Shaving Roger Federer and other eye-catching artwork from a Funding Circle business


This month we travelled to Birmingham to meet Kristian Jeffrey, founder of Street Advertising Services, who shared his business story with us.

Street Advertising Services creates innovative advertising campaigns for brands and agencies, by using vibrant art and technology. Their work is designed to grab people’s attention, and judging by some of the artwork in this video, it’s not hard to see why.

One of the most memorable campaigns they’ve been responsible for was for the ‘World’s Biggest Shave’ for Gillette in 2011; part of which is shown in this short video. Kristian also explains how he set up his business and the sacrifices that were made when doing so.

In June 2014, Kristian took out a £40,00 business loan so they could employ more people and move to new offices. More than 500 people lent to Street Advertising Services through peer-to-peer lender Funding Circle.

If you’re interested in taking out a business loan in the future, you can find out more details here.


One year on: did you lend to this manufacturer?

Last month we visited David Potter, Director of Ambic, who is based in County Durham and borrowed £100,000 in July 2013.

Ambic is a long-established UK manufacturer and their primary focus is making and fitting educational furniture. They supply schools, universities and offices in the North East of England and pride themselves on the quality of their furniture; and the experience their staff bring to the field.

In this short video you’ll meet David, who set the business up 30 years ago. You can find out more about his manufacturing business and how his Funding Circle loan helped him with working capital over the busy summer months.

Ambic borrowed £100,000 from 1,277 investors through Funding Circle in July 2013.

If, like David, you’re interested in taking out a working capital loan for your business, you can get started on the application here.

Digging into the data – Collections & Recoveries

At Funding Circle we are committed to being a transparent business and we want to share more of our information with you around lending and borrowing activity.

As part of this commitment we are launching a series of monthly blog posts looking at the data behind Funding Circle. The series launches today and this first post examines the decline in late payments by businesses and the increase in the amount of money recovered for investors when they experience a bad debt.

Understanding why bad debts occur

Lending to businesses can deliver attractive returns to investors while helping established British businesses to access the finance they need to grow.

However from time-to-time some businesses will be unable to fully repay their loans. This is often due to an unexpected change in their circumstances; sometimes businesses are themselves the recipient of a late payment from one of their customers, causing cash flow problems. At other times another financial provider, like a bank, may withdraw their support suddenly. Often these are only temporary setbacks for a business, but in some cases it can have a more significant impact, leading to a business failing to repay their loan on time.

When businesses are late repaying their loan at Funding Circle our in-house collections and recoveries team work closely with the business affected to deliver the best possible results for everyone. One of our core principles of collections and recovery is ‘survival for revival’. A business that ceases to trade or is declared bankrupt without any recovery for investors is never a positive outcome.

Since we brought all of our collections and recoveries processes in-house in February 2014, we have seen significant improvements in the recovery rate for investors and a reduction in the number of businesses being late with a monthly payment. What this means to investors is that more businesses are paying back on time and when an instance does occur where a business ceases to trade, we are recovering more money for investors.

Let’s take a look at some of the key numbers:

Bringing down late payments

Firstly the number of businesses that are late with their monthly repayments has dropped since February from ~1.5% to less than 1%. The lowest this has reached is 0.80% was on 31 July 2014.

Decline in % of late payments since launch of FC in-house collections and recoveries teamDecrease in late rate - August 2014

Bringing down the rate of late payments was not achieved by simply defaulting more loans. This short term gain may look good initially, but the overall recovery rate would go down with each new default.

Instead, the decline in late payments is a result of building industry leading policies for managing businesses in distress. These policies involve working closely with borrowers as soon as they experience trouble – which helps to reduce the frequency of late payments, and puts us in a better position should the business ultimately cease to trade.

Raising recoveries for investors

As a result of this work, we expect recoveries across all loans defaulted up to 30 June 2014, to recover a minimum of 34p in the pound. Based on more recent loans (between 1 January 2014 – 30 June 2014) we anticipate the recovery rate to be 40p in the pound.

To give some context to these numbers, independent research indicates that traditional lenders would expect to receive between 28p-42p recovery on a secured business loan once a business enters administration, and 1p-3p. on unsecured business loans (without a personal guarantee).

Increase in recovery rate - August 2014

What is particularly encouraging about these figures is that we believe these estimates could potentially be higher. For example we have not included estimated recoveries on bankruptcies, and any loans currently in dispute before the courts or otherwise in negotiation for a payment plan.

What this means for investors

We are committed at Funding Circle to having the best collections and recoveries process in the industry – ensuring investors feel confident in lending to businesses. We know there is still lots more to do and we are constantly looking to recover as much money as possible, and further improve our communications.

We hope you found this post useful. We’ll be talking about this in more detail on our forum – please join us there. Our next data post will appear in September.

The Funding Circle team

Time to take a peer-to-peer loan?

The news today that small businesses are still struggling to access finance via traditional means, despite the more positive economic outlook, should comes as no real surprise for anyone who has been following business lending figures over the last few years. There has only really been one trend when it comes to high bank lending figures, and that has unfortunately been downwards.

The figures released by the British Bankers Association today show that borrowing by non-financial companies from high street banks declined in the year to June by £12.7 billion. Whilst it’s heartening to see that there was a small percentage increase in lending to small businesses in the wholesale and retail, accommodation and food, and real estate sectors, the percentage change remained below zero. Where we had previously seen some improvement in the manufacturing industry, with this being the only sector benefiting from positive increases in lending since October last year, this fell in June from ~10% to ~4%.

BBA lending stats June 2014

In comparison, business can typically access finance directly from investors via marketplaces like Funding Circle within two weeks. The application process is entirely online and can take as little as twenty minutes, and the credit assessment team will typically have a decision for you within 48 hours. On average it can take up to 15 – 20 weeks to hear from a bank – by which time the season may have passed, or the stock you needed to buy is no longer necessary as you weren’t able to take an important contract.

Today we’re publishing an infographic which shows just how fast a peer-to-peer loan can be for small businesses looking to grow and expand. If you have any questions, then just get in touch. Otherwise please feel free to share to help raise awareness of the choice that business owners now have when they are looking for finance.

If you’re a small business owner looking for finance, then why not put an application in now? Apply here.

