Accessing your funds through Funding Circle

When we first launched, Funding Circle opened up small business lending to investors for the first time. Loans taken out since 2012 are on track to deliver an annualised return of 4-7% per year and we are proud that 83,000 investors have earned more than £300 million in interest (after fees and bad debt), more than any other lending platform. We are also pleased that Funding Circle is the best-capitalised lending platform in the UK, following last year’s Initial Public Offering.

When you lend through Funding Circle, your money is matched to loans which are paid back over a period of up to five years. As a result, it is important to treat lending as an investment, as your money may be tied up for this time period.

Even so, investors are able to access funds in two ways:

1. Switch lending off. Businesses pay back interest and principal each month, so by simply switching lending off, you will receive approximately 3 – 5% of your outstanding portfolio after the first month and approximately 30 – 40% of your money back after the first 12 months.

2. List loan parts for sale. Our selling tool matches investors looking to sell loan parts with investors looking to buy. However, this is subject to demand from other investors and selling is not guaranteed.

We are constantly looking at ways to improve your lending experience and following a recent review, we will be launching a new selling tool on 2nd December that will improve your ability to access funds more regularly. 

Currently, loan parts are sold on a first-come, first-served basis and investors wait until they reach the top of the queue before selling any. The new tool will cycle through all investors wishing to sell loan parts as many times as possible within a 120 day period. This will mean investors start to receive money back more regularly from the loan parts that have sold.

We will also introduce a transfer payment for those wishing to sell loan parts to other investors. When a loan part is sold, a 1.25% transfer payment will be applied. For example where a seller sells a £20 loan part, they would receive £19.75 from the buyer (as with the current tool, you would also receive any interest owed on that loan part since the last monthly repayment). 

This will boost returns for investors that buy both new loan parts and loan parts listed for sale on the secondary market. We hope this will attract new customers and funds to the platform. It also brings us in line with other lending platforms although, in our case, Funding Circle does not receive any fees from any loan part sale. The transfer payment does not apply if you want to withdraw repayments as they come in.

Finally, the new tool will make it easier to change the amount you want to withdraw after you have started selling. You’ll also be able to see the amount received from loan part sales as well as the amount received from repayments, so you don’t withdraw more than you initially requested. 

How to access your funds

These graphs show how you could receive cumulative repayments and funds from sold loans. They are indicative and meant for illustration purposes only.

What happens next?

On 2nd December, all investors currently selling loans will be automatically transferred over to the new selling tool, and investors will start to sell loans with funds made available more regularly. Every investor will continue to sell for 120 days, and will receive a notification at the end of this period to confirm how much has been sold in that time. If you would like to sell more loan parts, you can make another request and start selling loans again. 

As part of this change we will also be updating our Terms and Conditions. You can read more about these here.

How can I provide feedback?

For more details—and if you would like to let us know your thoughts—please visit our feedback page

As part of our review, we have considered a number of options and strongly believe the package of measures we are launching are in the best interests of the majority of investors and will provide an improved overall service.

The Funding Circle team

Remember, by lending to businesses your capital is at risk. Past performance is not a guide to future performance. Funding Circle is not covered by the Financial Services Compensation Scheme.

£300 million interest earned is after fees and bad debt, but before tax. The repayment rates with lending paused are based on the average repayment rate for all loans outstanding on the 1st of September 2019. As you are lending to your own individual portfolio of loans, your actual repayment rate may differ.

Get up to £450 in John Lewis vouchers when you add and lend funds

For a limited time only, you can receive gift vouchers when you lend £5,000 or more through your Funding Circle account! Transfer funds into your account today and you could treat yourself to an Apple Watch, an Amazon Echo, a new wardrobe or whatever you need with John Lewis gift vouchers. 

What value John Lewis vouchers can I claim?

The amount you receive depends on how much you add to your account and lend to businesses:

  • Add £45,000 to get £450
  • Add £35,000 to get £350
  • Add £25,000 to get £250 
  • Add £15,000 to get £150
  • Add £5,000 to get £50 

What do I need to do?

Add funds to your account between the 30th October and 31st December 2019 to get the voucher amount you want, then lend it out to businesses. After the 31st December, we’ll look at the amount added to your account during this period minus any withdrawals. This will determine the how much you’ll qualify for. If you have both ISA and Classic accounts, we’ll look at the amount added between them. 

You also need to have lending switched on and keep those funds lent out until 29th February 2020. If you withdraw funds (from either your Classic or ISA account) you may receive a lower voucher amount or no longer qualify. We’ll then send your vouchers out to your registered email address. For full terms and conditions click here

Transfer funds now

Can I use my ISA and Classic accounts? 

You can only claim one gift per person. If you have only an ISA account and have used up your ISA allowance, you can either transfer existing ISAs you hold from other providers, or open a Classic account. 

If you have both an ISA and Classic account registered to the same email address, you can split the extra funds between the two. However, if you withdraw from one and transfer to the other, you won’t qualify for a gift. We’ll look at the net amount added between the two. 

