7 compelling reasons for your small business to be on Google+

Google+ needs to be taken seriously by small businesses



Google+ is Google’s attempt to take on the likes of Facebook and Twitter in the battle of the social networks. When co-founder Larry Page took over as CEO in 2011, he challenged his company to go out and win battle of the social networks. From that, Google+ was born.

It’s useful to know the importance Google places on social because it’ll help you understand why they are throwing the full weight of it’s other titanic platforms behind the success of Google+. With this knowledge you can learn how best to leverage these efforts to the advantage of your business.

1. Visibility

Google+ business pages are now appearing in Google search results on the (previously) empty white space on the right. This is prime internet real estate and should get a lot of people into your company’s G+ circles.


2. Author rank

Author rank is a system that Google is developing to help verify the validity of content based on the reputation and identity of the author of that content. So if content is created by someone with a good author rank, it’s likely to be more prominent on Google search results pages than a piece of content without a ranked author. Up until this point, author rank hasn’t actually counted towards rankings but this is all about to change in Google’s next search engine algorithm update, know as Penguin 2.0. So now is definitely the time to get on board!

Google have had this idea for a while but they’ve had to wait for a tool to help them identify the validity of authors and this tool is Google+. Make sure whoever is writing your content knows about author rank and is properly set up for it. You can start by linking your personal G+ account to the content you create here: https://plus.google.com/authorship.

3. Google+ is growing, while Facebook is faltering

Google+ has swiftly become the world’s second biggest social network after Facebook, while Facebook is starting to show signs of faltering and lack of a value offering to small businesses. The reported number varies but, anywhere between only 1% and 16% of your own Facebook fans see each post you publish to Facebook but if you want them all to see your updates, you have to pay for it. This obviously puts into question the true value of Facebook as a marketing channel as the key effort on Facebook for many marketers is to grow their likes/fans. What’s the point of this if most of them don’t see your posts? It makes your own email list more effective than Facebook.

Your Google+ content, however, is not limited by an algorithm and is also seen in Google search results. It’s worth noting that at this stage that 89% of web users in the UK use Google as their search engine.

4. There are some busy Google+ pages out there

There have been a lot of questions of the level of interaction experienced on Google+ and at this stage it’s safe to say that Facebook is still winning on this front but Google+ is definitely on the rise. If the basic signal of interaction is a +1 (Google+ equivalent of a like) then pages like The Economist with 3 million +1s, the Guardian with 1 million +1s and photographers Thomas Hawk and Trey Ratcliffe have a whopping 5 million fans each!

5. Google+ followers count on adwords

You can now add your business’s Google+ follower account to your adwords adverts. Google claims this increases click through rate on your ads by 5-10%.


6. Youtube and G+ channels starting to merge

Youtube is the 2nd biggest search engine in the world and Google now allows you to link your Google+ profile to your Youtube account. It’s early doors but the marriage can only be a good thing. It should bring more identity and credibility to your Youtube channel and more interaction to your Google+ page.

7. Google+ communities

In a bid for more interaction, Google+ launched communities which centre around a topic of interest. These have been well received and interaction has been good. The interesting part is that you can join communities as a brand. This is something you can’t do on Facebook. So if you go ahead and search the communities and there are people talking about topics that are relevant to your business, jump right in and get involved!

The top 10 British innovations in 2012: Part 3


Part 3: Hailo App

In the third instalment of our British innovation blog series we’ll be looking into the success of Hailo, the app that allows you to hail a cab from your mobile phone.

Having started off in a café in London in late 2011, it has experienced phenomenal success and now operates in 11 major cities worldwide. Hailo’s business model draws similarities to Funding Circle as it cuts out the middleman; by allowing passengers to connect with the taxi driver directly, rather than going through an operator.

What is Hailo?