Infographic final

Assessing more businesses on a case by case basis

Last month we revisited how we assess the types of security required for business loans, and removed the £150k threshold for loans without asset security. As mentioned, this will give our credit team more flexibility to assess the security required on a case by case basis.

As part of our ongoing work to improve and innovate the service we provide to both borrowers and investors, we will also start to review loan applications where the business has a turnover between £50k and £100k.

Previously we have considered loans for businesses who have around £100k turnover. However, as the marketplace grows, we are seeing an increasing number of businesses with a lower turnover and a high profit margin, that would pass our affordability check and our credit assessment.

These kinds of businesses are typically service companies, such as accountants or consultants, who have previously not been able to borrow through Funding Circle due to their lower turnover figure.

It’s important to note that we will always assess a business’s ability to repay a loan, and only list those that pass our credit assessment. Having the flexibility to consider businesses with a lower turnover will allow us to look at companies who have performed consistently well.

An example

Company A has been trading for 6 years, consistently turning over £60k with a profit of £25k.

Company B has 2 years filed accounts. The first shows a turnover of £6k with a loss of £100k, and the second year shows a turnover of £51k and a profit of £2k.

Company A is much more likely to be approved than Company B.

If you have any questions about this, please visit our FAQs or join us on our forum where we will be happy to discuss this in more detail.

Watch the investor evening video

On 29th May we held our first investor evening, where we had the pleasure of meeting about 30 of you in person. It was a great evening, with lots of interesting debate and helpful feedback. We hope those that attended agree, and many thanks to you for giving up your time to come and say hello.

We appreciate that not everyone is able to travel to London, so we hope you enjoy this short video! For a longer write up, check out what was discussed with the credit assessment and analytics teams here, the tech, product and collections teams here, and the co-founders here.

Watch the video:

Investor evening part 3: co-founder Q&A

Following on from part 1 and part 2 of our investor evening write up, we take a look at the points raised during the co-founder Q&A.

Q&A with Funding Circle co-founders

A lot of ground was covered with Samir and James, two of our co-founders, about the future of Funding Circle. Crucially, as we come towards the end of the whole loans trial, we discussed the need for a diverse mix of investors in order to create sustainable marketplace for the long term. The ambition for Funding Circle is to become like the London Stock Exchange for small business, where any investor, be they small or large, can lend to small British businesses.


This doesn’t mean our individual investors will become less important to us over time. If we look to the US market, regulation of the industry currently means we have more institutional investors but over time, we will work to ensure more individuals can lend. And vice versa in the UK market. Having this diversity will allow us to help thousands more businesses access finance, whilst ensuring investors continue to earn good returns.


Other key things to come out of the Q&A included:

Q: When will peer-to-peer lending be included within ISAs?

A: This was announced in the Budget earlier this year and consultation with Treasury is ongoing. We’re part of those conversations about exactly how it will work and when, and will update you as soon as we know more detail. In the meantime though, we expect the process to take about a year.

Q: The secondary market was less liquid at times earlier this year? Why was this and could we have more data on the performance of secondary market sales?

A: Just like any exchange, both the primary and secondary markets rely on supply and demand, and as we grow, we will need to ensure that one does not vastly outweigh the other at any one time. Record numbers of businesses came to Funding Circle at the beginning of the year and we saw 100+ loan requests listed a week, which led to a slow down for people looking to sell their loan parts. This has since improved and we will work hard to find a balance between the two. The aim is for both markets to be very liquid, which is why a diverse mix of investors – both individual and organisations – will be increasingly important, as business demand grows. We will also provide more data on secondary market fluctuations in the next couple of months.

Q: What does regulation mean for investors?

A: We actively campaigned for regulation for a number of years as we believe that as the industry grows, consumers must be protected. Specifically regulation means that peer-to-peer lending platforms will be required to have arrangements in place to continue to return available funds and administer existing loans in the event that the platform fails. All platforms will be required to hold capital reserves (extra cash) to help mitigate any business and financial risks, and every platform must have a complaints procedure in place (you’ll find ours in the FAQs).

The regulator has also issued guidelines on the information that a peer-to-peer lending platform should provide to investors. These include information on the average returns (after fees and bad debt but before tax) from the last few years, expected bad debt rates going forward, and information on whether a loan is secured, and if so, what form the security takes.

As part of our membership of the Peer-to-Peer Finance Association we already adhered many of these requirements and welcomed formal regulation.

Thank you!

We hope this has a useful overview of what was a very interactive and engaging session. We really enjoyed meeting more of you in person and found your feedback very useful. If you’ve got any further questions, then don’t hesitate to get in touch or join us on the forum, and we look forward to doing it again soon.

Meet the wider teams!

If you missed some of team interviews, then check out credit assessment, credit analytics and collections & recoveries. Tech and product interviews coming soon.

Investor evening part 2: collections and tech

Following on from part one of our investor evening write up, part two looks at themes discussed with both the collections & recoveries, and tech & product teams.

Collections & recoveries

Next up, Andrew Jackson, our Head of Collections & Recoveries, outlined the changes we’ve made to our processes since he joined the Funding Circle team about a year ago. Since then we’ve brought our entire debt collection and recoveries process in-house, which has allowed us to streamline our processes. This includes re-writing our documentation to be more effective,  and it also means that we’re not held back by the policies of a third party provider – thereby allowing us to act swiftly, robustly and within timescales that we consider fair.


Overall though, bringing everything in-house means we have a committed team of four professional working to deliver results for investors. This care and commitment is far more than any outsourced agency would provide. We know this is your money and we care very much.

By bringing debt collection in-house has led to our our ‘late rate’ recently reaching an all time low of 0.83% of our total living loan book – something we’re really proud of and will work hard to maintain and improve upon.

Key things to come out of the Q&A included:

Q: How do you strike the balance between recovering a debt and ensuring businesses are not asset stripped unnecessarily?

A: There is a huge trust element in the recoveries process. When a company director initially realises that they are unable to repay the loan, the first response is often fear. By turning this fear into trust, we improve the chances of Funding Circle investors being paid in full. Regular communication builds trust, and with transparency and responsiveness we can find fair and affordable solutions. We want to see as many businesses succeed as possible, because a successful business will deliver a full recovery.

