Changes to the marketplace next week | Weekly Lending Review

Week 38: 14 – 18 September 2015

We’re introducing fixed interest rates for all new loans next week, meaning that investors on the same loan will earn the same return as each other, similar to how property loans work today.  

We plan to launch next monday, 28th September. Read more about what this means for you on our fixed interest rate webpage.

What will the new fixed interest rates be?

Typically rates will be  based on a range of factors including the risk band and the term of the loan.

Here are the new gross fixed interest rates (before fees and estimated bad debts):

Fixed rate card

Interest rates for property loans will be set on a case by case basis and will be clearly indicated on the individual loan request.

What happens if you use Autobid?

If you use Autobid there’s nothing you need to do as it will continue to lend to businesses on your behalf. It will lend at the interest rates stated above for new loans, and buy loans parts at rates you have saved in your current settings.

New loans available to you

There are currently 49 loan requests on the marketplace which are all available for you to lend to.

The total value of new loans listed on the Funding Circle marketplace was £13,402,940 averaging at £81,659 per loan. The largest loan value was £400,000 and the smallest loan value was £7,300.

Business loans still available to bid on:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 14-Sept represents the week of 14th – 18th September 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)
Yield WLR 38

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

Loans listed WLR 38

Listed loan value per week

Loan value WLR 38

Total amount lent

Amount lent WLR 38

Loan parts available to buy from other investors

Loan parts WLR 38

News you should know

Investor evening

Last Thursday we had the pleasure of welcoming investors into our office to discuss the move to fixed interest rate loans. We filmed the event and will be publishing the video in the next week. Further information about the change can be found on the fixed rate webpage.

Updates to our terms and conditions

On Monday we’ll be changing our T&Cs following the introduction of fixed interest rate loans. You’ll be required to re-accept the loan conditions next time you place a bid or buy a loan part. Read more about the updates on the blog.

Loans defaulted last week

Commercial lighting manufacturer. Loan 10770. Risk band C

This Essex business was established in 2009 and went into administration on 10 August.

Language school. Loan 7290. Risk band C

This Cardiff business has been running since 2007 and has proposed a Company Voluntary Arrangement.

Flooring contractors. Loan 7943. Risk band C

This Bedfordshire business was established in 1997 and entered administration on 19 June.

Residential building contractors. Loan 13710. Risk band A

This London business has been running since 2010 and the guarantor is unresponsive.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, The Funding Circle Team

Updates to our T&Cs and Privacy Policy

Following our announcement of moving to fixed interest rates for all new loans, on Monday, 28th September we will be updating the terms & conditions for both investors and borrowers. We’re also taking this opportunity to update and simplify other clauses, set out below.

What you need to do

From next week, if you’re an investor you’ll be required to re-accept the loan conditions next time you place a bid or buy a loan part, as the updates below are included in the loan conditions.

If you’re a borrower, there’s nothing you need to do other than read the new conditions.

Investor T&Cs:

  • We’re changing the term ‘lender’ to ‘investor’ so the T&Cs are consistent with the website.
  • Clause 4 – we’re removing references to auctions and adding that all new loans will be listed at fixed interest rates.
  • Introduction paragraph 5 – we’re clarifying there is one borrower contract and how it works.
  • Clause 12.4 – the term novation is changing to assignment as it better describes the way in which the transfer works, on default of a loan or sale of loan part on the secondary market.  Investors will now assign their rights to another investor or to a Funding Circle company on default of a loan, and the loan conditions provide that the new investor becomes party to the loan and takes on any obligations of the transferring investor. This has no impact on you but helps with certain regulatory analyses.
  • Clause 12.4 – we are removing the option to, and the 7 day window for, opting-out of the collections process. This means our collections team will be able to start the process faster than before, and work to recover the debt outstanding on your behalf. The opt-out provision was originally included within the terms when the collections process was outsourced, and has been used twice by investors out of a total of approx. 400 loans which have defaulted since 2010. Since bringing this function in house, where we have a dedicated team of specialists working to make recoveries on your behalf, the recoveries estimates have greatly improved: the current actual recovery estimated is 19.3p in the £, in comparison to 9.2p before, and across all loans the estimated recovery within 5 years of default is 40p in the £.

Borrower T&Cs

  • Changes to clause 3 to reflect the move to fixed interest rates for all new loans, where Funding Circle sets the interest rate of a loan before it’s listed on the marketplace.
  • Changes to paragraph 4 of the introduction and clause 3.12 to clarify how the borrower contract works.
  • Change to clause 1.5 – to add a borrower warranty and representation that it does not expect the information provided to change in any material way in the next 6 months, and an undertaking to update us if any information is likely to materially change.
  • Clarification in clause 4.3 that the interest rate stated in Key Contract Terms will not change.
  • Clause 8.4 – changes to clarify that a loan is assigned rather than novated.
  • Change to clause 8.7 to reflect that if we agree a payment plan, we can verify whether you can afford this by requesting information and doing credit checks.
  • Clause 9.2(b) – clarification that we can terminate membership if there is a breach of any security document, a facility letter in connection with property loans or any other documents arising out of the loan made on the platform

Updating our privacy policy

We are also taking this opportunity to simplify our privacy policy. The new policy is shorter, easier to understand and it better explains certain practices (including in relation to when we undertake credit reference checks and how you can contact us). There are no fundamental changes to how we collect and use personal data, we’re just simplifying our documentation.

If you have any questions about the above, please don’t hesitate to contact us and we’ll be happy to help.

Enjoy lending,

The Funding Circle team

Using Autobid? | Weekly Lending Review

Week 37: 7- 11 September 2015

Last week more than £9 million made its way to businesses across the UK, thanks to your lending. Of the new loans listed on the marketplace last week, London and the South-East were the most popular business locations.

