The big business of small business

When you think of a small business, you might think of a local coffee shop or a garage, your butchers or an electrician. They’ve built a reputation for being independent, hard working and reliable. Lying behind these businesses, however, is an untold story. They may not employ thousands of people or be household names, but collectively they have a crucial and profound impact on driving prosperity around the world.

Small businesses account for 50% of global GDP. Over half the people with jobs in the developed world work in a small business. They support local communities, provide essential services and develop innovative new products. The contribute billions in tax revenue, helping to run schools, hospitals and more. In short, they are the unsung heroes of our economy.

To help tell their story, we’ve partnered with Oxford Economics to produce our second in-depth report looking at the economic impact of lending through Funding Circle. We’ve seen how providing small businesses with access to finance helps them to keep progressing, and has an immense impact on the global economy. And while it’s the businesses that are making it happen, none of this would be possible without the support of investors lending through Funding Circle.

To find out more, check out our summary video and infographic, or you can download the full report.

Lending impact

Update to our projected returns

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

Taking into account these factors and the mix of businesses in each lending option, following our most recent review we have updated the projected returns for each lending option.

What are the new projected returns?

The projected returns are a forward looking estimate for loans added to your portfolio, and do not affect loans you already hold. As a result of our review, the projected returns for our Balanced and Conservative lending options are now:

Balanced: 4.5% to 6.5%

Conservative: 4.3% to 4.7%

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 – as you are lending to your own individual portfolio of loans, not everyone will earn the same projected return. The return you achieve depends on the loans your funds are matched with, and 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. 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.

Will this affect the businesses you lend to?

These projected returns will affect your lending going forward, and do not affect any loans you already 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.

Remember, by lending to businesses your capital is at risk and is not covered by the Financial Services Compensation Scheme.

The Funding Circle team

Celebrate St George’s Day with these English businesses

Small businesses play a vital role in supporting communities and driving the country forward. To celebrate St George’s Day, we met with three businesses across England that have all been able to progress thanks to  investors lending through Funding Circle.

Since 2010, over 43,000 English businesses have borrowed over £4.5 billion to grow and develop. Watch our video to learn how they help their local area, create jobs and contribute to the economy.

 

What is an ISA? We explain in our video and infographic

What is an ISA? How much is your allowance? What are the different types? When it comes to financial terminology, learning what everything means can be as time-consuming as it is yawn-inducing. However, we want to help everyone understand what important terms mean and how things work at Funding Circle.

What is an ISA?

If you’re more of a visual person, we’ve put together a handy video and infographic to help explain what an ISA is, why they’re important and what makes ours different. Check them out below!

To start earning tax-free returns, you can open a Funding Circle ISA in minutes at fundingcircle.com/investors.

Tax rules depend on your circumstances and may change. Capital at risk. Not covered by the Financial Services Compensation Scheme.

What is an ISA?