Q: Do investors pay for expenses incurred during recovery?

A: At the moment the expenses and costs of court proceedings are not deducted from repayments by borrowers – they come out of the 1% servicing fee. There is currently a discretionary 15% administration fee for borrowers on late payments which can be used to offset the costs of court proceedings (if necessary). One expense that is borne by investors is the 16% fee which our former outsourced debt collectors used to charge on all recoveries. Clearly now that this is in-house those fees do not apply to most recoveries, but for historic cases those fees are still borne by the investors.

Tech & product

Steve, our Product Director, began by thanking all of you for your feedback via the surveys we regularly send out and the user experience sessions we run. Priorities you highlighted include: ensuring a good rate of return; managing default risk and improving recovery rate; and making the site easier to use.


In response to this feedback, we have extended the types of loans we offer to give investors more lending opportunities across various sectors such as property, to allow for well-diversified lending portfolios. The tech and product teams have also spent a lot of resource on creating data systems to support our credit models, new underwriting systems, and systems to bring recoveries in-house.

Andy, our Chief Technology Officer, discussed how we split our developer time between working on new functions and systems and cleaning up the site to make it easier to work on and more reliable by replacing old legacy code. We’re also in the process of introducing newer, faster servers which will improve site speed and responsiveness.


Key things to come out of the Q&A included:

Q: What are you doing about the security of the site and our accounts?

A: We are also going to be rolling out further security around investor fund transfers, including the addition of nominated bank accounts to receive transferred funds. We make use of two external agencies to undertake frequent site penetration testing, and to review and work with us on making sure that the code used is safe and secure. Further to this, we have an internal technology security team who work on maintaining and implementing code updates, as well as technology infrastructure security hardening.

Q: Is it possible to have access to more data around the performance of loans and how quick it is to sell loans?

A: We want to be the most transparent financial services company out there, and will always look to provide investors with as much data and transparency possible. As one example of this we have recently launched a new statistics page. Take a look here and let us know what you think.

Look out for…

tomorrow’s post which will include key points raised during the co-founder Q&A! As always, please get in touch with any comments or feedback.

A pleasure to meet you!

2014 has already seen a number of new developments at Funding Circle, including the introduction of regulation, the announcement of additional funding by the Government-backed British Business Bank and the start of our tailored property loans for businesses. With the number of investors fast approaching 30,000 we wanted to host an investor evening to meet more of you in person, and hear first-hand about your experience of investing through Funding Circle.

Last Thursday we had the pleasure of meeting about 30 of you at our first event for investors. It proved to be a great forum for debate and feedback, with many interesting and useful points raised – we hope those that attended agree, and many thanks to you for giving up your time to come and say hello.

We appreciate that not everyone is able to travel to London, so we filmed the event and will be publishing a video shortly. In the meantime though, we wanted to write up some of the key themes discussed in a three part blog series. This first post will take a look at some of the key points raised during the credit assessment and analytics session.

Credit assessment & analytics

Rahul, our Head of Credit Analytics, and Ari, our Head of Underwriting, kicked things off with a discussion on our credit assessment process and the risk models we build to help us determine which businesses to list on the marketplace.


We discussed how these models ensure we remain within our estimated loss rate and why we’re constantly improving them so that only the most creditworthy businesses make it through to the credit assessment team. We also covered off our five-stage credit assessment process, and why ‘big data’ analytics, combined with a personal review of every application delivers superior credit performance.


Key things to come out of the Q&A included:

Q: How many pairs of eyes look at a single loan application?

A: Businesses go through a five stage credit assessment process at Funding Circle. Two of these are automated; the first is a credit model we have built and continue to improve following data from past performance of loans, and the fourth is a model which looks at whether the business meets the criteria for a Funding Circle loan. We manually assess stages 2, 3 and 5, and the sales, underwriting assistants, and underwriting teams respectively all work incredibly closely together to ensure that information is shared and assessed at each stage.

Q: Are you prepared for another economic downturn?

A: The answer to this is two fold. In terms of listing new loans on the marketplace, our risk bands are calibrated to target the expected annual loss rates that we publish on the site and this would not change in the event of a downturn. Loans that might have previously been listed as A+ would simply be listed as a B, for example, and loans that might have been listed as C- would be rejected.

In terms of our existing loan book, we take three factors into account when calculating the expected annual loss rate. The first is whether or not the business is expected to default. The second is the time at which the business defaults; for example a business which defaults after 1 repayment compared to a business who is unable to repay after 50 of 60 repayments will owe considerably more. The third factor is how much we expect to recover following the default. For both the second and third factors, we have taken a significant downturn into account and calculated the loss rate using stressed estimates.

Next week…

…we’ll be posting the second and third part of this series which will include key points discussed with collections & recoveries, and tech & product, as well as a Q&A with the co-founders.

Update on whole loans trial

At the start of May we announced that we will be trialing whole loans at Funding Circle. The trial has been successful with approximately £1.3 million lent to UK businesses as whole loans.

As a result of this success, we are continuing with the trial for another few weeks and planning an official roll-out to all investors, which we anticipate will take place within the next month.

As we get closer to the official launch, we’ll provide further information to all investors and include details about how whole loans will be presented on the marketplace.

The Funding Circle team.


“763 people lent to us, which felt like tiny votes of confidence!”

Business owners David and Geoff share their Funding Circle experience.

After the success of The Exhibition Rooms restaurant in Crystal Palace, David and Geoff wanted to open a second neighbourhood restaurant, and needed a business loan to refurbish the premises.

In this picture story you’ll find out how they met, where they’ve come from, and how peer-to-peer lending has helped their business along the way.

You can also watch their business story in this short video.










Final Slide

If you’ve got a UK business that’s been trading for at least 2 years and has a turnover of £100,000 or more, you can apply online at any time. We’ll always get back to you within 2 working days of receiving your complete application.


Introducing whole loans

It’s been a fantastic start to the year at Funding Circle. The announcement of additional funding by the Government-backed British Business Bank and the introduction of regulation by the FCA helped to drive a record quarter of lending, with more than £53 million lent to small businesses across the UK – more than two and a half times the amount during the same period of 2013.

At Funding Circle our goal is to build a better financial world by helping as many businesses as possible to access finance, and investors to earn attractive returns.

