused by Brexit, London continues to be an attractive place to start and grow a business. In a recent case study, we spoke to Tom and Sian, founders of Bobbin Bikes, to learn about how their London-based bicycle business is on the road to success.

News

Your November Review – Insight and Analysis

YourNovemberReview

Last month was a global record month here at Funding Circle. In the UK alone, over £120 million was lent to businesses thanks to your continued support. We’re also pleased to announce that we’ve been recognised in the LinkedIn Top Companies list for 2017. Read more here or dive into your monthly analysis below.

Each month we bring you a regular column from Simon Read, a personal finance expert with extensive experience in helping people make the most of their money. In this month’s article Simon discusses the recent rise in interest rates and how this will affect your finances.

OctoberLendingFigures

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!

InfographicBlock

 

October highlights: meet two entrepreneurs

Our co-founder and UK Managing Director, James Meekings, met the founder of Sustainable Direction, the first business to borrow through Funding Circle. Watch the video to hear two entrepreneurs discuss the highlights and challenges of running your own business.

MonthlyTrends

These graphs show the most recent activity on our platform.

You’ve helped more than 8,900 small businesses access finance in the last 6 months…

Volume

Totalling over £630 million lent

Value

October 2017 sector breakdown

Amount lent to each sector

Sector

October 2017 regional breakdown

Amount lent to each UK region

LoansDefaultedLastWeek

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. Our automatic lending tool will help you diversify by splitting your investment across lots of businesses. We recommend lending £2,000 or more, so you can lend to 100+ businesses, with no more than 1% going to each one.  

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 2nd November 2017.  For further information on why Funding Circle defaults loans you can read our FAQ here.

Collections

HowItWorks

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

Up next in November, 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

*Data from CEBR report

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.

Read between the lines: How can rising interest rates affect your finances?

We regularly bring you a 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 provided some pointers on planning for retirement.

The much-anticipated interest rate rise finally hit at the beginning of November. It was interesting for two main reasons.

First is the fact that it was the first rise in the Base Rate for 10 years. Do you recall what it climbed to then, back in July 2007? The base rate actually went up 0.25% to 5.75%. That seems incredible now, when we’ve experienced almost a decade of record low interest rates.

In fact it’s only been for 18 months that the rate has been at its all-time record low of 0.25%. This month’s rate increase saw it climbing back to 0.5%, where most savers and borrowers have experienced it since the Bank of England lowered it to that level to March 2009.

But the second interesting thing about the rate rise is what it tells you about your money. If you haven’t already got the message that it should be a wake-up call for you to check your finances, then now is the time to get your house in order.

It’s extremely likely that the rate increase is just the first of many over the next 12 months or so. The Bank of England will need to act again to protect Sterling ahead of Brexit and to counter rising inflation. So you should be acting to protect your interests, with interest being at the forefront of your mind.

Think about your savings. While a rise should mean better interest offered at banks and building societies, rates are still likely to remain paltry on deposit accounts. That means thinking carefully about where to stash your nest egg and making the most of alternative options such as peer-to-peer lending or, if you’re prepared for greater risk, stock market-linked investments.

What about your mortgage? If you’ve got a fixed rate loan then you won’t notice the effect of any interest rate rise until the end of your deal. But with further increases ahead, by the time you arrange a new deal, charges may be much higher.

For that reason it’s worth looking at switching sooner.

However you need to check if there are any early repayment penalties on your existing deal and do your sums carefully to ensure that switching will actually be worthwhile in the long-term, especially after taking into account any new charges you may incur.

If you have a variable rate mortgage or tracker then you will be hit by the rate rise much sooner.

By how much? The Nationwide building society reckons a 0.25% rate rise would increase monthly payments by £15 to £665 for the average variable mortgage, or an extra £180 a year. Depending on the size of your mortgage, the rate increase could cost you much more.

However much it is, it’s worth checking out fixed mortgage deals to work out if it’s worth changing. If you have a low variable rate, then you should probably stick with that for the moment. If you’re paying 3% or more, however, then you would be better off finding a lower fixed rate.

And in the months ahead keep an eye on rates.

Some lenders priced in the rate rise to their mortgage rates some weeks ahead. If you see a trend for fixed rates to start to rise, that may be the time to act, before the best low deals disappear altogether.

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

How to be a star baker

Just 10 short weeks ago Paul, Prue, Noel, Sandy were joined by 12 nervous amateur bakers in the famous Bake Off tent to find out who would be crowned this year’s winner. It was also an exciting moment for Funding Circle as our latest TV advert, featuring fantastic drummer Victoria, was broadcast during the show.

Bake off

What a series it’s been. We all fell in love with Liam, congratulated Steven on his star baker hat-trick and watched Kate literally drop a clanger. But, as another year of The Great British Bake Off draws to a close and champion Sophie wanders into the sunset, we’ve put together 4 fantastic businesses who could help you create your very own showstopper this Autumn. All these businesses have been able to prosper and grow, thanks for investors like you.

House of Hackney Oven GloveOven glovekitchen textile

Treat yourself to a new apron and oven gloves

Every star baker needs a stunning set of oven gloves. Championing print, colour and texture since 2011, House of Hackney are the perfect place to find something special to bring your kitchen to life. The husband and wife team borrowed £110,000 to purchase stock and cope with demand for their products. Don’t miss the boat!

Hidden gems for creations

Are you looking to create a showstopping Christmas Cake, or simply want to add a little something extra to your bake? Look no further than online specialist Naturally Good Food for a variety of dried fruit, nuts and seeds. More than 900 investors, like you, have helped this environmentally friendly business invest in marketing and upgrade IT systems.

Brush up your skills on a weekend away

Cookery courses can be good for bakers of all standards to get started or brush up on specific techniques. Award-winning Ashburton Cookery School have borrowed £175,000 to expand their cookery school and are hosting a series of Baking Weekends in 2018. Set in beautiful Dartmoor, and covering everything from choux pastry to cakes and muffins, the course is perfect for any budding Bake Off champion.

  flower seal  lion label  Briddon Baker Sticker

Sealed with your own stamp

Every masterpiece deserves to be presented perfectly, so why not seal your packaging with a special sticker. Briddon Baker have been producing labels, seals and stickers from their base in Somerset since 1972. To purchase stock and a barcode machine, they’ve borrowed over £49,000 since 2013.

Are you interested in lending to businesses like these?

Lend alongside 72,000 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?

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