News you should know: moving to fixed interest rates

Over the next few weeks there will be changes to how the marketplace operates, and to the way Autobid works.

Using Autobid?

Autobid will automatically lend at the new fixed interest rates for all new loans listed on the marketplace, and the interest rates you currently have saved in your Autobid settings will only apply for buying loan parts on the secondary market.

For more information about this please see our fixed rate page, or give our customer relations team a call on 0800 840 4075.

Site downtime this weekend

The site will be unavailable for approximately 12 hours overnight this Saturday, starting at 7pm. Everything should be up and running again by 7am Sunday.

New loans available to you

There are currently 49 loan requests on the marketplace which are all available for you to lend to.

The total value of new loans listed on the Funding Circle marketplace was £12,560,020, averaging at £80,000 per loan. The largest loan value was £400,000 and the smallest loan value was £5,000.

Business loans still available to bid on:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 7-Sept represents the week of 7th – 11th September 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

number

Listed loan value per week

value

Total amount lent
whole loan

Loan parts available to buy from other investors
secondary

Loans defaulted last week

Retailer. Loans 2027, 3869, 7381. Risk band B

This fruit and vegetable retailer was established more than 20 years ago and entered administration in August.

Vehicle retailer. Loan 6910. Risk band A

This Warwickshire business has been running since 1995 and has entered liquidation.

Digital media company. Loan 1913. Risk band C

This Manchester business has been running since 2008 and has entered liquidation.

Retailer. Loans 1399, 4683, 6670. Risk band A+.

This London business was established in 2000 and has entered administration.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

 

The Funding Circle Team

 

Your fixed rate questions answered

Following feedback from investors over the last few days we have put together a list of the most frequent questions and answers that have been raised. If you would like to join the investor evening on 17th September or webinars that are taking place over the next few weeks, please contact us at community@fundingcircle.com.

Information on the marketplace

When will fixed interest rate loans launch?

Fixed interest rate loans will launch the week commencing 28 September.

With the introduction of fixed interest rate loans, will I still be able to review a business’s details on the marketplace, or will Autobid, or investors running automated scripts, fill up the loan immediately?

Funding Circle was built so investors could have the opportunity to review individual businesses and decide if they want to lend to them based on their own preferences. We are committed that investors will still have time to review individual loan applications as we grow. Autobid has a 65% cap on all new loan requests it can fill. 35% of all new loans will be available to manual bidders.

We are aware of certain investors using automated scripts. We continue to monitor the marketplace and if we feel any individual investor is disrupting the marketplace we will take action.

Can interest rates be changed mid-term?

Once a business accepts their loan request the interest rate is fixed for the term of the loan. This is how loans have always operated at Funding Circle and will not change with the introduction of fixed rates. All loans already in your portfolio will remain at the same rate for the full term. Repayments will operate in the same way they have previously. For all loans, except certain property loans (those marked as ‘interest only’), investors will receive capital and interest repayments on a monthly basis.

Changes to fixed interest rates

Do rates include a provision for a potential interest rate move in years to come?

As part of setting the new fixed interest rates, we take into account forward looking expectations of interest rates over the next five years. This is why you will see the longer term loans are higher rates.

The fixed rates you have published are below the average rates seen over the last 100 loans.  Why is this?

August is typically a month where interest rates increase due to the holiday season. This is a seasonal trend. We have published below the average rates from the start of 2014 and 2015, (excluding property) and you can see that the fixed rates for 24-36 and 48-60 month loans are comparable with the new fixed interest rate loans. The majority of investors will achieve more attractive gross interest rates under the new model.

Fixed rate table

 

Why are 6-12 month A+ loans only 6% fixed interest rate?

6-12 month A+ loans make up a very small proportion of our overall loanbook (about 1% of all loans) and we haven’t yet seen any defaults to date for this group. Short term loans are typically very competitive in the market and the rate is what feel it should be to attract these types of borrowers.

What happens when ISAs become available. Won’t the rates will be driven lower because of higher demand?

Typically the majority of ISA money is deposited over a short period towards the end of the tax year. With an auction model this volume of money would have depressed rates over that period given the influx of capital. This will not be the case with fixed interest rate loans.

Why not offer both models, fixed rate and auctions, and allow investors and borrowers to choose their preferred method?

Businesses are looking for low cost finance which is quick to access. They will only accept a loan auction if the rates are lower than the fixed rate for their risk band. Therefore we believe that rejections would increase under an optional auction/fixed rate model.

Why are you taking away all of the fun and turning into a bank?

We passionately believe in investors being able to lend their money directly to businesses in the UK. This is what makes Funding Circle very different from a bank. We are committed that investors will still have time to review individual loan applications as we grow.

Were investors consulted on this before? Why won’t you launch as a pilot first?

We try to engage with investors as much as possible and listen to feedback. Where we feel suggestions are practical and can help improve Funding Circle we try and implement these. Unfortunately there will be times when significant business decisions are made that will not be communicated to investors before the decision is taken. We have monitored fixed rate loans at our US business and our property loans, and we believe they will be successful here in the UK.

Time investor money tied up

Will fixed interest rates mean borrowers accept their loans quicker?

The current average time it takes for a loan request to be accepted is approximately 7 days. We expect it will be faster with the introduction of fixed rates. All fixed interest rate loans will be listed for 7-14 days or until the borrower chooses to accept the loan. In the longer term we will be looking to implement a system where borrowers can pre-accept their loan and are automatically removed from the marketplace when their loan is 100% funded. As a result of the move to fixed rate we expect rejection rates will drop as borrowers have a certainty of price, which will help investor money to be used more efficiently.

