We’re launching an exciting new lending experience

Since we launched Funding Circle in 2010, our aim has been to enable investors to earn attractive, stable returns by lending directly to small businesses.

Recently, we have been reviewing how lending through Funding Circle works, with the aim of making lending simpler, better and fairer for all investors. After careful consideration, we have taken the decision to make some improvements to your lending experience.

On 18th September, we will launch a significantly improved and upgraded version of our existing Autobid and Autosell lending tools, and the option to manually choose which businesses to lend to and which loan parts to sell will be withdrawn.

How will the new lending experience work?

Investors will be able to choose one of two new lending options based on their personal preference. Both options will be available as a Funding Circle ISA, which we intend to launch later this tax year.

  • Balanced: you will automatically lend to the full range of creditworthy businesses (A+ to E), aiming to achieve an attractive, stable return. This will allow you to build a balanced portfolio similar to the makeup of small businesses in the UK today. The projected return is estimated to be 7.5% per year after fees and bad debt.
  • Conservative: you will focus on lending to businesses that have been assessed as lower risk (initially A+/A) but with a lower projected return. The projected return is estimated to be 4.8% per year after fees and bad debt.

Your actual return may be higher or lower, and by lending to businesses your capital is at risk. You can read more about the improvements we are making, and what they mean for you, on our announcement page.

As part of the improvements we are making we are also updating the interest rates at which you lend to businesses. The projected return of both lending options have taken these changes into account. We’ll be introducing these new rates on 30th August, and you can read more about them here.

As part of this change we will also be updating our Terms and Conditions. You can view a summary of the main changes here.

We always want to hear your thoughts, so please fill out the feedback form on our announcement page if you would like to give us your feedback.

Enjoy lending,

The Funding Circle team

Update to Funding Circle rates

At Funding Circle, our aim is to allow you to earn an attractive, stable return by lending directly to a diversified portfolio of creditworthy businesses. To help you achieve this, we regularly update and improve our assessment processes. This also includes regularly reviewing the interest rates at which you lend to businesses.

Following our recent review, we wanted to let you know about some upcoming changes to the interest rates on our platform and our assessment process.

What are the new rates?

From Wednesday 30th August, we will begin to list small business loans in the UK at the gross interest rates below. These rates are shown before fees and bad debt. The projected annual return for the overall Funding Circle loanbook, after fees and bad debt, will be 6.7%*.

We made an important announcement today about some improvements we are making to how lending through Funding Circle will work from the 18th September, including introducing two new lending options. Taking into account these changes, the projected annual return for these lending options, after fees and bad debt, is estimated to be:

  • Balanced – 7.5%
  • Conservative – 4.8%

Your actual return may be higher or lower, and by lending to businesses your capital is at risk.


As some borrowers will have begun their application before the new rates are introduced, you may see loans listed at different rates for the same risk band and term length up until 5th October.

How have the rates changed?

You can see how the new rates compare to our current rates in the table below:

Why are the rates changing?

When reviewing rates we take a number of factors into account, including macroeconomic trends, the expected mix of risk bands of borrowers, expected bad debt rates and wider competition in the market, which continues to be increasingly competitive for lower risk businesses. The new rates will allow you to continue to lend to established, creditworthy small businesses while earning an attractive, stable return.

Will this affect the businesses you lend to?

Over the past seven years, 64,000 investors have lent £2.5 billion to more than 25,000 UK businesses. This has provided us with significant amounts of performance data to help improve our statistical credit models and means we can provide even more accurate pricing decisions to borrowers. With these improvements to our credit models, you can expect to see an adjustment in the mix of risk bands of borrowers in the coming months. This adjustment means the new expected bad debt rate for the overall Funding Circle loanbook will be 2.3% annually.

The improvements also mean we can make updates to our policy criteria. Our policy criteria give direction to business owners and help filter out businesses that have a low likelihood of being approved, so our credit assessment team only spend time on the right type of applications. Our latest policy criteria are:

  • A minimum of two years trading history
  • At least 1 year of filed or formally prepared accounts
  • No County Court Judgments (CCJs) registered in the last 12 months, with no outstanding CCJs larger than £1000

Do you need to do anything?

The new rates will not affect any loan parts you currently hold, and will not apply to property development loans, which are priced individually.  

If you use Autobid to lend to businesses, there is nothing you need to do as Autobid will continue to place bids on new loans at the new rates until 18th September, when the new lending options will be introduced.

As a reminder, these new rates will go live on Wednesday 30th August. If you have any questions about today’s news, please get in touch.

