Update to our projected returns

At Funding Circle, our aim is to allow you to earn attractive, stable returns by lending directly to a diversified portfolio of creditworthy businesses. As part of this commitment, we regularly review and update our assessment process and the interest rates at which you lend to businesses.

Following our most recent review, we have updated the projected returns we display for each lending option and will now show these returns as a range.

Introducing ranges for projected returns

The projected return is the annual return that a diversified investor could earn, after fees and bad debt but before tax, by lending to businesses through each lending option. To reflect there is an expected level of uncertainty when making predictions about loan performance we are introducing ranges for the projected returns.

What are the new projected returns?

Following our most recent review of our gross interest rates and taking into account the above, the projected returns for our Balanced and Conservative lending options are now:

  • Balanced – 6 – 7%
  • Conservative 5 – 5.5%

You can see more information on how the projected return is calculated here.

What other factors can affect your return?

It’s important to understand that your actual return may be higher or lower than the projected return shown for your chosen lending option. This can be caused by factors such as:

  • Actual performance may be higher or lower than projected – for example, more businesses may be unable to repay their loans if macroeconomic conditions were to change, such as during an economic downturn. In addition, the individual businesses you lend to may perform better or worse than projected.
  • The number of businesses you lend to – it’s important to understand that you are lending to your own individual portfolio of loans and not everyone will earn the same projected return. As your personal projected return depends on the loans your funds are matched with, the more businesses you lend to the better our lending tool will be at matching your funds to achieve the projected returns shown. Lending to more businesses also helps you earn a more stable return by reducing the impact of bad debt.
  • Your actual return is likely to change over time the projected return is the annual return you could earn once all loans have repaid and recoveries have been received from defaulted loans. It’s important to remember that bad debts do not typically occur evenly over the life of a group of loans, and it often takes time for recoveries to be made on defaulted loans. This means your return is likely to change over time. You can read more about this here.

Remember, by lending to businesses your capital is at risk.

Will this affect the businesses you lend to?

These projected returns only affect new loans made through the platform, and will not affect any loan parts you currently hold. We will review and if necessary, update the projected returns every three months. We display projected returns for the past five years of loans on our statistics page, and update these every three months.

You do not need to do anything and, by having lending switched on, you will continue to lend to businesses automatically. As always, you can change your lending option or pause lending via the lending settings page of your account.

If you have any questions about today’s news, please get in touch.

Enjoy lending,

The Funding Circle team

How to earn a more stable return with diversification

We want to help you get the most from your account and earn attractive returns. One of the best ways to earn a more stable return is diversification. Check out our infographic to find out what diversification means and how it works, or read our summary below. 

What is diversification?

Diversification is a way of spreading your risk. It’s basically a fancy word for saying “don’t put all your eggs in one basket”.

At Funding Circle, this means splitting your investment into lots of small pieces, then lending them out to different businesses.

Why is it important?

As an example, say you lent £2,000 all to just one business. If they were unable to repay their loan, you could lose all of your money in one go.

Instead, if you were to split your £2,000 across 100 businesses, you could then lend just £20 to each. Then if one or two of them couldn’t repay, you would only lose a small amount.

You would still have a great chance of earning a good return overall.

What do I need to do?

To help, we’ve made diversification easy. Our automatic tool will help you lend your money in small amounts to lots of different businesses.

We suggest lending £2,000 or more, as our lending tool will then spread your funds across at least 100 businesses, with no more than 1% going to each one. Everyone who has diversified like this for a year or more has earned a positive return. 98% have earned 4% or more.

To lend £2,000 or more and diversify your account today, simply login to your account.

Past performance is not a guarantee of future performance, and by lending to businesses your capital is at risk.

Enjoy lending

5 ways to treat your Dad this Father’s Day

Trying to think of something to get your Dad this Father’s Day? Instead of giving him another pair of socks or a coffee mug, we have come up with a variety of ideas for all the different Dads out there. All these businesses have been able to flourish thanks to your lending.