Property

I like property lending. What plans and/or changes do FC have for property loans?

There are no plans to change how property lending operates on the marketplace.  

Borrower related questions

Won’t borrowers just refinance when loans rates have dropped?

Borrowers can already do this today when rates fall at times in the year, but we don’t see this as an attractive option because of the additional fee the business would incur.

Autobid questions

When will Autobid start buying discounted loan parts?

This change will be made tomorrow and Autobid will start purchasing discounted loan parts immediately.

I use autobid.  Do I have to do anything in the context of the new system?

If you use Autobid to lend to businesses then you may wish to update your settings when fixed interest rates launch.

Going forward:

  • Autobid will lend on all loans within risk bands you have selected. The gross interest rates stated above will apply for the majority of new loans, excluding property, where rates may vary.
  • Your current Autobid settings will remain in place for buying loan parts from other investors on the secondary market.

‘The disruption of financial services has only just begun’ | Weekly Lending Review

Week 36: 31 August – 4 September 2015

Included in this month’s industry news, Funding Circle CEO Samir Desai discusses how disruptive new technology companies are transforming business in Europe and borrower Jenny Brown explains in The Sunday Times how marketplace lending helped her business, Pampeano, grow. Read our round-up on the blog.

Important Funding Circle update

We’ve been looking at ways to improve our marketplace for borrowers and investors and have decided to introduce fixed interest rates for all new loans, within the next month. Last week, we sent a letter and Q&A to all active Funding Circle investors announcing the change. Read more about what this means for you on the fixed interest rate webpage.

New loans available to you

There are currently 37 loan requests on the marketplace which are all available for you to lend to.

The total value of new loans listed on the Funding Circle marketplace was £9,417,040 averaging at £80,499 per loan. The largest loan value was £390,000 and the smallest loan value was £5,120.

Business loans still available to bid on:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 31-Aug represents the week of 31st August – 4th September 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 36 yield
Number of loans, value of loans and amount lent are reported weekly.

 

Number of listed loans per week

WLR 36 loans listed

Listed loan value per week

WLR 36 loan value

Total amount lent

WLR 36 amount lent

Loan parts available to buy from other investors

WLR 36 loan parts

News you should know

Updates to Autobid

Autobid will now buy loan parts which have a discount applied, as well as those listed at par value. In addition, we’re also increasing the maximum discount you can apply to 20% of the outstanding principal. These changes have been reflected in clauses 4.6 and 7.3 of the investor T&Cs.

Loans defaulted last week

Food wholesaler. Loan 11236. Risk band D

This Bury business was established in 2012 and the borrower has become unresponsive.

Pub. Loan 8973. Risk band C

This Essex business has been running since 2012 and will be served with a statutory demand.

Lighting manufacturer. Loan 6939. Risk band B

This Cornwall business was established in 2009 and has been placed into administration.

Utility engineers. Loan 6937. Risk band A+

This Hertfordshire business has been running since 1998 and the guarantors intend to enter into individual voluntary arrangements.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, The Funding Circle Team

 

A revolution in small business lending. August industry news

Newspapers - Copy

Bye, banks. We prefer peer-to-peer lending

This month, one of our borrowers Jenny Brown, was featured in this great article about her experience of getting a business loan for her company, Pampeano. She discusses her experience with banks versus her experience with marketplace lending. With sophisticated technology, online platforms are able to assess the credit risk of a business and help investors to deliver cash much faster than a bank. Last year, around £1.6 billion of loans were granted by these platforms and this figure is set to almost double this year. Another borrower of ours, The Stripes Company, was also highlighted in an article published in the Daily Mail.

Zopa reaches £1 billion lending milestone

A massive congrats to Zopa on their huge milestone; the platform has now facilitated its billionth pound in consumer loans. For the past five years, Zopa’s loanbook has grown between 70 and 100 percent a year and is on track to increase even more. This substantial growth is seen across the sector as more investors and borrowers look to marketplace lending for business and consumer loans.

Disruptive new tech companies are transforming business in Europe

Prevailing attitudes about Europe being able to produce successful global companies are beginning to change, as Britain continues to build a powerful fintech sector. In the second quarter of this year alone, nearly €3.5 billion has been raised by European tech firms. In this article bylined by our CEO, Samir Desai, he discusses the importance of embracing this innovation.

Funding Circle Wants To Start A Revolution In Small Business Lending

Last month, Funding Circle US, along with five other marketplace lending platforms in the US, helped lead the charge to launch a Small Business Bill of Rights. Sam Hodges, our US Managing Director, talks about the importance of a Bill of Rights in order to protect small businesses and promote transparency in the sector. The six key rights can be found here, and there was further coverage in Forbes and Reuters.

Banks should be afraid, the disruption of financial services has only just begun

Simon Champ, CEO of P2PGI – a large marketplace investor, discusses how disruption in financial services has not yet reached the same levels as sectors such as e-commerce and travel. Marketplace lending platforms are beginning to change that as we continue to see immense growth within these tech firms. It’s only a matter of time before we see marketplace lending become the accepted way for people or businesses to grow money – the disruption of financial services has only just begun.

Funding Circle is set to do over £35 million in revenue this year — and it hasn’t spent any of the £97 million it raised

And last but certainly not least, on the 26th August Funding Circle celebrated it’s 5th birthday! Investors are now lending more than $100 million a month via our platform across the UK and the US, helping hundreds of small businesses access business finance, so thank you to all our customers for your continued support. To read more about what we’re up to at the moment, check out our blog. Any questions? Please get in touch.

News

Fixed interest rate loans – important Funding Circle update

As you may already be aware, we sent a letter and Q&A to all active Funding Circle investors today announcing that we will be moving to fixed interest rate loans within the next month.