Hailo provides a service to both cab drivers and customers. To get going with it, you can download the app onto your smartphone from your respective app store which will allow you to pick up a booking if you’re a cab driver or help you to book a taxi if you’re a passenger. Instead of braving the elements and searching the streets for a yellow light, the GPS on users’ phones pinpoint where both parties are; providing an estimate of when the taxi will collect their ride. As a passenger, you also have the option to pay by credit card for your journey, which is great for when you don’t have any cash.

Why has it been so successful?

Recognising that there were huge inefficiencies in the taxi market, three London cabbies teamed up with three technology entrepreneurs and together, their wealth of knowledge allowed them to create an easy-to-use app for the urban population. With figures suggesting that cabs can have between 30-60% downtime, there was a gap in the market to provide something that would ease the uncertainty of driving around and searching for a fare. The Hailo team also saw inefficiencies for the customer. Cash is being used less as people use electronic payments and credit cards more, and once you create a Hailo account you can pay electronically, add a tip and leave feedback for your driver.

Success despite the competition

At the time of launching Hailo, there were other taxi apps available to download, however their success can be attributed to building a happy community of drivers first, before it was offered to the public. They offered services to drivers, such as daily logs to improve efficiency and traffic sharing information which meant that as soon as Londoners started using Hailo, their service was already established enough to take off.

Their key London competitor is Get Taxi, which has 1,500 black-cab drivers registered, and apps for mini cab providers, such as Addison Lee or comparison taxi apps like Kabbee.

What’s next?

Currently Hailo operates in London and four other cities worldwide, and there are plans to expand to New York and another 5 cities this year with the $30 million they received in series B funding.


Although the app is free to download for drivers and passengers, the costs involved for a successful trip may act as a deterrent for users in the future. Drivers hand over 10% of their fare to Hailo, and they have recently introduced a minimum £10 fare for the passenger on a Friday and Saturday night; which has to be paid by card.

Hailo is an excellent example of British innovative thinking that can produce great success locally and internationally by solving everyday problems.

Nesta and Funding Circle report reveals peer-to-peer lending has potential to deliver £12 billion in business lending

Click the image to view the supporting infographic


Today we’re excited to help launch a new report by Nesta that looks at peer-to-peer lending for businesses.

The report titled Banking on Each Other is part of a project Nesta has been undertaking over the last year and involved research with both Funding Circle borrowers and lenders.

The report – the first time an in-depth piece of independent research has been conducted into peer-to-peer business lending – looked at the characteristics and motivations of both Funding Circle lenders and borrowers and draws some very interesting conclusions about the future for peer-to-peer lending to businesses.

Highlights from the report, which has been endorsed by the CBI and Federation of Small Businesses, included:

  • 77% of businesses said they would come to Funding Circle first for future finance needs, rather than going to their bank. Business owners cited frustrations with the lengthy application process with banks as their reason for using peer-to-peer lending.
  • Even if banks offered a similar facility, only 27% of businesses would approach the banks first.
  • Lenders place greatest importance on interest rates to explain their motivation of why they start lending to businesses, with 75% suggesting they would increase the amount they lend within the next year.

What is particularly exciting about the report is that Nesta believes in time the peer-to-peer lending industry has the potential to deliver as much as £12.3 billion in business lending annually.

This is a pioneering piece of independent research and we are pleased to have been able to support Nesta to undertake it. As we approach the milestone of having facilitated £100 million lent to businesses, we recognise that there is a huge opportunity for us and others in the peer-to-peer lending industry to help fill the finance gap that British businesses are facing.

This report is well worth a read and you can download it here.


The Funding Circle team

– See more at: https://www.fundingcircle.com/about-us/our-blog/nesta-and-funding-circle-report-reveals-peer-to-peer-lending-has-potential-to-deliver-12-billion-in-business-lending#sthash.9w3a9x8p.dpuf


Introducing net returns and diversification data


We want lending at Funding Circle to be as straight-forward as possible so we’re always looking for ways to improve the information we provide you. Having spoken to many investors over the past few months, we can see there are some valuable changes we can make:

  1. Displaying net returns after fees and bad debt: to show an average across all investors and also showing individual net returns in your account.
  2. More information on the distribution of net returns across investors and how these returns vary by level of diversification: allowing you to compare the returns for those investors lending to a handful versus those lending to hundreds of different businesses.