Organise a trip away

Does your Dad love being outdoors? How about organising a short trip away to the rural village of Alves in Northern Scotland? Here you’ll find North Alves Holiday Park. The company is run by a passionate couple who have come up with their very own unique style of “glamping”. When visiting this park you have the opportunity to stay in a SKARA central-BBQ cabin, which allows you to enjoy the pleasure of socialising and cooking at the same time. In order to continue to cater for the ever-growing needs of their customers, the company borrowed £31,000 on two separate occasions in 2017 and 2018.

 

Get ready for a fishing trip

Does your Dad reckon himself as a bit of an angler? If so head down to Top Tackle for his Father’s Day supplies this year. These guys offer a range of fishing tackle and other accessories. They deal with a number of major fishing tackle manufacturers, such as Korda and Preston Innovations. The company borrowed £5,000 at the beginning of the year. This funding helped to introduce even further ranges to their online portal and renovate their store in central Oxford.

Have some throwback fun

Get the flares out of the cupboard and break out the Dad dancing with at Razza Roller Disco! Razza was created by dance champion Gary Newley in 2012 with the purpose to deliver an incredible customer service for all. You can also book a skating lesson at Razza Skate Academy. The company was able to expand into other areas of the country after they borrowed £47,000.00 at the beginning of 2018, purchasing new DJ gear, safety equipment and uniforms.

Watch an extreme sports performance

Is your Dad more into adrenaline action? Check out Inspire Shows, who provide unforgettable extreme sports performances. You may recognise their team of highly skilled stunt individuals from the popular TV show “Don’t Tell the Bride”, where they conducted the world’s first ever extreme sports wedding. Thanks to your lending, the company purchased more stunt ramps for their nail-biting shows, enabling them to host multiple bookings on the same day.

Get a luxury grooming set

Finally, if your Dad is needing some R&R then you could always spoil him rotten with a gift set from Debonair Male and Fitness Grooming. Whether it’s their Deluxe Beard Oil Gift Box or Daily Shampoo Moisturising Conditioner Set, this luxury British brand provides a range of high-quality products with an innovative approach. Their aim is to make men of all ages and backgrounds feel good about themselves. The company was able to purchase new salon equipment after borrowing £13,000 at the beginning of 2018.

Are you interested in lending to businesses like these?
Lend alongside 79,000 investors and support British businesses by signing up online today. You can use our investor information guide to help you get started. 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.

Digging into the data: How your lending helps the UK economy to grow

At Funding Circle, we’re proud of what you have achieved by lending directly to small businesses. Since 2010, more than 75,000 investors have earned an average return of 6.4% per year after fees and bad debt. In addition to earning attractive returns, you’ve also had a significant role in supporting the growth of the UK economy.

Your contribution has been highlighted by research published today by Oxford Economics, a leading economic consultancy firm. Their report, which can be seen in full here, reveals how small businesses are using the funds you lend them to:

  • Create and sustain tens of thousands of British jobs
  • Add billions of pounds to the UK economy
  • Make a significant contribution to UK tax receipts

In this blog, we will investigate how businesses use their loans and how this benefits communities across the UK.

Your lending is an increasingly vital source of funding for small businesses

Small business isn’t small. It forms the backbone of the UK economy, accounting for approximately half of the UK’s GDP¹ and 60% of private sector employment.² Between 2011 and 2017 the number of small and medium enterprises (SMEs) in the UK grew by 28%.³

Despite the demand for small business finance increasing, banks have continued to focus on funding larger businesses. The proportion of outstanding bank loans held by SMEs fell from 38% to 35.6% during this same period.⁴ Your lending is helping to bridge this gap, with over £3.4 billion lent to businesses through Funding Circle since 2010.

2017 net lending figures, Funding Circle and UK banks

Net lending in 2017  

Source: Bank of England, Funding Circle

If small businesses across the UK are to thrive, it’s important that the total amount of credit available to them grows. The above chart shows the net lending—the difference between new lending and repayments received on existing loans—of both Funding Circle and the 30 largest UK-resident banks combined in 2017.