Below is the letter and you can read more about these changes on our fixed interest rate webpage. To download a more detailed Q&A about the changes, please click here.

We appreciate this is a big change but we believe it is a necessary step towards building the most successful marketplace for our customers. We would be grateful for your feedback to help us in the next stage of our journey.

The Funding Circle team

……

Fixed rate letter from Samir Desai, CEO and co-founder of Funding Circle

Since we first launched Funding Circle our goal has been to enable investors to earn attractive, stable returns and to help small businesses access finance quickly at a fair, transparent price.

Recently, we have been reviewing in detail how Funding Circle operates, with a view to providing an improved service for both investors and borrowers. We have found that the current auction model has significant drawbacks, which we believe can be improved to give investors and borrowers a better experience, and ensure the long term sustainability of the marketplace.

After careful consideration we have taken the decision to move to fixed interest rates for all loans within the next month. I appreciate this is a big change, which is why I wanted to write to you today.

What’s the challenge with the auction model?

The auction model has existed since Funding Circle first launched in 2010 – enabling investors to choose the interest rate they wish to earn and the amount of money they wish to lend.

Whilst I know many investors have enjoyed the auction model, there are a number of disadvantages with it:

  • Auctions tie-up investors’ funds: auctions typically last 7 or 14 days. During this time your money is not earning any interest and your bid may be knocked out by a lower rate. This means that investors may bid multiple times during an auction, with no guarantee their bid will be successful.
  • Confusing and complex to understand: many investors tell us they want a simple, easy way to lend their money. Auctions can be confusing and unattractive, especially for new investors.
  • Unattractive to borrowers: many business owners are put off by the lack of certainty around the cost of their loan.

How do fixed interest rate loans work?

Fixed interest rate loans are where Funding Circle sets the rate based on the risk of the loan and all investors achieve the same interest rate. We already operate fixed interest rates for property and asset finance loans.

The interest rate is based according to the risk of the loan, rather than the availability of investor funds. The rate is set before a business is listed and it is published on the marketplace for all investors to see. Rates will be set according to the risk band and the length of the business loan.

By setting the interest rate before a loan is listed on the marketplace, there is no need for the traditional auction. Loans will fund and be accepted by businesses more quickly, meaning your money is working harder for you.

Benefits of fixed interest rate loans

  • Simpler and easier to understand: if you like a business you can bid knowing your offer rate cannot be knocked out by other investors.
  • Your money works harder for you: by giving borrowers certainty of rate we expect businesses to accept their loans faster than they currently do, meaning your money is used more efficiently.
  • More businesses to lend to: certainty of cost means more businesses will apply to Funding Circle, creating more lending opportunities for you.

How will this change affect me?

We believe this move is in the best long-term interest for the Funding Circle marketplace. For the majority of investors, fixed interest rate loans will deliver a better service and higher returns. From our analysis, if the new fixed interest rates had been introduced at the start of last year, 71% of investors would be earning a higher expected return. To help plan for the launch of fixed interest rates, we are releasing the new rates to all investors today. You can see these on the Q&A page attached with this letter.

We have taken this decision in the interests of the majority of our investors and the feedback we have received has been positive. 90% of you have previously told us that you would increase or maintain your investment through Funding Circle if more fixed interest rate loans were introduced.

We recognise, however, there are a group of investors who actively use the auction model to earn above average returns, and who will be unhappy with this news and whose overall return is likely to drop as a result. We hope those affected will still consider that they can earn an attractive return at Funding Circle and continue to lend through the platform.

How can I provide feedback?

This is a significant change to how Funding Circle operates. We want to be open with all investors and provide the opportunity to ask questions before we make this change.

Below are details about how you can be involved in the process:

  • Investor evening: this will be held on 17 September and primarily focused on questions about fixed interest rate loans.
  • Webinars: we will be hosting regular webinars to answer your questions. We will provide further information about these on the blog, forum and in your weekly email newsletter.
  • Written feedback: investors can provide written feedback, found at our fixed interest rate webpage.

If you would like to join any part of this process, please email us at community@fundingcircle.com.

This is a big, but necessary, move to continue to build Funding Circle into a successful, mainstream business. I hope this letter provides you with further information behind this important change and we look forward to answering any questions you have.

Yours sincerely,

Samir Desai

CEO and co-founder, Funding Circle

News

Funding Circle turns 5! | Weekly Lending Review

Week 35: 24 – 28 August 2015

In August 2010, the Funding Circle marketplace was launched by three university friends, Samir Desai, James Meekings and Andrew Mullinger. £50,000 was lent to small businesses in the UK during the first month.

Fast forward five years, and approximately £65 million, or $100 million, is being lent to small businesses in the UK and the US every month. We’ve come a long way in the past five years, and it’s all thanks to your lending and continued support! Read some of our highlights on the blog.

New loans available to you

There are currently 44 loan requests on the marketplace which are all available for you to lend to.

As part of lending to businesses, some may be unable to fully repay their loans, which is why lending small amounts to lots of businesses is so important. In this short video you’ll learn the basics of diversification and find out how to diversify at Funding Circle.

The total value of new loans listed on the Funding Circle marketplace was £13,342,840 averaging at £84,160 per loan. The largest loan value was £370,000 and the smallest loan value was £5,000.

Business loans still available to bid on:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 24-Aug represents the week of 24th – 28th August 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

Yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

Loans listed

Listed loan value per week

Loan value

Total amount lent

Amount lent

Loan parts available to buy from other investors

Loan parts

Loans defaulted last week

Civil engineers. Loan 2137. Risk band C

This Cheshire business was established in 2002 and is being placed in compulsory liquidation.