Enjoy lending,

The Funding Circle team

*The projected return is an estimate of the annual return, after fees and bad debts, that a diversified investor could earn. It is calculated by taking the distribution of loans, across both risk band and loan term, that we expect to be funded on the marketplace.

The return is then calculated by taking the gross interest rate of these loans, then deducting the fees and estimated bad debts that will occur in the future. The average return is weighted by loan amount, compounded and before tax. See the full calculation here.

Happy 7th birthday Funding Circle!

In August 2010, Funding Circle was launched by three university friends, Samir Desai, James Meekings and Andrew Mullinger above a waffle shop. Their small team of five huddled around a telephone battling for their first customers and originated £2 million of lending in their first year.

Seven years on, you and other investors have supported the growth of 32,000 small businesses across the UK, US, Germany and the Netherlands. We’re blown away by how far we’ve come together so far and that’s all thanks to your lending.

Investors earning for their future

69,000 people and organisations are lending to small businesses, including local councils, the government-owned British Business Bank, the European Investment Bank and our most recent investor, Aegon. This new strategic lending partnership will support the growth of approximately 2,600 UK businesses, creating an estimated 6,400 new jobs in the first year. A diversified investor base ensures our platform is stable and sustainable, even in times of economic stress.

Businesses driving the economy forward

32,000 businesses have accessed finance, including David’s IT business, a doggy daycare in Suffolk, and our first ever borrower, Sustainable Direction. We recently met Dr John Henry Looney, founder of Sustainable Direction, to see how his business has grown since 2010.

Small businesses like these are the driving force behind much needed job creation, which in turn fuels productivity and the economy. Lending through Funding Circle has supported the creation of approximately 80,000 new jobs across the world.

And finally, we’re proud to have launched a new look, which celebrates the people who have turned their passions into livelihoods, supporting their families and local communities.

Thank you for choosing to be on this journey with us – Funding Circle wouldn’t be where it is today without all of your support.

Meet the 12 brewers bringing back beer

At Funding Circle we celebrate the people who’ve turned their passions into livelihoods, supporting their families and local communities. Ordinary people doing extraordinary things, pushing the economy forward. This week we’re looking at some of the independent breweries that have flourished thanks to Funding Circle investors.

 

Up north

 

Upnorthbrewery

 

1) Roosters Brewery in North Yorkshire brews modern classic Yankee which scooped a silver at the 2017 International Beer Awards and Baby-Faced Assassin which achieved a gold medal at the same event. To continue investing in brewing capacity, Roosters have borrowed over £150,000 since 2015.

2) Over 500 investors helped the Worsthorne Brewing Company in Lancashire expand and keep up with growing demand for their cask ales. Established in 2011, the brewery has quickly gained a reputation for quality. Try their award-winning Old Trout or Blackthorne Stout.

Down south

 

Down south brewery

3) Over 800 investors helped Gloucester Brewery create an onsite bar and renovate their building. This year, the brewers are concentrating on using new world hops from New Zealand, Australia and US.

4) In the heart of the Devon countryside, Hunter’s Brewery uses only the best locally-sourced ingredients. Last year, you and other investors helped them increase brewing capacity by installing a new fermentation room.

5) Based in an old brick and flint grain store in Oxfordshire, Loddon Brewery borrowed back in 2015 to hire a new specialist member of staff. Choose from their range of beers in the brewery shop, including ‘rich, nutty and malty’ Hullabaloo and ‘highly hopped session ale’ Hoppit.

6) Named after the famous naval hero, Nelson Brewery situated in The Historic Dockyard Chatham uses the finest Kent hops to produce a wide variety of ales including their Admiral of the Fleet. The brewery borrowed in 2016 to buy new equipment and increase production.

In London

 

In London Brewery

 

London has been at the epicentre of the recent British beer revolution, with a whole host of taprooms and breweries offering tours sprouting up across the capital.

7) If you’re central, take a short walk from London Bridge and hidden under the railway arches you’ll find Brew By Numbers.The brewery, which borrowed earlier this year to finance expansion, hosts a range of events including beer and cheese evenings in their Tasting Room.

8) At By The Horns in south-west London you can find beer ‘that makes an impression’. Enjoy a pale ale in their taproom or rent out the beer hall for a special occasion. Over 1,500 Funding Circle investors helped the brewery purchase larger fermentation vessels to increase production.

9) When you’re out east, bumble across to Crate Brewery in Hackney Wick who first borrowed in 2015 to expand. While you’re there take a tour of the Brewshed or enjoy a pint and hand-rolled pizza in their fantastically up-cycled bar.