Over the last few months you will have seen an increase in lending opportunities with record levels of demand from businesses across the UK. Within the next 12 months we expect demand to increase substantially, and our aim over the next few years is to grow to become a significant part of the small business lending market. In the UK, this is an estimated £7.5bn per month market.

To achieve this we want to ensure we have a diverse range of investors at Funding Circle. More investors helps us to attract more businesses, as we have seen from the Government’s involvement. This helps to deliver more lending opportunities for everyone and ensures long-term stability and sustainability for the Funding Circle marketplace.

As you will probably be aware, we have mentioned before that there is a lot of interest from organisations, such as pension funds, insurance companies, family offices and hedge funds, to join Funding Circle to lend.

We have been considering the best way to introduce these new types of investors to the marketplace in a way that is sustainable and also protects the experience of individual investors.

As part of our considerations we have closely followed the developments of the US peer-to-peer lending market over the last 18 months, where larger investors have purchased whole loans rather than lots of individual loan parts. This has shown to us that introducing the ability for investors to buy whole loans is a successful way of creating more lending opportunities for everyone, whilst also protecting individual investors’ Funding Circle experience.

Today we’re announcing that from early May we will be starting a one month ‘whole loans’ trial with a small group of non-bank financial institutions who will lend up to £3m in total. These whole loans will be purchased in full and it will not be possible for individual loan parts to be purchased, as is the case with the ‘partial loans’ that are listed today.

Initially, this will be a closed trial and last for one month beginning 1st May. During the trial whole loans will not be visible on the marketplace; however we will continue to publish details of every loan in our loan book and clearly indicate whether a loan is a whole loan or a partial loan.

While we anticipate most investors will continue to prefer lending on partial loans, once the trial has been successfully completed we will make whole loans available to any interested investors. You can register your interest after the trial by contacting us at

Today’s news does not mean individual investors will become any less important to us. Helping individuals earn attractive returns by backing British businesses is in the DNA of Funding Circle. It is something we are very proud of and will remain a core part of the business as we grow.

For more information about today’s news, visit our FAQs or join us on our forum where we will be discussing this in more detail. You can also read more here about how whole loans have worked in the US.

The Funding Circle team

Video: Did you help a South London restaurant open its second set of doors?

The Exhibition Rooms is an award-winning restaurant and bar based in Crystal Palace, winning Time Out’s best local restaurant in 2009. It was started in 2008 by two friends, David Massey and Geoff Ridgeon, and has since gained an excellent reputation on a number of restaurant review sites. Geoff is an experienced restaurateur and David is the head chef, having worked alongside Anthony Worrall Thompson.

In February, they took out a business loan through Funding Circle which was funded by 763 people and organisations across the UK, so they could develop a new restaurant site.

In this video you’ll meet David and Geoff and hear from them first-hand about how their restaurant started and why they believe they’ve got something special.

Crowdfunding or peer-to-peer lending – which is best for my business?

Crowdfunding or peer-to-peer lending? This is the question many business owners are asking now that these alternative forms of business finance have become mainstream on the back of ineffective lending from the banks. So the ultimate question then is, which method of finance would work best for you and your business?

Crowdfunding and peer-to-peer lending are two innovative ways to get money into your business. They’ve been making headlines over the past few years and it’s fair to say that you’ll have had to have been hiding under a rock for you to not have heard of at least one of them!

A lot of people actually don’t realise that crowdfunding and peer-to-peer lending are two very different beasts; both share the same principle of raising finance from a number of people who pool together, but it’s likely that one will better suit your business needs, depending on what stage your business is at.

Artboard 1 copy@2x

If you’ve got a great idea and need some help getting it off the ground, crowdfunding is for you.

Crowdfunding is a great option for startups and early stage businesses. You “pitch” your idea or business to potential investors, and if interested, they will contribute a sum to the proposed venture. Then you decide how you want to reward those lovely people who helped you make it happen.

Crowdfunding in its earliest form focussed on helping entrepreneurial creatives and inventors to get their creative ideas off the ground. The people who chipped in and made their dreams a reality were then given something in return, like a unique perk, a gift, or first dibs on their product. This is what’s known as reward-based crowdfunding – one to consider if you’ve got a cool little gadget you want to develop. Kickstarter is the world’s largest reward-based crowdfunder, and has just passed the milestone of $1 billion pledged; $54 million of that has come from the UK.

Like all new things, the concept of crowdfunding has evolved into different forms, with investment crowdfunding now starting to grow rapidly. In this model, instead of giving a reward to those who helped, you actually give them equity in your business. Key UK proponents of investment Crowdfunding are Seedrs and Crowdcube.

What will my business need to be crowdfunded?

Crowdfunding platforms will typically want a business with a business plan and financial forecasts from you when you make your application, so it’s important you get these in order. You could take a look at Planwriter or iAdviseUK for some tips on how to get these right.

If you did want to go down the investment route and release equity in your business, there are quite a few legals that you’ll need to deal with and you’ll also need to make sure you keep your shareholders in the loop with what’s happening further down the line.

To help you get started, Nesta have some general crowdfunding tips, from pre-launch to how to tell your story. Entrepreneur also provides 5 steps to crowdfunding success, placing importance on interaction with your supporters and considering feedback.

If you’ve got an established business then peer-to-peer lending is the one for you

Peer-to-peer lending is a fast and accessible way of getting a cash injection into your business. The essential difference between this and investment crowdfunding is that you do not give away any equity, but rather pay interest on the money you borrow, much like you would with a bank. Whether your loan is for a piece of kit for your factory, purchasing a property, buying stock or even working capital, peer-to-peer lending for businesses offers the most accessible and flexible way of getting finance for established businesses.

Peer-to-peer loans are usually funded by a number of different people, and in the case of Funding Circle, you’ll also have your loan funded by local councils, Huddersfield University and the Government-backed British Business Bank Programme.*

Peer-to-peer lending is a viable alternative to traditional funders, as you can apply for loans up to £1 million in the case of Funding Circle and £3 million for Thincats, repayable over terms of up to 5 years.


Tushar & Mehul Shah from Bluebird Care. The business borrowed £150k from peer-to-peer lender Funding Circle.