Magazine publisher. Loan 3523. Risk band C

This Shetland business was established in 2007 and the borrower has proposed a payment plan.

Digital marketing agency. Loan 5180. Risk band B

This Devon business has been running since 2005 and has been placed into liquidation.

Garden machinery supplier. Loan 9394. Risk band A

This Gloucestershire business was established in 2009 and is entering Creditors’ Voluntary Liquidation.

Mobile advisers. Loan 11419. Risk band B

This West Sussex business has been running since 2009 and has been placed into liquidation.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works on our blog.

Enjoy lending, The Funding Circle Team

Investor evening: meet the co-founders

In the third installment of our investor evening roundup, you can hear from Funding Circle co-founders Samir Desai, James Meekings and Andrew Mullinger who spoke at the recent event hosted at our London office.

They discuss the idea behind Funding Circle, what building a sustainable marketplace means for you, and future plans for the business.

Watch video:

Andrew started off the night by explaining why the three university friends decided to quit their jobs more than six years ago, to plan what would become the UK’s largest marketplace for small businesses loans.

James followed on to discuss how building a sustainable marketplace means having a diverse mix of businesses with thousands of loans, allowing investors to be diversified.

Samir rounded off the evening and talked in depth about raising capital, how lending to businesses across geographies may be possible in the future and gave a quick update on Funding Circle US.

Have you watched our highlights video from the event?

Five reasons why now is the right time to hire a social media freelancer

Like Funding Circle, weliketowork want small businesses to succeed by helping them unleash the power of the hidden workforce. Below they outline the reasons why small businesses should consider hiring a social media freelancer.

The power of social media has never been greater and any successful business, large or small, needs to consider what part it will play in their marketing strategy. No one is looking in telephone directories or at the classified ads these days – we are all browsing online and often hear about products or services via social media.

Here are five reasons why hiring a skilled professional to manage your social media marketing could be the best investment you make this year.

1) Save time

Social media is a fantastic engagement tool which is free to use. That’s great! No printing costs, advertising costs or line rental. But it costs time. Your time! Who can produce engaging content and interact on several different sites several times a day whilst running a business?  

If you’re spending eight hours a week managing your social media presence that’s a whole day out of your schedule. By hiring a skilled social media freelancer to do in two hours what would have taken you eight, you gain back a day at a fraction of the cost. You can get on with pouring all your energies into your business while they take care of the social media side.

2) Hire expertise

The world of social media changes fast with new platforms sprouting up all the time. Twitter, Facebook, Linkedin, Pinterest, Snapchat, Whatsapp, Youtube, Vine, Instagram – learning your way around all of these, or at least being aware of what they can offer your business, can be a full time job in itself.

But it doesn’t have to be time consuming, and a skilled freelancer can help you. Someone well versed in all the different platforms out there can get your social media marketing campaign up and running quickly and advise which ones are right for you.

3) Hiring a freelancer has never been easier

There are huge numbers of talented people out there looking for flexible freelance work and it’s never been easier to find them. The beauty of hiring a freelancer is the flexibility they offer. Social media marketing can be managed remotely from anywhere which makes it the ideal task to outsource to a skilled professional. You can hire someone to work for as many or as few hours as you need without hiring a permanent employee.

4) Outsourcing is nothing new

Technology has made outsourcing possible for any size of business, not just large corporations, as people are able to work from pretty much anywhere and in their own time. You may already have an accountant or bookkeeper, and a designer for your marketing collateral, so what’s stopping you from looking for someone for your social media marketing too?

5) Build your audience

Make your business more social and you make it more visible. Build followers, likes, an audience and they add credibility and trust to your brand. The simple fact is people judge your business at the click of a mouse these days. The more Twitter followers and Facebook likes you have, the more trust people place in what you can offer. But you don’t need to spend time learning the ins and outs of Pinterest, Vine and Instagram. There are plenty of freelancers out there who know these platforms inside out and with a skilled social media professional at the helm, you are likely to quickly see an increase in traffic to your site. And if you have a creative social media campaign which goes viral you have struck gold!

Sound like a good idea? Why not visit weliketowork.com to find out more!

Weliketowork is the UK’s dedicated freelance marketplace, connecting freelancers with small and medium sized businesses.  

Read more on why you should consider outsourcing your marketing.

‘Brilliantly British’ hatter shares his top tips for success

We caught up with Alex Torun-Shaw, owner of Laird Hatters, who shared his top tips for running a small business.

Alex owner Laird Hatters

Described as ‘Brilliantly British’, Laird Hatters sell handmade caps and hats combining the essence of classic style with an approachable, modern twist. Alex has borrowed £140,000, across two business loans, from more than 2,000 Funding Circle investors, to enlarge the business’s main retail premises in Covent Garden.

Laird Hatters has a diverse range of clients from judges and films stars, to tourists and cab drivers. “We are an unstuffy, friendly place to buy quality and affordable headwear,” says Alex who also has shops in Soho and Cambridge.

In this short video you’ll meet Alex, find out why he felt it was important to observe his new premises at various times of the day and how they came to be featured in magazines such as Vogue, Esquire and GQ.

Alex’s top tips are:

  • Do your research
  • Think outside the box for marketing
  • Always keep an eye on your costs

If, like Alex, you’re looking for a business loan, you can check you qualify for a business loan in just 30 seconds.

Apply online and a member of our team will get back to you within 2 working days.

We’ve helped more than 10,000 businesses in the UK and US access finance for a range of finance needs, and you can read more stories like Alex’s here.

Happy 5th birthday, Funding Circle!

In August 2010, the Funding Circle marketplace was launched by 3 university friends, Samir Desai, James Meekings and Andrew Mullinger. £50,000 was lent to small businesses in the UK during the first month.