This new information will not only help you make more informed lending decisions, but make it simpler to track the returns you earn as a result. We’re part-way through these changes and you’ll see them across the site in the coming weeks, but in the meantime we wanted to share a preview with you.

The average net return (after fees and bad debts) across all investors who have been lending for more than 180 days currently stands at 6.2%. 75% of investors that are lending to at least 100 businesses (with a maximum exposure of 1% of their total lending to any one business) have earned more than 6% net per year. The charts below show the distribution of net returns for investors who have lent to a least 100, 50 or 10 businesses with a 1%, 2% or 10% maximum exposure respectively.

You can read more about the net returns and diversification calculations, the methodologies used and their limitations in our post on the Funding Circle forum, together with comments from other investors.





– See more at: https://www.fundingcircle.com/about-us/our-blog/introducing-net-returns-and-diversification-data#sthash.IkS8CKA6.dpuf

8 small business super trend you should know about


The increasing influence of Internet services and mobile technology coupled with the prolonged effects of the economic slowdown has created a rapidly changing world for small businesses. To help you get a grasp of what small business trends are making waves this year, we’ve compiled a list of the most prominent themes being written about on business websites.

1. A flexible workforce

Everyone has their own take on how to implement this or what the effect could be but this is definitely the key small business super trend at the moment: finding new ways to get the job done with a variety of flexible resourcing solutions:

2. Cross border opportunities

The ever growing power and increasing ease of access to sales platforms like eBay, Amazon, Etsy and online in general means that even the smallest players can take their business global without much effort and all. And with the World’s online population as your potential customer base, the rewards could be huge!

3. Access to funds

As the banks tighten their purses and the funding gap to small businesses increases, owners and financial managers are turning towards more innovative solutions such as Crowdfunding for startup ideas and peer-to-peer lenders like Funding Circle for small business loans.

4. Getting into the Cloud

If a flexible workforce is something you are looking at, then cloud technologies and services could be the tools to help you achieve this. The simplest example of an effective use of cloud services is how easy it is to share and co-create documents using Google Docs, which also happens to be free to use saving your company a stack on license fees. Cloud solutions also allow small businesses to hit the ground running without massive upfront investments in storage, infrastructure, software and networking allowing the solutions to scale as the business grows.

5. Social media

Everywhere you turn, people will be telling you to leverage social media as marketing transforms from broadcast to a conversation. That said, things have changed a bit since last year as Facebook increases it’s throttling of free content, encouraging you to pay for it to be seen by your own fans, and as Google+ rises to prominence and starts to integrate into the rest of Google, most importantly search results. This is definitely a space to watch. If there’s one thing you do in social right now, it should be to get your company’s Google+ page up and running.

6. The mobile revolution

Another big trend that has continued from last year is the mobile revolution, which is set to be bigger than ever. You have no excuse not to optimise your website and communications for your mobile-using customers. Mobile’s share of global web traffic accounts for nearly a quarter of all traffic and your company runs the risk of becoming irrelevant if it’s not on mobile. The UK also has the world’s highest mobile web usage.

7. Pay more attention to your data

Put simply, there’s a lot more data about your customer out there than there used to be. There is a major shift towards getting better at using data and you’ll often hear the term ‘big data’ being thrown about. The consensus from all this attention is that all businesses should be focussing on how this growth in data availability can be leveraged to improve your customer experience and ultimately grow your bottom line. But remember to back it up and keep it secure so you don’t fall foul of regulation!

8. The changing high street

We’ve all seen the horror stories of flagship brands like HMV, Woolworths and Blockbuster shutting down on the high street over the past few years; it’s even a problem on the American main streets. The approach to the high street model is going have to change suggests e-Nation who are strong believers in pop-up shops as a lower-risk way for smaller entrepreneurs to enter the high street.