10) Based further north, check out Redemption Brewery in Tottenham and taste their range of 7 core cask ales onsite. They often have local pop-up food stalls as well so you can really make an evening of it. Redemption have borrowed over £90,000 since 2016 to support growth.

In the midlands

 

11) If you’re still thirsty there’s Byatt’s Brewery near Coventry who borrowed £50,000 to invest in equipment after moving to a 12 barrel brewery.

Whether you prefer cask, can, case or keg we hope you’ve enjoyed our journey across the country discovering the delights of real ale. Check back next time when we’ll be visiting even more fantastic Funding Circle borrowers.

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

 

Your August Review – Insight and Analysis

August review
Each month we bring you a column by Simon Read, a personal finance expert with extensive experience in helping people make the most of their money. Last time, Simon looked at the effect rising inflation can have on your funds.

This month, fresh from filming the BBC’s Right on the Money Simon discusses how to look after the pennies with savvy financial planning. Also included in this month’s post, find out about our historic partnership with JustEat. Dive in below.

July lending figures
Last month, you and other investors helped businesses to take new opportunities, create new jobs and drive energy into the UK economy — thank you for your continued support!

July lending

July industry news

Included in last month’s industry news, The Times interview Funding Circle borrower Yilmaz Guney, who runs a Turkish Restaurant in North London, to understand how he’s benefited from Funding Circle & JustEat’s recent tie-up.

These graphs show the most recent activity on our platform.

You’ve helped more than 8,700 small businesses access finance in the last 6 months…

 No of loans July final

Totalling over £617 million lent

 Amount of loans July

July 2017 sector breakdown

Amount lent to each sector

July sector

July 2017 regional breakdown

Amount lent to each UK region

July region

Loans defaulted last week
As part of lending to businesses, a small percentage will not be able to fully repay their loan. This is known as bad debt and is a normal part of business lending. We believe diversification, where you lend no more than 1% of your total to each business, is the best way to reduce the impact this has on your return. You can diversify automatically using our Autobid tool.

Each week, we publish a list of the loans being defaulted on the Customer support section of our website under ‘Announcements.’ To see a breakdown of the loans defaulted last week simply click on loans defaulted 3rd August 2017.  For further information on why Funding Circle defaults loans you can read our FAQ here.

Collections and recoveries

How it works
You can also read more about how our collections and recoveries process works (part one and part two) on our blog.

Up next in September, we’ll be looking at the impact your lending is having on the UK economy and bringing to life some of the businesses you’ve helped access finance.

As always, if you have any questions or comments our dedicated team are here to help. And if you have any further suggestions we’d love to hear them.

Enjoy lending, the Funding Circle team

*The current estimated return is a weighted estimate of the annual return after fees and bad debts that investors could earn from lending money to businesses seeking loans today. It is calculated by taking the gross interest rate less fees and estimated bad debts that will occur in the future for each of the last 3000 loans accepted on the marketplace. The average return is weighted by loan amount, compounded and before tax. The return is updated daily. See the full calculation here.

This blog is a general summary, and should not replace financial advice tailored to your specific circumstances. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice. If you have any questions, please speak to your professional advisor or seek independent specialist advice.

Your July Impact – Lending Impact and Borrower Stories

In this month’s post find out how your lending has helped businesses across the UK achieve their goals. First up, meet our very first Funding Circle borrower, Sustainable Direction, to hear about their latest project on the Isle of Alderney. Then, whizz to beautiful Brighton to learn how your lending helped Christine Johnston take her business, Kite, Surf & Sup Co, to the next level.

In case you missed it, here’s last month’s post, when South East Timber & Damp told us how accessing finance in just 10 days revolutionised their business back in 2015, and we met Amy Cunnington, owner of The Strings Club, who borrowed to keep up with demand for her award-winning music courses.

Dr. John Henry Looney is passionate about helping the world do more with less

Last month, Funding Circle co-founder and UK Managing Director James Meekings visited John Henry to see how his business, Sustainable Direction Ltd, had developed since taking out their first Funding Circle loan back in August 2010.

Dr. John Henry Looney from Sustainable Direction

With a Ph.D. in Physiological, Community and Statistical Ecology, John Henry has over 30 years’ experience in delivering environmental and sustainability projects for businesses and organisations. Sustainable Direction Ltd helps businesses work with the natural world in order to increase their sustainability, efficiency and ultimately their prosperity. Watch what happened when John met James in this short video.

Did you help Christine take her business to the next level?