Fast forward 5 years, and approximately £65 million, or $100 million, is being lent to small businesses in the UK and the US every month. We’ve come a long way in the past 5 years and it’s all thanks to your lending and continued support, so here are some highlights:

– More than $1 billion has been lent to small businesses in the UK and US.

42,000 investors, including individuals, the Government-backed British Business Bank, a university, 16 local councils and a number of larger financial organisations are lending to small businesses.

– Your lending has resulted in 12,000 loans to more than 10,000 UK businesses.

– 12,000 loans has created an estimated 36,000 jobs in the UK*.

– Borrowers have gone on to do fantastic things including exporting worldwide, like Moo Free, some have had their goods stocked in major department stores, like Pampeano, and one business, The Stripes Company, has had their fabric feature on the set of a major TV series, Downton Abbey.   

– More than £54 million of interest has been earned by investors in both the UK and US

The growth of Funding Circle community would not have been possible without your continued support, so we’d like to thank all of our investors and borrowers for helping to build the Funding Circle marketplace into what it is today.

The Funding Circle team


Click the image for the full version

fc-timeline-front

* Independent research by government think tank Nesta found that businesses that receive a loan through Funding Circle employ on average 11 people, and see an average increase in employment of 27 per cent after receiving finance.

Unique uniforms, thanks to more than 2,000 investors

Last month we were in Chiswick visiting bespoke uniform designers, Fashionizer. The award-winning company was launched 20 years ago by costume designer Debbie Leon when she identified a gap in the market for luxury uniform design. “There’s a technical side to uniforms – their functionality, whether you’re bending or stretching or carrying, their durability and their wearability,” Debbie says.

Fashionizer Debbie Leon

Operating at the top end of the market Fashionizer boasts an impressive client list including St Pancras Renaissance, The Connaught Hotel in London and Four Seasons Hotels and Resorts in Dubai. Debbie and her team create uniforms that reflect a brand’s identity, combining the creative design process with strong technical expertise. They export their tailor-made uniforms all over the world, and even have an order from Bora Bora at the moment!

Fashionizer Limited was the first company to receive part of their loan from the Government’s Business Bank* and since 2013, have borrowed over £195,000, across three business loans (Loan ID 2392, 3464, 9564).

In this short video you’ll hear from Debbie, meet the Fashionizer team and learn the three key elements to uniform design.

Are you interested in lending to businesses?

You can support businesses like Fashionizer and earn a great return. It takes minutes to sign up online and you can use our investor information guide to help you get started. We have thousands of loans which you can be a part of, making it quick and easy to build a diversified portfolio. Remember, by lending to businesses your capital is at risk.

Do you need a business loan?

More than 10,000 businesses in the UK have accessed finance from the marketplace for a wide range of purposes. You can check if your business qualifies to apply online in just 30 seconds.

*Funding Circle is supported by the British Business Bank, a development bank wholly owned by the UK Government. British Business Bank and its subsidiaries do not offer bank accounts, take deposits or provide regulated banking services. British Business Bank provides its financial support to smaller businesses through its delivery partners. Any decisions to provide finance to smaller businesses are made by Funding Circle not by the British Business Bank.

Highlights from our third investor evening | Weekly Lending Review

Week 33: 10 – 14 August 2015

Last month we had the pleasure of welcoming investors into our London office. We filmed the event and will be publishing three videos in the coming weeks, which will include an introduction of the new risk band and how lending through marketplaces will be included within an ISA wrapper next year. Watch the highlights from our third investor evening on the blog.

New loans available to you

There are currently 29 loan requests on the marketplace which are all available for you to lend to.

If you are lending to less than 100 businesses you may be missing out on a more stable return. We’ve created a short video which runs through the basics of diversification, which simply means lending small amounts of money to lots of different businesses, why it’s so important and how you can diversify at Funding Circle.

The total value of new loans listed on the Funding Circle marketplace was £13,099,680, averaging at £75,080 per loan. The largest loan value was £480,000 and the smallest loan value was £5,000.

Business loans still available for bidding on:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 10-Aug represents the week of 10th – 14th August 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 33 Yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 33 Loans listed

Listed loan value per week

WLR 33 Value

Total amount lent

WLR 33 Lent

Loan parts available to buy from other investors

WLR 33 loan parts

Loans defaulted last week

Health & safety training company. Loan 4876. Risk band D

This West Yorkshire business was established in 2007 and the borrower has been placed in administration.

Local information service. Loan 5100. Risk band C

This Worcestershire business was incorporated in 2010 and the borrower has been placed into liquidation.

Helicopter services. Loan 5749. Risk band C

This County Antrim business has been running since 2009 and is two months in arrears.

Online fashion store. Loan 5891. Risk band D

This Northern Ireland business was incorporated in 2014 and is four months in arrears.

Web solutions. Loan 3437. Risk band D

This London business was established in 2008 and is four months in arrears.

Riverside marine & leisure limited. Loan 9860. Risk band D

This Cambridgeshire business was incorporated in 2005 and is looking to enter insolvent liquidation.

Property repair company. Loan 5286. Risk band D

This Kent business has been running since 2005 and is two months in arrears.

All affected investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans. Read how our collections and recoveries process works on our blog.

Enjoy lending, The Funding Circle Team

 

Top 4 questions (and answers) from our recent investor evening

In the second instalment of our July investor evening round-up, and following from the highlights video, we’re focusing on the questions that were asked during the event. We’ve picked our top 4 which are detailed below.

Our third and fourth instalments will be published soon, so watch out for these in your newsletters.

If you have any questions please get in touch with our customer relations team who will be more than happy to help or come and join us on our forum.