Net lending is used by the Bank of England to discover the new amount of lending to small businesses throughout the economy. When looking at new sources of finance for small businesses, investors like you are providing nearly as many new funding opportunities as the entire UK banking system put together. Investors lending through Funding Circle created £598 million in net lending, compared to £677 million for all UK-resident banks.

When small businesses win, we all win

To help determine the full impact of your lending, in February 2018 Oxford Economics surveyed more than 500 UK small businesses owners who had previously taken out a loan through Funding Circle. They found that small businesses use the funds you lend them in three key ways:


You can be proud that you not only help the businesses you’re lending to, but your lending also has positive knock-on effects throughout the economy.

You lend to businesses based all over the UK

These benefits are being felt by businesses all over the UK. The chart below shows where businesses who accessed finance through Funding Circle in 2017 are located:

Loans made to UK businesses in 2017, by local authority district

As you can see, in one year alone your lending has benefited towns and cities from every corner of the UK.

Your impact on the UK economy

Business owners were asked about topics such as their revenue, job creation, and tax payments. Oxford Economics were then able to determine the overall impact investors’ lending is having on the UK economy.

For example, the chart below shows the direct, indirect and induced economic impact of the outstanding funds lent by investors in 2017:

The economic impact of outstanding loans in 2017

Source: Oxford Economics

From this you can see three key areas of the UK economy where your lending is having a significant impact:

  • Your lending creates and sustains jobs – In 2017, investors’ lending supported 45,000 jobs across the UK, either by creating new jobs, or preventing existing ones from being lost.
  • Your lending boosts the overall economyIn 2017, investors’ lending supported a gross value added⁵ contribution to the UK economy of £2.4 billion.
  • Your lending grows the public pursethe taxes paid by small businesses help build schools and hospitals all over the country. In 2017, investors’ lending supported the generation of more than £700 million in tax revenues.⁶

Make a return and a difference

At Funding Circle, our aim is to allow you to earn attractive, stable returns by lending directly to businesses. Although the return you earn is important, it’s rewarding to take a step back and appreciate the positive impact your lending is having. By continuing to provide small businesses with access to the finance they need to grow, you are playing a vital role in the growth of the UK economy.

By lending to businesses, your capital is at risk.

Enjoy lending,

The Funding Circle team

¹  Source: http://researchbriefings.files.parliament.uk/documents/SN06078/SN06078.pdf

²  Source: http://www.fsb.org.uk/media-centre/small-business-statistics

³  Source: ONS, UK business: activity,size and location — 2017, 1 November 2017.

⁴  Source: Bank of England

⁵  This gross value added measure of production, or GVA, is similar to the well-known gross domestic product measure (GDP). The only difference is that GVA is valued at the ‘basic’ price received by the producer, excluding taxes on sales such as VAT, rather than at the ‘market’ price paid by the purchaser, including those taxes.

⁶ The taxes included are corporations tax, employers’ national insurance and business rates paid by the firm, income tax and national insurance paid by its employees, taxes on the firms’ purchases from other firms, and VAT and duties targeting final consumers of the firms’ products.

The world needs small business

Small businesses play a vital role in driving prosperity around the world. They create jobs, provide essential services, develop exciting new products and support local communities. In the UK alone they account for 50% of GDP and 60% of private sector employment. In short, small businesses are the unsung heroes of our economy, so we decided to do some singing.

Funding Circle was founded to help small businesses get the finance they need to thrive. Having worked with thousands of businesses, we’ve seen first hand how access to funds allows them to keep progressing and achieve even more. To celebrate the contribution they make, we’ve partnered with Oxford Economics to produce an in-depth report looking at the economic impact of lending through Funding Circle.

Below you can find the key findings from the report, a summary video and the report in full. Watch it, read it, share it and help spread the news of our amazing small businesses up and down the country.

Download the full report – The Economic Impact Report of Lending Through Funding Circle.

You can also find more information in our blog – Digging into the data: How your lending helps the UK economy to grow.