Meet Christine Johnston, founder of Kite, Surf & Sup Co, a successful British kitesurf school and online shop in Brighton. Former windsurfing World Champion, Christine has kite surfed for nine years and holds eight national titles.

Christine Johnston, founder of Kite, Surf & Sup Co

After years of working long hours in an office, Christine knew this way of life wasn’t for her, so in 2014 she followed her dream and founded Kite, Surf & Sup Co. Two years later, the company was awarded British Kitesports Recognised School status – the highest level a kite school can reach – giving testament to the high-quality lessons that Christine and her team offer.

To upgrade the website, launch an online marketing campaign and purchase additional stock, Christine took out a loan in March 2017. Asked about her Funding Circle experience, Christine said, “The customer service I received was excellent and within a week the funds were in my account.”

Watch this space for a video about Christine and her amazing business coming soon!

Up next

At the beginning of August, we’ll be publishing ‘Your August Review – Insight and Analysis’ which will focus on the numbers and include some helpful tips to help you make the most of your investment.

As always, if you have any questions or comments our dedicated team are here to help. And if you have any further suggestions we’d love to hear them.

Enjoy lending, the Funding Circle team.

Your July Review – Insight and Analysis

Your July Review
If, like us, you’ve been inspired by Wimbledon, get new ideas to get active this summer with our list of 7 specialist Funding Circle borrowers who’ve flourished thanks to your lending.

Also included in this month’s post, The Telegraph looks at how our economy is dependent on the stability of small businesses. Dive in below.

June lending figures
Last month, you and other investors helped businesses to take new opportunities, create new jobs and drive energy into the UK economy — thank you for your continued support!

July investor stats

June industry News

Included in last month’s industry news, The Telegraph focuses on a recent Nesta report which shows that it’s small and medium-sized enterprises, not larger firms, that are supporting greater job creation in Britain, making up 50% of GDP and 60% of private sector employment. These businesses, like the ones you’re lending to through Funding Circle, really are the backbone of our economy.

Monthly trends
These graphs show the most recent activity on our platform.

You’ve helped more than 8,700 small businesses access finance in the last 6 months…

 June no of loans

 

Totalling over £625 million lent

June amount of loans

June 2017 sector breakdown

Amount lent to each sector
June sector

June 2017 regional breakdown

Amount lent to each UK region
June region

Loans defaulted last week
As part of lending to businesses, a small percentage will not be able to fully repay their loan. This is known as bad debt and is a normal part of business lending. We believe diversification, where you lend no more than 1% of your total to each business, is the best way to reduce the impact this has on your return. You can diversify automatically using our Autobid tool.

Each week, we publish a list of the loans being defaulted on the Customer support section of our website under ‘Announcements.’ To see a breakdown of the loans defaulted last week simply click on loans defaulted 6th July 2017.  For further information on why Funding Circle defaults loans you can read our FAQ here.

Collections and recoveries
How it works
You can also read more about how our collections and recoveries process works (part one and part two) on our blog.

Up next in July, we’ll be looking at the impact your lending is having on the UK economy and bringing to life some of the businesses you’ve helped access finance.

As always, if you have any questions or comments our dedicated team are here to help. And if you have any further suggestions we’d love to hear them.

Enjoy lending, the Funding Circle team

*The current estimated return is a weighted estimate of the annual return after fees and bad debts that investors could earn from lending money to businesses seeking loans today. It is calculated by taking the gross interest rate less fees and estimated bad debts that will occur in the future for each of the last 3000 loans accepted on the marketplace. The average return is weighted by loan amount, compounded and before tax. The return is updated daily. See the full calculation here.

This blog is a general summary, and should not replace financial advice tailored to your specific circumstances. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice. If you have any questions, please speak to your professional advisor or seek independent specialist advice.

Your June Impact – Lending Impact and Borrower Stories

june investor impact
This month we’re looking at some of the success stories from recent borrowers and how your lending has helped them achieve their goals, from South East Timber & Damp to The Strings Club. Dive in below to find out more.

In case you missed last month’s post, we interviewed The Naked Marshmallow Company, and got ready for festival season with 5 camping essentials from Funding Circle borrowers.

know
You and other investors have now helped more than 25,000 UK businesses access finance to grow and create much needed jobs.

When it comes to driving the UK economy forward these small businesses pack a pretty impressive punch. According to FSB statistics SMEs make up 60% of all private sector employment and 47% of all private sector turnover in the UK.

lifesaver

Annabel and deanTo help cover their staff’s wages for two months, husband and wife team Annabelle and Dean Webster borrowed £30,000 in August 2015. They’d approached a bank first but found the application process slow and cumbersome as they needed finance fast, so they did some research and came across Funding Circle. Ten days later, the couple had secured a cash injection for their business. “It’s been a lifesaver,” said Annabelle. The couple run Kent based damp specialists South East Timber & Damp. Read the full success story in The Times.