Q : When the third ISA launches in April 2016 will investors be able to transfer current lending into the new ISA wrapper?

A : Although the ISA has been announced and will open in April 2016, details of how it will work in practice are yet to be released. We are engaging with HMRC and will update you with further information as soon as we have news to share.

It has not been decided whether investors will be able to transfer existing loan parts into an ISA wrapper, but we believe that this is the most sensible approach. You can read more about what we’ve proposed to Government here.

Q : As new platforms enter the market, and more people start investing, what do you think is going to happen to the returns investors currently enjoy?

A : At an industry level we don’t think new entrants in the market is linked to pricing, or returns. The market as a whole is very big; in July 2015 Funding Circle investors lent £47.5 million to businesses, but we estimate there is between £7 to £10 billion lent to small businesses each month in the UK.

In terms of competition on the Funding Circle marketplace, there are certain things we do to make sure returns are attractive for investors. There are minimum bid rates in place for each risk band, which increase with expected bad debt rates, and we encourage investors to diversify their investment. Recent data published on our statistics page showed that everyone lending to 100+ businesses equally is earning positive returns, with approx. 90% earning more than 4%. Remember, by lending to businesses your capital is at risk.

Q : Will you offer other products?

A : Funding Circle’s vision is to help as many small businesses access finance as possible. We’re always looking to increase our product range, as having more products will mean we’re better able to service the needs of small businesses. Property finance for example, has been a very successful product; investors have lent £80 million to small businesses who develop or invest in property over the last 16 months, helping to build over 400 homes.

Q : What kind of backup procedures do you have in place?

A : We have a stringent disaster recovery plan in place, from a gas leak in the office to how we would handle a whole data centre going down, and we systematically run practice scenarios for employees to test our resilience. Our disaster recovery plan is in line with FCA regulations. We also run regular security penetration tests, where hackers try to break into our system. This allows us to continually review our security systems and fix any vulnerabilities.  

Funding Circle has raised $273 million of equity capital, but in the unlikely event that we were to go out of business, all loan contracts would remain in place. You can read more about this here.  

Have a question?

See our FAQs for answers to the most popular questions.

Meet the team: highlights from our third investor evening

Last month we had the pleasure of welcoming investors into our London office. Members of the Funding Circle team gave short updates on recent developments, such as the introduction of the new risk band, and how lending through marketplaces will be included within an ISA wrapper next year.

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 three videos on the blog in the coming weeks. The first video, below, shows highlights from the evening and you’ll also hear from other investors about their experience of lending to businesses on the marketplace:

Are you interested in becoming a Funding Circle investor?

It takes minutes to sign up online and you can use our investor information guide to help you get started. We have thousands of loans which you can be a part of, making it quick and easy to build a diversified portfolio. Remember, by lending to businesses your capital is at risk.

 

Marketplace lending in the UK breaks new record | Weekly Lending Review

Week 32: 3 – 7 August 2015

A record-breaking £500 million was lent to consumers and businesses through marketplaces like Funding Circle, from April to June 2015 for the first time in history. Here’s our round-up of last month’s industry news.

News you should know

We’re making some improvements to the marketplace; specifically how Autobid funds new loans. Until now, Autobid could fund up to half of each available loan at the minimum bid rate. As more money is being lent through Autobid than ever before, we’re increasing this so 65% of new loans can be funded by Autobid at the minimum rate. Should this change again in the future, we’ll let you know in the Weekly Lending Review. This update should not affect your lending experience, but if you have any questions about this please get in touch or visit our forum.

New loans available to you

There are currently 50 loan requests on the marketplace which are all available for you to lend to.

The total value of new loans listed on the Funding Circle marketplace was £13,119,840, averaging at £73,331 per loan. The largest loan value was £400,000 and the smallest loan value was £5,000.

Business loans still available for bidding on:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The dates on the graph should be read as ‘week beginning’, for example: 3-Aug represents the week of 3rd – 7th August 2015.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 32 yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 32 loans listed

Listed loan value per week

WLR 32 value

Total amount lent

WLR 32 amount lent

Loan parts available to buy from other investors

WLR 32 loan parts

Loans defaulted last week

Retail business. Loan 8268. Risk band C

This Manchester business was established in 2011 and has entered liquidation.

Courier company. Loan 5423. Risk band D

This Cheshire business was incorporated in 2007 and has been placed in administration.

Indian restaurant. Loan 1751. Risk band B

This Birmingham business has been running since 1998 and is 2 months in arrears.

Ecological consultants. Loan 3751. Risk band D

This Wiltshire business was established in 2010 and has entered liquidation.

All affected investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans. Read how our collections and recoveries process works on our blog.

Enjoy lending, The Funding Circle Team

A third type of ISA. July industry news

Newspapers - Copy

P2P Isa investments confirmed for next year

July saw the Chancellor deliver his Summer Budget, where he confirmed a third ISA, which will allow lending through marketplaces such as Funding Circle to be held within an ISA from the 6th April 2016. This is tremendous news for investors who will soon be able to lend up to £15,000 per year tax free. Our co-founder, James Meekings said “inclusion of peer-to-peer lending within ISAs is a pivotal moment for our industry”. You can read more in the Telegraph, Mirror, Mail, Times, Independent and on our blog.

Funding Circle’s new Innovative Finance ISA can be found here

 

UK peer-to-peer finance breaks new record

Another busy month at Funding Circle as you lent a record £47.5 million to businesses across the UK! Q2 was also a record quarter for marketplace lending as a whole with over £500 million lent to consumers and businesses across a three month period for the first time in history. The phenomenal growth is proof that marketplace lending continues to become a mainstream way to borrow and lend. Check out this article in the Guardian if you’re still not convinced.