References: http://www.smallbusinesscomputing.com/News/ITManagement/small-business-it-trends-to-watch-in-2013.html http://www.forbes.com/sites/capitalonespark/2013/01/25/6-trends-reshaping-small-businesses-in-2013/ http://www.cnbc.com/id/100349578/2013_SmallBusiness_Trends_to_Watch http://www.simplybusiness.co.uk/knowledge/articles/2013/01/small-business-tech-trends-2013/ http://www.wired.co.uk/news/archive/2013-02/12/lessons-for-small-businesses http://www.freshbooks.com/blog/2012/12/14/2013-business-predictions/ Picture credit: Johnji

– See more at: https://www.fundingcircle.com/about-us/our-blog/8-super-trends-for-small-business-you-should-know-about#sthash.mXZuCsKl.dpuf

Labour recommends income tax deductibility for peer-to-peer lending

Funding Circle investors have long been asking us what we have been doing to encourage tax incentives for lenders. For a long time now we have been campaigning for income tax relief on loans and actually for extensions to schemes like EIS to allow lenders to pay NO TAX on lending they do at Funding Circle given the economic benefit created.

On Monday we attended the launch of the Labour small business taskforce report, and now that the report has been issued we are pleased to announce that the Labour party are now recommending that losses incurred in peer-to-peer lending can be off-set against income tax rather than capital gains tax. The full report can be seen here (we have a nice mention on page 26!). This is the first time a major political party has recommended a favourable tax change for peer-to-peer lending. Here’s the relevant extract:

8. Government should give active support and encouragement to emerging alternative finance marketplaces and their participants. This means understanding the particular business models adopted by new providers and the challenges they encounter. For example, the growth of marketplace lenders is being constrained because they must pay interest income tax calculated before lending losses. This makes it unprofitable to lend to riskier businesses. The government should permit marketplace lenders to calculate income tax obligations based on interest net of bad debts, rather than pre-bad-debts.

We can now use this to campaign with the existing Government to adopt these measures. I don’t want investors to get their hopes up, but often when one political party recommends something like this it can be quickly taken up by the current Government if there is enough momentum. This is a good step in the direction of eventually getting complete tax relief for people who lend via peer-to-peer lending.

I know it may seem like these things are very slow, but behind the scenes we are working hard to improve the regulatory and tax environment for our lenders.

Samir, CEO

– See more at: https://www.fundingcircle.com/about-us/our-blog/labour-recommends-income-tax-deductibility-for-peer-to-peer-lending#sthash.IfjGnits.dpuf

What you need to know about borrowing at Funding Circle

If you’re thinking of taking out a business loan through Funding Circle, cast your eyes over this first to make sure you have all of the information you need. These details are available on our website but we thought you might find this guide useful.

Who can apply for a loan?

Our aim is to help established and creditworthy businesses with access to finance. Limited companies, limited liability partnerships (LLPs) and non-limited companies that have been trading for at least 2 years  can apply. 

What do we look for when we make our decisions?

You’ll need to submit an online application which can take as little 10 minutes to complete. We will also require you to email your most recent filed or formally prepared accounts, your last 3 months of business bank statements and up-to-date management accounts. When making their decisions, the credit assessment team use in-house models which capture the information you provide to us as well as information from credit bureaus (for example, Creditsafe) including your past and current credit score.

Types of loans we offer

We offer business loans from £10,000 to £1,000,000, over a 6 month, 1, 2, 3, 4 or 5 year loan term. Loans have a fixed rate and a fixed monthly payment. The level of security required depends on the loan value and the purpose of the loan. Most loans require a personal guarantee, a security over a specific asset, or security over all of the assets in the business.

Loans from £10,000-£500,000 are generally unsecured. This means they don’t require business assets as a security. However, a personal guarantee will be required from director(s) in almost all circumstances. These are highly flexible and can be used for a wide range of purposes, including working capital, expansion capital, asset purchase and more.