Strings Club
Award-winning musical education company, The Strings Club, offers children aged 4-11 a range of high-quality musical experiences. Founder Amy Cunnington launched the business in 2012 with the aim to give primary school children an opportunity to discover and engage with music. Their ethos is simple: for all children to be inspired by music.

kids music

The very first Strings Club took place in London with just 6 budding students. After, a parent asked, “When’s the next one?” Since then, The Strings Club has gone from strength-to-strength and Amy has remained devoted to creating musical experiences for children.

Due to the rising popularity of courses and lessons, Amy needed help keeping up with demand. Choosing Funding Circle for support, Amy said, “The loans allowed me to expand my business, hire new staff, buy more equipment and launch a marketing campaign. Overall, the experience was very efficient and very helpful.”

We’ll be visiting Amy and the team soon to film a case study video – stay tuned.

Dream wedding
We’re well into wedding season and whether you’re organising your own or supporting family or friends with theirs we’ve put together a list of 7 unique businesses to help you get ready for the big day, from finding the perfect dress to finding the right venue.

Up next

At the beginning of July, we’ll be publishing ‘Your July Review – Insight and Analysis’ which will focus on the numbers and include some helpful tips to help you make the most of your investment.

As always, if you have any questions or comments our dedicated team are here to help. And if you have any further suggestions we’d love to hear them.

Enjoy lending, the Funding Circle team

Your June Review – Insight and Analysis

Your June Review
Summer has arrived, and it’s been another exciting month. We’ve been given full authorisation from the UK regulator, the Financial Conduct Authority – another step forward to offering industry-leading, tax-free returns with the Funding Circle ISA, which we plan to launch later this year. You can read the full story in this article.

Also included in this month’s post, personal finance expert Simon Read looks at what the record level of inflation in the UK could mean for you and what you can do about it. Dive in below.

May lending figures
Last month, you and other investors helped businesses to take new opportunities, create new jobs and drive energy into the UK economy — thank you for your continued support!

June review
Remember, your actual return may be higher or lower as your capital is at risk.

Monthly trends
These graphs show the most recent activity on the marketplace.

You’ve helped more than 8,500 small businesses access finance in the last 6 months…

June number of loans

Totalling over £610 million lent

June amount of loans

May 2017 sector breakdown

Amount lent to each sector

Business sectors

May 2017 regional breakdown

Amount lent to each UK region

June business regions

Making the most of your investment

May Industry News

The Times looks at a variety of different apps to help make your money work harder, from keeping track of your spending to monitoring investments. Read about this and more in our round-up of last month’s industry news.

What does rising inflation mean for your money?

With inflation in the UK at a four-year high, personal finance expert Simon Read looks at what this could mean for you and what you can do about it in his latest blog.

Loans defaulted last week
As part of lending to businesses, a small percentage will not be able to fully repay their loan. This is known as bad debt and is a normal part of business lending. We believe diversification, where you lend no more than 1% of your total to each business, is the best way to reduce the impact this has on your return. You can diversify automatically using our Autobid tool.

Each week, we publish a list of the loans being defaulted on the Customer support section of our website under ‘Announcements.’ To see a breakdown of the loans defaulted last week simply click on loans defaulted 1st June 2017.  For further information on why Funding Circle defaults loans you can read our FAQ here.

Collections and recoveries

How it works

You can also read more about how our collections and recoveries process works (part one and part two) on our blog.

Up next in June, we’ll be looking at the impact your lending is having on the UK economy and bringing to life some of the businesses you’ve helped access finance.

As always, if you have any questions or comments our dedicated team are here to help. And if you have any further suggestions we’d love to hear them.

Enjoy lending, the Funding Circle team

*The current estimated return is a weighted estimate of the annual return after fees and bad debts that investors could earn from lending money to businesses seeking loans today. It is calculated by taking the gross interest rate less fees and estimated bad debts that will occur in the future for each of the last 3000 loans accepted on the marketplace. The average return is weighted by loan amount, compounded and before tax. The return is updated daily. See the full calculation here.

This blog is a general summary, and should not replace financial advice tailored to your specific circumstances. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice. If you have any questions, please speak to your professional advisor or seek independent specialist advice.

Your May Investor’s Impact – Lending Impact and Borrower Stories

May investor impact
We’re looking at some of the success stories from recent borrowers and how your lending has helped them achieve their goals.