What sort of credentials will my business need to have?

Peer-to-peer lending is suitable for all established business, including limited companies, limited liability partnerships and non-limited companies, generally trading for at least 2 years or more. As part of the application, you’ll have to provide your businesses financials (filed accounts or equivalent) and reasons for why your business needs a loan. This information should be pretty easy to source, so by way of preparation there isn’t that much extra you’ll need to do.

It’s worth noting that depending on the size of the loan you’re after, security in some form will be required. This could either be a personal guarantee or they may take security of a particular asset or assets in your business. You should check when you apply, as each platform will have different policies.

Which would work best for my business?

In a nutshell, if you have a great idea that’s yet to get off the ground, then go for crowdfunding. But, if your business is well established and you’re looking for a business loan, then you’d be better suited to one of the peer-to-peer lending platforms.

Hopefully we’ve shed some light on the differences between the innovative finance options out there. Both are viable, but it’s important to evaluate the pros and cons of each model before you decide.

And finally…

This week, the UK’s leading alternative business funders met to launch a web portal designed to help you find the the most appropriate source of funding, which should aid with your decision making.

* The British Business Bank programme is currently run directly by the Department for Business, Innovation and Skills and is not authorised or regulated by the Financial Conduct Authority or the Prudential Regulation Authority. British Business Bank plc will operate as a Government-owned financial institution once HM Government has received European Commission State aid clearance, which is expected in 2014.


Your 5 minutes with.. the Credit Analytics team

Following on from our interview with the Credit Assessment Team, we’re now with Rahul, James and Hossein, who make up our credit analytics team. These guys are our data experts and build statistical models for every part of our business, including that ‘in house credit model’ I referenced in the last interview.

Although there are only 3 of them, what they lack in numbers, they make up for in experience. Rahul started at Funding Circle in 2012, and James and Hossein came on board in 2013. Between them they share an impressive 3 undergraduate degrees, 3 MBAs, 1.5 PHDs and 17 years working in risk and consulting. Pretty good eh?

IMG_2992-2 (1)

In a nutshell, this team builds models.

The credit analytics team builds statistical models to predict the future, which we base a good portion of our business decisions on. The main area they focus on is credit risk, or in other words, the probability of a business not being able to pay back their loan. Statistical models are involved in all parts of Funding Circle so as a result, they work closely with teams across the company. And, especially close with those on the credit team, and together they form our Credit Committee.

Welcome to the interview. I have to say, this is going to be as much of a learning experience as it is running an interview! Can you take me through your day-to-day activities?

Rahul: Yes of course. A lot of our time goes into collecting data. We’re responsible for the credit infrastructure so we can build and refine our models. So to do that, we interact with data collection bureaus like Experian and Creditsafe to obtain the information we need. The other half of our time then goes into analysing the information that we’ve collected. We build excel-based models for a wide variety of needs; assessing and quantifying the risk of a loan for example. Every statistical model related to any part of the business comes through us.

OK, so what does that mean in the context of risk?

Rahul: Every borrower will have an expectation of loss. Our credit assessment team will use the expectation which the model provides, to approve or reject the loan application. If we expect the loan to default then a loan is rejected. But, models have errors in them inherently. This means that of the businesses we have approved, we still have an expected and estimated target loss rate.

Our intent is not to have zero losses, our intent is to have a precise estimate of what the loss rate is. eg. in the A+ risk band, we expect 0.6% of loans to default, net of recoveries.

The goal of our team is to not only make sure our loss rates and assessments are accurate, but also to ensure that our portfolio experiences the loss rates that we publish. We utilise the data from our loan book which has over 3 years of information to allow us to rebuild our models regularly to incorporate new information.

How did you come into building models, do you all have financial or statistical backgrounds?

James: I joined about 5 months ago, and prior to Funding Circle I was actually in academia. I studied theoretical physics at university and I have a Masters in financial maths.

Hossein: I did my PHD at Stanford and then I attended the Business School. I’ve also worked with a quantitative hedge fund and I’ve advised a number of startups in Silicon Valley.

Rahul: I studied engineering and then completed my MBA in India. I’ve worked as a consultant, and in risk management areas in a number of banks. I completed my second MBA in the States and then moved to London to work as a consultant, before starting at Funding Circle.

Quite a range of backgrounds then! So why did you decide to work at Funding Circle?

Hossein: Innovation in the financial industry is very rare, and I think that was the most exciting part for me. Peer-to-peer lending is disrupting one of the oldest professions in the world, and I wanted to be part of it!

Rahul: I was initially approached by a headhunter and then spoke to one of the co-founders Andrew [Mullinger]. He talked so excitedly about the business that I was sold in 10 minutes flat. The role itself also appealed to me; it was more of a startup when I joined so a lot of the processes had to be built from the ground up. The challenge the role presented was exciting, and after working in banks for 10 years I really wanted a change.

James: I was halfway through my PHD and the opportunity of Funding Circle came to me through my professor. I thought my PHD needed a new direction, saw Funding Circle and what it was all about and thought it would be a perfect route to follow.

How do we differ to other places you’ve worked at or had experience in?

Rahul: This is my first experience of working in a company with less than 100 employees, so there definitely are differences. We don’t have the legacy drag that banks have, so I feel our process is much more agile and lean. Changes and improvements take less time to implement which is really refreshing.

Hossein: I’ve worked in startups for the majority of my career. But I’ve worked with larger financial organisations in the past, and I think the key difference is, as Rahul mentioned, the time it takes to make decisions. We get things done quickly, and we have more freedom to research and implement ideas.

James: Well this is my first experience in a workplace environment. Although the research projects I undertook whilst in academics may have had different applications, the underlying theory and methodology can be transferred to a lot of different fields, including credit risk. So there’s a lot of overlap which has made it a smooth transition. In academia, nothing is applied first hand to the real world so you perhaps lose sight of what the goal is. Now I know what we’re aiming to achieve. Not only can you use the stuff you’ve learned, but you actually get to see what happens at the end.

With so many different projects going on, this must be pretty tricky to manage. What would you consider to be the most challenging part of your job?

James: Yeah as we’re always working on a number of different projects, you’re constantly dipping in and out of different areas and teams which can be a challenge, but I wouldn’t want it any other way.