 

Funding Circle Hires Barclays, AmEx Executives to Oversee Risk

In more big news, we are delighted to welcome Jerome Le Luel and Manpreet Dhot to the Funding Circle team. Jerome, former Head of Risk Analytics at Barclays Group, is joining the company as Global Chief Risk Officer. And Manpreet, previously Chief Credit Officer at American Express within the Latin American market, has joined as Chief Risk Officer in the USA.  Full details can be found in the press release.

 

Software firm Sage brings funding options to its small business customers

We were also pleased to announce our new partnership with Sage, one of the world’s leading software providers for small businesses. Our partnership means Sage will refer small businesses to the marketplace for fast and efficient access to finance.  We believe that by working in partnership, we can help more small businesses grow, and bring you even more lending opportunities. This tie-up follows our agreement with Santander last year. More details can be found in the Daily Mail, CNBC and on our blog.

 

Apple becoming a bank? Don’t count on it

And finally, in this interesting article about the powerful growth of the financial technology industry, Morgan Stanley predicts that marketplace lending could grow from 1% of consumer and small business lending in America, to 10% by 2020. With tech companies popping up everywhere and smartphone apps providing 24/7 services to millions of people, it’s no wonder the fintech revolution is taking off. The internet is driving the biggest upheaval to the financial services industry in its history, and we hope that by lending to businesses through Funding Circle, you feel part of this!

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9 things you need to know about applying for a business loan

Thinking about taking out a business loan through Funding Circle? Cast your eyes over our list below to make sure you have all of the information you need.

1. Who can apply for a business loan?

Our aim is to help established and creditworthy businesses access finance through our marketplace.

Limited companies, limited liability partnerships (LLPs) and non-limited companies that have at least 2 years of filed or formally prepared accounts can apply. We’ll typically need to see a minimum annual turnover of £50,000 in your latest accounts. You can check if you’re eligible for a business loan online in just 30 seconds.

2. Types of business loans we offer

Unsecured loans – typically up to £250,000
These are highly flexible loans that can be used for a wide range of purposes, including working capital, expansion capital, asset purchase and more.

Secured loans – typically up to £1 million
These loans can be used for a wide range of purposes and will allow you to borrow more for your business.

Asset Finance – typically up to £1 million
If you’re thinking about purchasing a new asset or refinancing an existing one, then this could be the best solution for you. We can also fund the VAT if required.

Property Finance – typically up to £3 million
We offer the full suite of property loans including finance for development and investment purposes, commercial mortgages and bridging finance. Please contact propertyfinance@fundingcircle.com to find out more.

A personal guarantee from the majority shareholder(s) is required for all of the above.

Birchmead Homes Property Finance School Development

Jonathan Jay, director of Birchmead Homes Limited, has borrowed more than £2 million since July 2014 to develop a former school in Gloucestershire into 19 family homes. Find out more about the development on the blog.

3. What do we look for when we make our decisions?

The credit assessment team use the information you provide, as well as information from credit bureaus (for example, Experian) and other third parties.

Once you’ve checked your business is eligible you will need to complete our short online application and provide the following, all of which can be uploaded online:

  • Most recent filed / formally prepared accounts
  • Last three months of business bank statements

We may also request management accounts, depending on the age of your most recently filed / formally prepared accounts, and other supporting documents for certain products.

4. How long does the process take?

The application form only takes 5-10 minutes to complete. Then, our Credit team will assess your application, making a decision typically within 2 working days, and the funds will be available for you to drawdown within a week.

5. What interest rate will your business pay back?

If your loan application is successful, the loan will be given a risk band. This will be one of six: A+, A, B, C, D or E. The final interest rate you pay back on your loan will depend on many factors, but the risk band is the most influential. Interest rates start at 6%.

6. What fees do we charge?

One of the best things about taking a loan through Funding Circle is that there is only one fee, and unlike other lenders, there are no early repayment fees so you can settle your loan early with no extra cost. All we ask is that you pay the outstanding capital on the loan and the interest up to, and including, the month that you repay.

The fee amount will depend on the risk band and loan term you have requested.

Fees

7. How are the repayments structured?

You’ll need to pay your loan back in equal monthly instalments over your chosen time period. (Please note the repayment structure of some property development loans may vary.)

Make sure you get your ID documents in to us to set up a direct debit as soon as you can, as your first repayment is due one calendar month after your loan request closes. This is to ensure payments are on time for the investors who have lent to you.

8. Who’s lending to me?

With more than 41,000 investors, including individuals, local councils, universities and the Government-backed British Business Bank*, the marketplace gives all types of investors, big and small, the chance to participate in your loan.

Each loan request is listed on the marketplace and is either funded in full by a large investor, like a family office, or as a partial loan, where thousands of investors can offer as little as £20 each to fund your loan.

They will have access to key financials for the business, for example the credit score and details of why you need the loan. Investors can also ask you questions about your application, and we recommend answering these as quickly and in as much detail as you can!

9. Can I apply for a second loan?

It’s easy to apply for another loan, as you’ve been through the process once before. You’ll typically need to have made at least 3 to 6 months of repayments on your existing loan before applying.

If you’re interested in taking out a business loan through Funding Circle, you can have a look at the website for more details, or start the application here.

Have a question?

If you are unsure about any of the above or would like to discuss your options, our team are more than happy to help. Call  0207 401 9111 (and choose option 2)

*Funding Circle is supported by the British Business Bank, a development bank wholly owned by the UK Government. The British Business Bank and its subsidiaries do not offer bank accounts, take deposits or provide regulated banking services. The British Business Bank provides its financial support to smaller businesses through its delivery partners. Any decisions to provide finance to smaller businesses are made by Funding Circle not by the British Business Bank.

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