Dive in below to find out how your lending helped The Naked Marshmallow Company access finance to grow, and get ready for festival season with 5 camping essentials from Funding Circle borrowers.

In last month’s post, we interviewed husband and wife team David and Angie Cusworth who run award-winning IT services provider, Firstnet Solutions Ltd. They’re in the process of opening a new data centre in Yorkshire. Meet the couple and hear their story in this short video.

Did you know?
Last week, after battling it out in a gruelling knock out tournament, Funding Circle was crowned Ping Pong Fight Club Champions! Ping Pong Fight Club is a tour de force of inter-company ping pong rivalry, bringing together teams from technology start-ups and global brands to compete for the ultimate prize. Thank you to Pongathon for organising and congratulations to our champion, Luis, and runners up Iwoca pictured below.

Ping pong fight club

A great month for

Marshmalllow infographic

Magnificent marshmallow manufacturer set to expand

Founders Ollie Rendall and Joseph Colson dreamt of starting their own confectionary business while working together on the shop floor of Next. Working out of Ollie’s mum’s kitchen, the friends experimented with all sorts of flavours. Bubblegum and Eton Mess became favourites. The feedback from their families and colleagues was overwhelmingly positive and so The Naked Marshmallow Company was born!
Marshmallow Co

Fast forward 3 years and the business has gone from strength to strength, landing deals with well known high street stores and establishing themselves as pioneers of the gourmet marshmallow market. The pair are tirelessly focused on innovating and bringing unique and sumptuous products to the UK market. They’ve also let Ollie’s mum have her kitchen back!

’The funding will allow us to scale the business further and gear up for what’s likely to be another incredible Christmas. We’re investing in staff and machinery to enable the business to cope with volume and an ever-expanding product range. Our sincere thanks goes to all of the investors who have supported our business.’ To meet demand and buy equipment, The Naked Marshmallow Company in Lincolnshire borrowed £50,000 in May 2017. You can check out their products online here.

Camping essentials
Festival season is fast approaching, so now is the time to ensure you have all your supplies ready to go! Get outdoors with our list of 5 camping essentials, from water bottles to waterproofs, while also supporting amazing local businesses across the country.

Up next

At the beginning of June, we’ll be publishing ‘Your June Review – Insight and Analysis’ which will focus on the numbers and include some helpful tips to help you make the most of your investment.

As always, if you have any questions or comments our dedicated team are here to help. And if you have any further suggestions we’d love to hear them.

Enjoy lending, the Funding Circle team

Your April Impact – Lending Impact and Borrower Stories

April's investor impact

You told us that monthly and weekly updates were a little too much, so to better suit your needs we’re improving the way we talk to you on a monthly basis.

In your first Investor Impact, we’re looking at some of the success stories from recent borrowers and how your lending has helped them achieve their goals.

Did you know?

This month we hit more than 60,000 investors, big and small, lending to businesses through Funding Circle. Together your lending is having a real impact on the UK economy. Already in 2017 you’ve helped more than 5,000 businesses access much needed finance to grow and prosper. We’re going to need a pretty big venue to host everyone for our next event!

60000 people

A great month for

Firstnet create 100 new jobs in Leeds

Award winning IT services provider Firstnet Solutions Ltd was founded in 2011 to provide small businesses with the best possible IT infrastructure. Based in Leeds, husband and wife team David and Angie Cusworth are passionate about helping small businesses benefit from the same IT solutions as larger companies, but for a price that suits their needs.

Firstnet solutions

Last month, Firstnet Solutions Ltd opened a new purpose-built data centre in Yorkshire. David told us ‘we envisage that this data centre will create more than 100 new jobs, providing an important source of local employment.’

To facilitate the launch of their new data centre, Firstnet Solutions Ltd borrowed £74,480 in October 2016. David added: ‘Accessing finance through Funding Circle has helped our business achieve this success and we will look to work together more as we grow.’ Congratulations to David and the team!

We’ll be visiting David and the team soon to film a case study video – stay tuned.

April's success story

Paralympian goes for gold with a Funding Circle loan

Husband-and-wife team Peter and Linda Norfolk are well-experienced in achieving excellence. Nicknamed ‘The Quadfather’, Peter Norfolk OBE is a double paralympic gold medal and multiple Grand Slam winning wheelchair-tennis player, while Linda was Head of Physio for the Paralympic GB team at the Athens Games.

Not content with just winning medals, together they also own and run Equipment for the Physically Challenged (EPC), specialising in providing high-performance wheelchairs and powerchairs.