Rahul: There are pros and cons to working in a young company. You can get involved in so many different things, but it may be challenging as there is a limited amount of resource. We have had to build everything from the ground up and when I joined, there was a lot less structure. The hard part is really to get things up and running quickly, when we have limited resources as we’re growing at a rapid rate. This I’d say is a good problem to have.

Hossein: Sometimes you think, “is there an accepted or obvious way of doing something that I’m missing?” That’s what makes it exciting, there isn’t a manual that you just read. You always have to think for yourself.

Exactly, and by thinking all the time, new solutions will be more forthcoming. What do you enjoy most about working here?

James: The culture is really cool, there’s a relaxed atmosphere but there is always direction. I’ve had the opportunity to work with lots of different teams, like the insolvency and marketing teams, which is great because I learn what’s going on in the company. I always know why I’m doing something, which I like.

Hossein: The culture is definitely a huge plus and I enjoy the work itself. It’s so exciting to be a part of the innovation and disruption of one part of the financial industry.

Rahul: Yes I agree, the culture is great. It’s so refreshing working here, we’re young and energetic.

The culture and people have been the most popular answers in this series so far. So let’s finish with this one, do you have any interesting facts or hobbies you’d like to share us?

James: I produce music in my free time, and I’m releasing an EP on a Berlin music label which I’m excited, if not nervous, about.

Hossein: Photography is the thing I like most. I recently bought an iMac which is exciting, there is so much you can do with them!

Rahul: I always wanted to join the army, but I got rejected because I wore thick glasses. So I decided on models instead! And, I really enjoy playing table tennis in the office.

I can vouch for that. For those who don’t know, we have a table tennis table in the office and Rahul puts up a very good fight…

Rahul: Yes, and don’t forget about Ping-Pong Fight Club last year! It was an all Funding Circle final in the competition for London tech startups. Helene (our Technical Project Manager)  played very well, but I managed to beat her!

Helene played competitively at an international level, so that was very good going. And how could we forget, the trophies that Rahul & Helene won for Funding Circle are the largest we’ve won, and have pride of place by our reception area.


So far we’ve met people in the credit, insolvency and customer relations team. Who would you like to meet next?


What did 2013 look like for Funding Circle?

Although 2014 is fully underway, we’ve taken a moment to stop and reflect at what 2013 meant for the whole of the Funding Circle community.

We’ve put a short video together highlighting some of the best moments from 2013: ranging from visiting businesses across the country, to launching Funding Circle in the States, to having the Government, Huddersfield University and local councils all lend alongside the British public.

We also look towards the rest of 2014 and what it will mean for our community. There’s no better way to get you excited for the new products that are launching this year, including property finance which will be landing on the marketplace over the coming month.

Here’s to an even more exciting 2014, where we look forward to helping many more thousands of businesses access finance, whilst helping different types of investors earn a better return on their money.

How to start lending to businesses through Funding Circle

If you’re interested in becoming an investor with Funding Circle, but still have a few questions about how it all works, then this is a great place to start. As you’ll soon find out, getting going as an investor is really easy and you’ll be up and bidding in no time!

How can I lend to businesses?

Any resident of the UK can get involved in peer-to-peer lending by lending money to UK businesses through the Funding Circle marketplace. Each loan request is funded using an online auction, where people bid against one another in multiples of £20. They can offer rates of typically between 6% and 15%; whatever rate they are happy to lend at. As you’re bidding against other people, you’ll need to ensure your bid is competitive enough to become part of the loan. If the bid is successful and the business accepts their loan offer, investors hold what’s called a ‘loan part’. As an investor, you are free to buy and sell loan parts from other investors, so you don’t have to be tied to a loan for its duration.

Step 1 – Create an account

Firstly, you’ll need to create an account on the Funding Circle website, using your email address. You’ll need to provide information such as your name, date of birth and address history so we can identify you at a UK address. Once you have successfully created your account, you’ll have complete access to the marketplace, allowing you to view details of the businesses that are currently looking for funds. It may be worth looking through each tab of your account to familiarise yourself with the content.

Create your account here

Step 2 – Credit your Funding Circle account

To start lending money to businesses, you will need to deposit funds into your Funding Circle account. You will need to click on the ‘Transfer Money’ tab in your account to do this. You can either use a debit card, where a minimum deposit of £100 is required, or you can make a bank transfer where there is no minimum. Funds transferred using a debit card will appear in your account immediately, however bank transfers can take up to 3 working days to arrive. It’s worth noting that if you plan on lending though a limited company, the account is restricted to bank transfers.

Transfer funds here

Step 3 – Lend money to businesses

Once your account is funded, you can start lending to businesses. The minimum bid size is £20. There are two different ways to lend to businesses on the marketplace:

1. Automatic lending using Autobid

Most users opt to use the Autobid tool to lend their money quickly and easily to businesses automatically. It’s also a great way of diversifying your lending. You choose the level of risk, the interest rate and the maximum exposure you’re comfortable with for each business, and Autobid will lend your funds on your behalf.

2. Choose businesses yourself

You can review details of each business looking for funding on the loan request page of your account. There is a lot of supporting information on each loan if you click on the loan title, which will help you make your lending decision. You’ll see their risk band, region, sector, the business’s financials and reasons for the loan.

When you find a business that interests you, decide how much you’d like to bid and at what interest rate, using the two drop down boxes on the right hand side of the screen. Even if the loan request is fully funded you can still place a bid, but it will have to be at a lower rate than another person’s bid.

Top Tip

You can also buy and sell loan parts from other people. If you’re looking at lending to another loan, or you wish to withdraw your funds, you will need to sell your loan parts. You can do this in a quick and easy 2-step process by clicking on the ‘Sell’ tab in your account. This is a really useful option if you’re looking to diversify your lending portfolio, as you can buy loan parts for all repaying loans since we launched, instead of waiting for new loan requests.

Now I’ve lent my money, what’s next?

Repayments from businesses come in every month and are distributed in equal instalments over the course of the loan. You’ll be able to keep track of your progress using the Summary Page in your account. You can also download a statement so you can clearly see how much capital has been repaid and what interest you’re earning.

If you have any questions about your account or would like help navigating around the site, please feel free to call the team on 0207 401 9111 or you can email us.