Can I transfer an ISA from an existing provider?

You can also transfer existing ISAs from other providers. In order for your ISA transfer to qualify, you need to fill out the ISA transfer form in your Funding Circle account between the 30th of October and 31st of December 2019. The ISA transfer form must be complete, with funds distributed to your Funding Circle account and lending switched on, by midnight on 29th of February 2020. 

Transfer funds now

For more information email us at contactus@fundingcircle.com. Terms and conditions apply. 

By lending to businesses your capital is at risk. Not covered by Financial Services Compensation Scheme. Your tax-free entitlement depends on your circumstances and may change.

Enjoy lending!

Project returns quarterly update – October 2019

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 are making no change to the projected returns for either lending option.

What are the 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 not changing. They will continue to be:

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 been 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

How to access your funds

When you lend through Funding Circle, your money is matched to loans which are paid back over a period of up to five years. As a result, it is important to treat lending as an investment, as your money may be tied up for this time period.

Your funds are lent out in small amounts to lots of different businesses. These are called loan parts, and each month you receive back a portion of the money you have lent plus interest. By keeping lending switched on, these repayments will be lent out again on more loans. This creates a rolling investment to help you earn better returns.

When you want to withdraw funds you have two options:

1. Switch off lending to withdraw small amounts

If you’d like to take out small amounts, you can withdraw your repayments as you go. Simply sign in to your account, go to the ‘Lending Settings’ page and turn off lending. Your repayments will no longer be lent out and the funds will accrue in your account ready for you to withdraw. 

The rate at which your funds will accrue will vary, but on average investors get back: 

Approx 3-5% of their portfolio after the first month 

Approx 15-20% of their portfolio over the first 6 months

Approx 30-40% of their portfolio over the first 12 months

The rate then slows, with repayments continuing over 5 years (or longer with recoveries).  

These figures are based on the average repayment rate for all loans outstanding on the 1st of September 2019. As you are lending to your own individual portfolio of loans, your actual repayment rate may differ.

To withdraw funds you need to first set up a nominated bank account.

2. Sell loans to withdraw a lump sum

If you would like to access your funds before your loan parts have been repaid, you can look  to sell them to other investors using our automatic tool. Selling loans is subject to supply and demand at the time and is not guaranteed. 

How does the selling tool work?

To use our selling tool, sign in to your account and go to the Access funds page. It will show the value of loan parts you have available to sell at that time (not all loan parts can be sold, more on this below). 

Enter the amount you want to sell. If you don’t want to sell the full amount available, the tool will select loan parts that best match up to the value of your request. 

Once confirmed, the tool will start selling your loan parts in small amounts. The funds are available for you to withdraw as soon as each loan part is sold.

How long does it take to sell loans?

The time to sell your loan parts may vary. It depends on the size of your request, the number of loan parts and supply and demand at the time. The tool will constantly cycle through each investor looking to sell, so that everyone regularly gets back small amounts. 

Any loan parts not sold after 120 days will be delisted and you’ll need to make a new request if you want to continue selling. We’ll notify you when this happens.

Is there a cost to selling loans?

When selling loan parts, a 1.25% transfer payment is deducted and passed to the buyer. For example, if you sell a £20 loan part, you’ll receive £19.75 (plus any interest owed since the last repayment). This happens at the point of sale and only to loans that are sold successfully.

100% of the transfer payment goes to the buyer. Funding Circle does not receive any fees from any loan part sale. The transfer payment does not apply if you want to withdraw repayments as they come in. 

How much of my portfolio can I sell?

To make it fair to all investors, you can only sell active loans with no credit issues, and not in the last month of their term. As a result, typically 85-95% of your portfolio is available to sell at any one time.

For loans that are late or have another credit issue, our Collections and Recoveries team are constantly monitoring and working with these businesses to recover the funds. You’ll continue to own these loan parts and receive repayments and interest as they come in. 

If their credit issue is resolved, they will become available to be sold again. 

What about defaulted loans?

If a loan is defaulted it will not be available to be sold again. The loan part is marked to zero in your portfolio, but our Collections and Recoveries team pursue each defaulted loan to recover as much as possible (read more about Collections and Recoveries here).

Recoveries can take years and may vary significantly depending on the loans in your portfolio. Successful recoveries will appear as available funds in your account as they come in ready for you to withdraw. 

Will I get the full amount requested?

The amount you receive from the sale process may be less than the amount you requested.  This could be for two reasons:

1. The balance of supply and demand on the secondary market. If there are not enough investors looking to buy loan parts, you may not sell all your funds within 120 days. You can make a new request if you want to continue selling. 

2. The number of your loan parts that are active with no credit issues. If this has changed since you made the request, the amount available to be sold may be lower. 

If you have any further questions or want to know more about accessing your funds, you can contact our Investor Support team at contactus@fundingcircle.com.

All information correct as of 2nd December 2019. 