To hire two new members of staff, Equipment for the Physically Challenged (EPC) borrowed £30,000 in 2016. Meet this inspiring couple and hear more about their story in this short video.

5 fun ideas

The glorious summer weather is fast approaching and with more bank holidays coming up in May, it’s the perfect time to start planning. We’ve put together a list of five great ideas, from picnics to watersports and weekend getaways, to help you get outdoors and support businesses that have flourished thanks to your lending.

Up next

At the beginning of May, we’ll be publishing ‘Your May Review – Insight and Analysis’ which will focus on what’s been happening on the marketplace to help you get the most from your investment.

As always, if you have any questions or comments our dedicated team are here to help. And if you have any further suggestions we’d love to hear them.

Enjoy lending, the Funding Circle team

Property development lending – important update

Funding Circle’s long term goal is to become the first choice for small businesses here in the UK and across the world. By attracting thousands more businesses to the platform, we can offer you many more lending opportunities, allowing you to continue to earn an attractive, stable return. To meet this goal, we have taken the decision to focus on our core small business lending product in the UK and our other markets and will scale down new property development lending, expecting to stop all lending by mid-2018.

We are proud of the lending we have facilitated to small developers since 2014. The borrowers you have lent to have built thousands of homes and credit performance has been strong; loans have generated a 7% annual return* (as of 10th April 2017) and you have earned more than £22m in interest.

By focusing on our core product you will be able to help thousands more small businesses to access finance and grow. Over the last year you have lent record-breaking amounts, with approximately £280m lent to small business borrowers in the first three months of 2017. We expect this trend to continue.

It’s important to note that this decision is not related to credit performance of property development loans, which have outperformed expectations over the last three years and we expect this to remain the case.

We will continue to work on your behalf to service all existing property development loans. There will still be opportunities for you to lend to experienced property professionals over the next 12 months.

If you have any questions on today’s news, please get in touch at contactus@fundingcircle.com.

Enjoy lending,

The Funding Circle team

*Past performance is not a guarantee of future returns. Returns shown may change over time as some businesses may not be able to fully repay their loans.

Spring-clean your Funding Circle account

Last week marked the start of Spring—the clocks went forward, the days get longer and with a bit of luck, the weather gets warmer!

For many people, spring represents the time to have a good clean out in their homes, but it is a good opportunity to get your financial house in order as well. Your Funding Circle account is no exception, so here are four tips to help you get the most out of your investment.

1. Give yourself the best chance of earning a stable return

Our data shows that investors who diversify by lending small amounts to many businesses are more likely to earn a stable return. From time-to-time some of the businesses you lend to won’t be able to repay their loans, so lending small amounts minimises the effect this could have on your return. We suggest you lend to at least 100 businesses, with no more than 1% of your portfolio lent to each one.

 More information on the benefits of diversification can be found on our statistics page. You can see the maximum percentage you have lent to any one business in the My Loan Parts section of your Summary page.

2. Make sure your funds are working hard

You can earn great returns by directly lending to businesses through Funding Circle, but your money earns nothing if it is sat idle. Each month you will receive either a principal and interest payment (the amount you lent plus the interest earned), or an interest-only payment from the businesses you lend to. Ensuring these repayments are lent out to new borrowers can maximise your earning potential.

Doing this regularly can be time consuming, however our Autobid tool will automatically lend your repayments out to new borrowers, leaving you to get on with your day!

3. Check your Autobid settings

It’s good practice to review your Autobid settings regularly to ensure they still meet your lending criteria. While logged in, the Autobid page will allow you to turn the tool on or off and manage your diversification options. The Advanced Settings will also allow you to choose which risk bands to lend to and set the gross interest rates for buying loan parts from other investors. Remember, diversification across both risk bands and businesses can help you earn a stable return.

4. Grow your portfolio for the long-term

Setting up a standing order can be done quickly and allows you to set aside a little each month towards your financial future. Making even a modest regular contribution can have a considerable long-term effect on your Funding Circle account. For example, if an investor with £10,000 in their Funding Circle account was to set up a standing for £100 a month, after 30 years they could have an account worth nearly £200,000.*

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

We hope you have found this useful, and if you have any questions about your account please get in touch.

Enjoy lending,

The Funding Circle team

*Returns are at our estimated annualised return of 6.9%** (as of 6th March 2017), are compounded monthly, and are after fees and bad debt but before tax. Based on this, an account worth £10,000 with a standing order of £100 a month would be worth £199,084.63. Returns are calculated using a compound interest calculator.  