Become an investor here 

Updates to the Terms & Conditions

Following from our last update, we’re making some additional changes to our Terms & Conditions which will be introduced on Monday 17th February 2014.

These changes will reflect (1) improvements to our debt collection processes which are being brought in-house, (2) more lending and borrowing opportunities through the extension of loan types on the marketplace, and (3) necessary changes for FCA regulation later this year.

Here are the key changes you should know about:

1. We’re improving our debt collection and bringing it in-house

We will soon handle all debt collection procedures in-house so we can work directly with responsive borrowers to help them if they come into financial difficulty, which will also help us to provide more detailed communication to investors about these loans.

We’re also making changes to ensure that we can act faster and more robustly with non-responsive borrowers. Going forward, investors will now have 7 days to opt out of novation after a loan defaults, reduced from 14.

We’re improving the clarity in the Loan Conditions surrounding payments received from businesses whose loan is in arrears. Any payment received will be first applied to the arrears, before the most recent monthly amount owed.

2. Bringing more property finance to the marketplace

As you may be aware, we are expanding the types of loans on offer to investors and businesses, by bringing more property finance loans to the marketplace. We’ve created Funding Circle Property Finance Limited, a subsidiary that will mirror Funding Circle Recoveries Limited. It will be used for holding security of property finance loans.

We’ve also had some feedback from borrowers about the name of “Funding Circle Recoveries Limited” (FCRL), which currently holds security on borrowers. This name is on a public record and borrowers have told us that “Recoveries” in the name may suggest that the borrower has been in financial difficulty when this is not actually the case. We’re changing the name to Funding Circle Trustee Limited (FCTL) as it is better suited, since it reflects the fact that the company is predominantly a security trustee.

3. Getting ready for regulation

From April, the peer-to-peer lending industry will be regulated and we are starting to make small changes now so we’re on course to comply with regulation. One such change is formalising the handling of fair complaints, which is an operating principle set out by the P2P Financial Association.

These changes will be reflected in the updated Loan Conditions, as well as the Terms & Conditions for investors, borrowers and intermediaries. It’s important to have a look, as by continuing to use the Funding Circle marketplace you agree to be bound by these revised terms.

On Monday 17th February, before making a bid you’ll also be asked to re-accept the Loan Conditions.

Your 5 minutes with… the Credit Assessment Team

So far in this series, we’ve spent some time with members of two key areas of the Funding Circle team: the customer relations team and the insolvency team. Now it’s the turn of the team who make informed decisions about the loans you invest in: the credit assessment team.

The team has grown steadily over the past 3 and a half years, with Kevin starting in May 2010 (before Funding Circle had even launched) growing to 8 members today, who share over 80 years of experience between them within the credit and risk underwriting industries.

underwriters team interview

Day-to-day activities include:

Assessing applications from potential borrowers who come to Funding Circle for a business loan. This includes reading biographies of where a business is, where it has come from, and where it wants to be in years to come. With that information, coupled with our our in-house assessment model and external sources of data, the credit assessment team can then work out how we could help them get to where they want to be. As well as this, they have regular catch ups with the credit analytics team, including Andrew Mullinger (co-founder and Head of Credit) to update and refine our credit model, to identify trends and raise any suggestions or comments.

So let’s get a feel of who the team are and where they’ve come from… Can you all tell me a bit about your backgrounds?

Kevin: Sure, as you mentioned, I was the first employee at Funding Circle. We had no website, no credit scoring models, no procedures, nothing! I have over 17 years’ Credit Underwriting experience working for various banks and finance companies.

Craig: I joined in May 2013, having 5 years’ credit underwriting and deal structuring experience. I’ve done quite a range of underwriting including property and shipping finance.

Penny: I only joined last November, but have 15 year’s experience and an asset finance background at ING.

Duncan: I became part of the team in August 2012, having 12 year’s experience in credit underwriting; specifically in agriculture and construction finance.

Jas: I joined pretty early on in February 2012. Before this, I had 10 years in risk underwriting and was previously at ING.

Ari: I actually knew Jas from ING, and focused on asset finance. In total, I’ve probably got around 15 years experience too.

Louisa: I joined a bit before you Ari, wasn’t I? February 2013 I think. I have 5 years’ credit underwriting experience, in leasing and asset finance.

Sandy: I started last month and previously worked as a trade credit underwriter for 2 and a half years, having come from Sydney where I worked as a mortgage insurance underwriter.

So it seems you all have a variety of backgrounds, and many years of experience! Do you think that helps with the decision making here?

Kevin: It definitely helps. Our team have a wide variety of experience, gained across several areas and while we do seek opinions from others, we try to ensure that all underwriters review applications across the whole spectrum.

Penny: It helps, yes. If you’re not 100% sure of something, then nobody has a problem with you passing it on or asking for some input. We all work together, and because of the range of businesses that come through to Funding Circle, it’s great that everyone is accessible.

And what would you say the common goal for the team is?

Kevin: I’d say it’s really to acquire well measured risk in a fair, prudent and accountable manner.

Craig: We’re guardians of peoples savings but we’re also investing in the future of businesses. Overall, I’d say we’re here to lend as much money as we can, in a sustainable and responsible way.

Duncan: Yes, and we hope to change people’s lives for the better.

Louisa: Definitely. We want to encourage the right type of business and protect investors’ money.

Yeah, it’s definitely important to reach that balance. So why did you decide to work at Funding Circle?

Duncan: I wasn’t happy at my old job. A recruiter called me, so I met Andrew and immediately I was sold! I joined when the company was a lot smaller and the business hadn’t massively taken off, but Andrew completely sold it for me.

Kevin: It sounds a bit sycophantic, but as soon as I met the three co-founders, I knew that Funding Circle would be a success (remember I joined before we launched). Looks like I was right!

Sandy: I think the concept of peer-to-peer lending is brilliant. Funding Circle has a platform which is able to provide a win win situation for both borrowers and investors, and we’re the industry leaders which is even better!

Craig: I wanted to work at a company where people liked working and people believe in what we do. I think a lot of the negativity in finance comes from legacy issues, like what happened in 2008 for example, whereas we don’t have the legacy issues here, and we love having our name in the newspaper!