Looking forward to 2020 and what it means for our introducers

Since its formation in 2012, our broker channel and introducer panel has continued to be integral in our success. This community has supported £1.3 billion of lending over 15,000 loans through Funding Circle, helping numerous businesses and unlocking thousands of jobs as a result. In turn, our registered introducers have grown their businesses too. 

We recently announced the promotion of Jeremy Crinall to the Head of Broker. Since joining in 2014, Jeremy has worked as a Business Development Manager (BDM) and as Regional Manager for Southern England. He has worked closely with all the team in their respective sub regions and is looking forward to using his 13 years of experience in the financial industry to assist the growth and development of the team, their panel of introducers, and building on those relationships even further. 

Jeremy has big plans for 2020 and sees three key areas to focus on for the next stage of success:

Service

Our team consider all our introducers as long term partners. We see them as relationships for life. We’re going to focus our efforts on improving the experience of all our introducers and their clients. We’re going to be focusing on optimising all touch points for our introducers and their clients and getting to know all our introducers on a greater level. This will enable our team to continue to go even further to provide them with the excellent service that they deserve.

Technology 

Technology will continue to be a pivotal focus for us and the team as we turn into the new year. We’ll continue to strive  to provide best-in-class solutions and to provide our introducers with even quicker decisions. We’re planning on making a lot of improvements across the business, which will ultimately benefit the broker channel and in turn, the service we’re able to provide.

People

As our plans for lending continue to grow in 2020, we want to look to build the team and further invest in our people. We strive to recruit the best individuals from a diverse range of backgrounds and experiences to ensure we can provide our introducers with an excellent service. We’ll also be looking to develop our existing team members. Both Business Development Executives and Business Development Managers receive continuous training and specialised courses, ensuring we have the right people in the right places. . 

2020 is going to be another amazing year for the entire introducer community and we want to remain at the heart of that at Funding Circle. We’re looking forward to the future and working with our introducers as we move towards 2020. We recognise the importance you will play as we continue to build a better financial world.

Loan Purposes we can help with

At Funding Circle we want to help fund all of your clients’ business needs. Every business has unique requirements and will be at different stages in their journey, so our loans can be used for a huge variety of needs.  Some of the most popular include:

Working capital – Working capital is the lifeblood of any business. Healthy cash flow allows business owners to pursue new opportunities and win more business. It saves them time, gives them greater peace of mind, and the breathing space to make the best long term decisions for them.

Refurbishment of premises – From office space to shop fronts, refurbishing business premises can be transformative. We can provide finance for refurbishment and spread the repayments over 5 years.

Hiring staff – The entire process of taking on extra staff can be costly and time consuming. Taking finance can allow  your clients to either outsource this process or conduct it in house. We’ve helped thousands of businesses for this very purpose. 

Buying new equipment/machinery – Equipment and key pieces of machinery can breakdown unexpectedly or become out of date. Often, this can be a significant outlay and cause delays in production. We can provide finance for business owners to purchase equipment and machinery. All our loans are unsecured (backed by a personal guarantee) so this means your client would own the equipment from the outset.

Deposits for property purchases – Business owners will often need full deposits before being able to apply for commercial mortgages. We can provide the funds for this, which means your clients can go to their bank, secure the full mortgage and then settle in full with us. They can repay in full with no early settlement or exit fees, making the process ideal for this scenario.

Stock purchases – Many of your clients will go through busier and quieter periods. It is important that they are prepared and can take advantage of busier times. We can help with providing finance for large stock purchases, which can provide your clients with peace of mind and often reduce overall costs.

Tax funding – Tax bills can creep up on business owners and often leave large unforseen dents in their cash flow. We can provide finance to cover the bill and spread cost out over up to 60 months. 

Funding a new project or product – For your clients, it is imperative that they stay commercially competitive and come up with new ideas to engage their current client base and attract new customers.

Refinancing existing debt – We also offer loans to refinance existing business debt. As long as the debt is registered under the business rather than anyone personally we can look to consolidate that into one repayment. This can often be easier to maintain and can reduce your monthly outgoings, assisting with cash flow.

What can’t we cover?

There are a few loan purposes that we are unable to help with: 

Refinancing of personal debt – We’re unable to provide finance for the consolidation of personal debt. Even if the debt was taken out for the purpose of benefiting the business, if it  is under a personal name we’ll be unable to help.

Onwards lending – We can’t help if the funds are going to be passed outside the business that has applied to either an individual or another business. The finance we provide must stay within the business and directly benefit the business is applying.

Speculative ventures that aren’t related to the core activity of the business – We’ll need to see how the loan purpose will benefit the business. It cannot deviate too far from the core activity of the business. For example, if your client owns a bakery but wants to expand into I.T. sales, this wouldn’t be something we could provide finance for.

Are you a looking for fast, affordable funding solution for your clients now?

Get in touch with our Partnerships Team at ukpartners@fundingcircle.com or give them a call on 0203 308 9708.