**This estimated return is a weighted estimate of the annual return after fees and bad debts that investors could earn from lending money to businesses seeking loans as of 6th March 2017. It is calculated by taking the gross interest rate less fees and estimated bad debts that will occur in the future for each of the last 3000 loans accepted on the marketplace. The average return is weighted by loan amount, compounded and before tax. The return is updated daily. See the full calculation here.

Read between the lines: What does the Budget mean for you?

Over the next few months we will be bringing you a regular column from Simon Read, a personal finance expert with extensive experience in helping people make the most of their money. Simon has written extensively on personal finance issues for a number of national UK newspapers. Previously he was personal finance editor at The Independent, and is currently an expert on BBC1’s Right on the Money show.

Each month Simon will cut through the jargon to help you understand what is happening in the wider financial world. This month, we caught up with him to get his reaction to last week’s Spring Budget and what it means for you.

 

We’ll be hearing regularly from Simon over the next few months, so watch this space!

Enjoy lending,

The Funding Circle team

The views expressed here belong to the author and do not represent those of Funding Circle. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice.

The information and views contained here are provided solely for informational purposes and should not be construed as legal, tax, regulatory, accounting or investment advice, or as a recommendation or an offer or invitation by Funding Circle.

To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, such information contained here.

If you have any questions, please speak to your professional advisor or seek independent specialist advice

Improving the way we talk to you

You told us that monthly and weekly updates were a little too much, so to better suit your needs we’ll now be updating you fortnightly with more in-depth information.

In-depth updates, every two weeks

Up first, we’re replacing your current Weekly Lending Review with two monthly blogs, which will still contain all the information you like to read, from the amount lent to businesses each month, how to make the most of your investment, and any recent defaults. However, we’re giving it all a spring clean and adding some new features.

Each month your new round-up will be split into two:

  • Your investment update will focus on the Funding Circle marketplace, from businesses you could lend to, to how much was lent last month, some new statistics and information from our experts.
  • Your lending impact will showcase success stories from recent borrowers, how your lending has helped them achieve their goals, insight into how things work at Funding Circle, and an opportunity to hear from other investors.

These refreshed blogs will be launching later this month.

Coming soon

Quick on the heels of the blog update, you’ll soon notice a refreshed look for your newsletters. Mirroring your new marketplace round-up blogs, the newsletters will be split into two:

  • An update on your investment and a round-up of what’s going on at Funding Circle at the beginning of each month.
  • What impact your lending is having on the UK economy mid-month, and showcase some of the extraordinary business owners you’re helping.

There’s lots of other improvements still to come, but for now we hope you like the new look and feel of our communications.

As always, if you have any questions or comments our dedicated team are here to help. And if you have any further suggestions we’d love to hear them.

How investor returns change over time

To help guide you on what you can expect from your lending experience, we wanted to show how a typical investor account could perform over a five-year period.

Performance over time

At Funding Circle, we show projected returns for both of the lending options available to investors. These are the annual returns investors could expect to earn once loans have been repaid. 

However, we don’t expect you to arrive at your projected return right away. During the course of your lending, your return will change. It will be affected by bad debt (businesses being unable to repay loans) and the recoveries you may receive (funds recovered from defaulted loans). Recoveries can take years, and the effect of bad debt is usually concentrated in certain phases. 

The below chart shows the typical stages a return will go through over a 5 year period. In this example, an investor has lent across all new loans taken out between 2012-2014, without reinvesting repayments. 

Phase 1 – Returns are at their highest initially

For the first few months the return is at its highest. This is because very few borrowers have been unable to repay their loans in the first 6 months.

Phase 2 – Bad debt causes a dip

We robustly assess every business you lend to, however, there will always be a small proportion who are unable to repay their loans in full. This is called bad debt. It can occur anytime, but it has the biggest effect between 6-18 months after lending starts. As you can see on the graph, it usually causes returns to dip during this period.

Phase 3 – Returns improve as recoveries and interest take effect

Although Phase 2 can be alarming, as you can see on the graph, typically returns pick up again. Although you will likely still experience bad debt, you’ll start to receive recoveries on some of the unrepaid funds and compound interest helps to boost your return over time. 

Think long term to get the best return

It’s important to accept bad debt as a normal part of lending. In most cases it will cause a dip in your return, and potentially some bumps along the way. However, by thinking long term, you can still earn attractive, inflation-beating returns.

The above chart is based on loan performance data over 5 years for all loans taken out between 2012-2014. As you are lending to your own portfolio of loans your return may differ. Past performance is not a guide to future performance and capital is at risk. Not covered by the Financial Services Compensation Scheme.