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 email@example.com.
All information correct as of 2nd December 2019.