Louisa: I wanted a change and thought this would be a great opportunity to grow with a company, and without sounding too clichéd I thought it looked very exciting!

Do you think any of our processes differ to other institutions you’ve worked at?

Kevin: I helped to design some of our processes, so there are similarities with others I have experienced. I think the biggest difference is that we are not risking our own money, but that of our investors, so we have to be extra vigilant.

Duncan: Our speed sets us apart I think. Other places take 6 weeks to make a decisions, where as we can get a decision out within 48 hours which is incredible for businesses, and also brings plenty of lending opportunities to investors.

Ari: I’d say the process has a general look and feel of everywhere else that I’ve been, but there are some improvements that can be made which we’re working on.

Jas: There’s not a lot different, the systems weren’t in place when I joined but we’re getting there. Generally I’d say we’re fairly inline with industry standard.

You must have seen hundreds, if not thousands of applications now. Has anything surprised you about the types of businesses that come to us?

Louisa: Not really surprising, but the average business tends to be well established; having weathered the last 5 or 6 years.

Ari: They are the “S” in “SME!” Usually husband and wife teams, generally asking for about £70k.

Penny: I’d call them lifestyle businesses. I used to see a lot of the same deals coming through in my previous company, but here – anything goes!

Sandy: Exactly. They’re typically SME family lifestyle businesses, so you know that they have a vested interest in making their business work, which provides some comfort when looking at their applications.

Craig: For me I think it’s the cross-section of businesses that we see, I mean it really could be anything.

Duncan: Anything could come through the door, from high street shops, to newsagents, to filmmakers, to hot tub manufacturers.. The list is endless.

Kevin: Not really. I have been doing this for a long time, and have seen many strange things.

That sounds interesting! Go on..

Kevin: We had an application where the company bought some land somewhere in Africa for £10,000 but had revalued it at £57 million in the accounts.

You’re right, something does sound amiss there. What’s your favourite thing about working at Funding Circle?

Jas: For me, it’s the people, everyone is really genuine.

Penny: I agree, it’s a nice place to come in to. They’ve also been very flexible with my childcare needs. Everyone is accessible and is happy to hear from you.

Ari: It’s also the people for me, it’s a great place to work, you don’t get the blues about waking up in the morning and we’re in early and stay late.

Craig: People are happy to be here. I don’t rush home at 6pm, I’m happy to continue working.

Kevin: I love the buzz and the energy. The people are generally young and vibrant, and being the oldest employee, I find it is infectious.

Louisa: Yeah, there’s a real positivity everywhere. We’re all excited about where the company is going.

Sandy: The dynamic and fresh culture. The people at Funding Circle are such a cool bunch and are really friendly.

Duncan: It’s nice to work somewhere where you are valued and the staff do matter. Everyone has a voice.

And what would you say the hardest part of your job is?

Ari: I love working here but the hours can be long.

Jas: Leaving work on a Friday afternoon!

Kevin: I think it’s remembering everybody’s name. We are growing so fast that I lose touch.

Craig: Trying to predict the volume that’s going to come in as it’s moving so quickly. Also, dealing with businesses who we’ve rejected is pretty tough, as rejection is always going to be taken personally.

Penny: I’d say seeing businesses, or their applications, that are just not quite there yet. You want to help them but you always have to remember that investor’s money is at risk. So I guess finding that balance is tough.

Louisa: You can sympathise with the company which really does need financial help, but we just can’t get them there.

So aside from Funding Circle, what other interests or hobbies do you have?

Louisa: I love doing anything outdoors, like running and hiking. And I enjoy going out in London with friends.

Penny: Looking after (and running after) my 5 year old son!

Duncan: I really enjoy cooking.

Sandy: I enjoy boxing and yoga.

Kevin: I love football, and played for many years at various levels, but now it’s confined to watching from my armchair.

Jas: At the moment, its managing an ongoing and overrun building project: my house. We started 10 months ago and it’s still not finished!

Oh no, I’m sure a lot of people can sympathise with that one. Thank you all for your time, I know you’re all keen to get back to reviewing loans so let’s finish with this one. Do you have any interesting facts that you wouldn’t mind sharing with us all?

Penny: I’m really scared of heights but I managed a bungee jump. I don’t think I’d do it again, as I’m sure I fainted at the top.

Duncan: I nearly became a chef and instead opted for underwriting.

Craig: I can juggle wine bottles.

Kevin: I did have an almost encyclopedic knowledge of 1970’s pop chart music.

Jas: Ari and I were once in a TV advert. It was for the National Lottery and there were some hilarious hairstyles going on.

Ari: Yes, we were. And Jas showed everyone the clip before I had even joined. Thanks Jas!

Excellent, I’m sure we can dig out that clip if enough people want to see it. And Duncan, why don’t you start a Funding Circle “Bake Off”, I’m sure there would be plenty of eager participants.

We’ll be spending our next 5 minutes with the credit analytics team, so stay tuned for our next installment.


Introducing the Funding Circle iPhone app

We’re excited to announce that from today, you’ll be able to download the Funding Circle App to use on your iPhone.

The app, free to download from the App store, will allow you to bid when you’re on the move, help you keep track of all of your bids and notify you when loan requests you’re interested in are coming to an end.

As well as this, there are some useful features like the auto login, which means you don’t have to login to your account every time you open the app on your phone. Safety is important to us which is why you can’t deposit or withdraw funds using the app, so if your phone was to get into the wrong hands, you can rest assured that your money is safe.

You may ask, why have we chosen Apple’s iOS over Android for our first app? The reason is simple: our usage data shows that visits from iOS devices, including iPhone and iPad, outweigh Android users significantly, specifically by 7 to 1 for the whole of October. That said, we do have a desire to launch an Android app, and the iPad App will be released shortly.

As this is the first version of the app, you may notice some features missing that you would expect to be in here. We will continue to add functionality with every release and we’d appreciate your input on what you think would be important to include in future releases.

The app is also intended for existing Funding Circle investors only, so if you haven’t yet created an account to lend to businesses, you can so do here.

The guide below shows you the key sections of the Funding Circle App. Don’t worry, it is really easy to use and and you’ll soon be making and tracking bids whenever and wherever you like.










 Download the Funding Circle App.