Figures taken from the FSB. By lending to businesses your capital is at risk.

VIDEO – Watch how this mini golfer grew thanks to his business caddie

With its unique decor, delicious cocktails and amazing atmosphere, Lost City Adventure Golf is not your typical mini golf venue. Like Barry, the co-founder, the place is made to do more.

cocktail bar lost city adventure mini golf

Located in the centre of Nottingham, this indoor mini golf business has got it all. Exceptional premises, friendly staff and two amazing cocktail bars with lots of seating space to enjoy a drink with friends.

This is exactly the vision Barry had for his business when he launched Lost City Adventure Golf in 2013. However, like many other small businesses, the journey to get where it is today was far from easy. After long hours, hard work and some careful consideration, Barry knew that funding was needed to take his business to the next level.

Looking for finance is always an important decision for any business owners. As well as looking into all the different options, the pressure of making the right decision for the business can be overwhelming.

So he could focus on running his business, Barry chose to avoid stressing about this dilemma and approached Steve at Central Finance. Steve helped him weigh his options, and they decided that a Funding Circle loan was the best choice for Lost City Adventure Golf. Barry could then get on with what he does best – driving his business forward.

Our relationship with commercial finance brokerages like Central Finance have helped thousands of small businesses access the funding they needed to grow. As a Funding Circle Business Champion, Steve was able to quickly complete the whole application on Barry’s behalf, with approval in 24 hours.

Are you interested in lending to businesses like Lost City Adventure Golf?
Lend alongside 79,000 investors and support British businesses by signing up online today. You can use our investor information guide to help you get started. 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.

Are you a commercial finance broker?
We are always looking to extend our network of partners to help small businesses across the UK fulfill their potential. Email our Introducer team at introducer@fundingcircle.com to find out how we can work together.

Introducing your new statistics page

At Funding Circle we are committed to providing you with access to easy to understand loan performance information. Today marks the next phase of this commitment as we launch a new and improved statistics page, which will be updated every three months and will provide you with a clearer and more accessible view of how loans are currently performing.

Exploring your new statistics page

Alongside our global lending figures, your new statistics page is designed to allow you to easily understand three key areas of information:

  • Lending – How much have investors in the UK lent to businesses?
  • Returns – How are loans currently performing in the UK?
  • Businesses – What kind of UK businesses are you lending to?

Providing you with the full picture of loan performance

The performance information we provide you on our statistics page uses our most up-to-date estimates, or projections. It’s important to remember that over an investment period there will always be some businesses who are unable to repay their loans. To reflect this, our projections are updated every three months using the actual performance data experienced so far. You can see an example of how this works in the chart below:


The projected return is the return we estimate loans will achieve over their lifetime. This is an annualised number and is updated every three months. It is calculated using the actual return received to date, plus the estimated return for outstanding loans that have not yet been fully repaid.

The return is shown as a range to reflect that the actual number of businesses who are unable to repay their loans could be higher or lower than estimated. As loans are repaid, the range of return shown will narrow and will be updated to reflect actual performance. Full explanations of all our statistics can be found in our definitions section on the statistics page.

Presenting you with data in a relevant format

It’s important that the data we provide continues to be presented in a way that’s relevant to investors’ needs. As part of this latest update we have withdrawn the downloadable loanbook.

While the loanbook was a useful resource for early-investors lending through Funding Circle, as the platform has grown and become popular with a broader group of investors, the number of people downloading it has fallen significantly. For example, approximately only 0.3% of investors downloaded the loanbook in the last month. It’s important that you are still able to access loan-by-loan information on the businesses you are lending to, which you can download from your Funding Circle account.

Validating our performance data

As part of our commitment to providing transparent loan information to investors, we have partnered with AltFi Data. AltFi Data are independent and well-respected industry experts with deep knowledge of online lending, and they will provide independent verification of the figures we provide to you. They will review the loan information every three months to ensure it is accurate and up to date.

If you have any questions or would like more information, please don’t hesitate to get in touch.

Enjoy lending,

The Funding Circle team