Loans from £500,000 – £1,000,000 are generally secured. This could be an all asset security, where we take a charge over all assets in the business (sometimes as a second charge), or a specific asset security.



Please note that a personal guarantee from the director(s) may be required in any of the circumstances above.

Who’s lending to me?

Funding Circle has a broad community of investors, including over 85,000 people, local councils and financial institutions, all looking to lend to small businesses. When your loan is approved, it could be funded by lots of individuals all lending small amounts, or by one organisation. We’ll handle everything for you so you never need to speak to them directly, but you’ll have the knowledge that there’s a community of thousands backing your business.

What’s the interest rate?

If your application is successful we’ll give you a fixed interest rate as part of your offer. Your interest rate will depend on our credit assessment and the term of your loan. Typically the longer you want to borrow for the higher the interest rate, but the lower the monthly payments. 

What fees do we charge?

You will pay a one-off completion fee when you take out your loan. If you are not happy with your offer that’s absolutely fine; you are not obliged to accept the loan offer and no fee is charged.

How are the repayments structured?

Repayments are made in equal monthly instalments over your chosen time period. We will need you to set up a direct debit to ensure payments come in on time for the investors who lent to you. If you want to pay off your loan early, there are no fees for full early repayment. All we ask is that you pay the outstanding capital and interest that is due for the month of repayment.

Can I apply for a multiple loans?

Applying for a second loan is easy. Simply login online and complete the short form, or contact or team. To apply for another loan, you’ll typically need to have made between 3 – 6 repayments on your existing loan, although each application is treated on a case by case basis. You can also consolidate your existing loan at the same time. 

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

If you are unsure about any of the above or would like to discuss your options, our team are more than happy to help. You can give them a call on 0800 048 2467 and press option 2 for the business team.


10 exciting developments to expect from Funding Circle in 2013


This year is already shaping up to be an exciting one for the Funding Circle community. With 2013 officially underway, we thought we’d share with you some of the more interesting developments that will affect your experience on the marketplace.


The £100 million milestone

A major milestone for the marketplace is quickly approaching: £100m in loans funded on Funding Circle. At the time of writing this, we are just about to cross the £70 million mark. Our expectation is that we will pass the £100 million milestone sometime in the first half of the year, can you predict when?


Government funds start being invested

We announced in December that the Government will be investing £20 million through Funding Circle. The funds should become available for investment in the next few months. We’ll keep you updated on when this happens.


Regulation of the Peer-to-Peer industry commences

Consultation on the Financial Services Bill will begin in January, which is the first step in the Peer-to-Peer finance industry becoming regulated. We welcome this move and the resultant regulation should see many benefits for organisations, borrowers and investors alike.


The Funding Circle community

We launched the new Funding Circle forum in December. The ambition, with your help, is for it to become a valuable resource for anyone investing or borrowing on Funding Circle or anyone thinking of doing so. We’ll also be growing our presence across the major social channels so you can engage with us on the platform of choice. We’re currently on FacebookTwitter and our own blog. Look out for our new presences on Google+ and Pinterest in the near future.


Secondary loan parts market

We are currently reworking the secondary market to make it much more useable and dynamic, with a lot of your suggestions coming to life in the new version. Based on some of the conversation on the forum, it appears that these will be welcome changes for the investor community.


Sole trader finance

We have always experienced a strong demand for the marketplace to offer loans to Sole Traders . We have been exploring the option for a few months now so look out for more news on this pretty soon.


Asset finance review

We are reviewing our asset finance product to create more opportunities on the marketplace for both borrowers and investors. The product will provide additional security for our investors and offer businesses more financing options.


More investment data

We’ll be exploring ways of presenting more Funding Circle data on the forum, giving you more insight into what is going on in the marketplace and hopefully helping you become a more successful investor on the Funding Circle marketplace.


Description and listing pages

We are currently working on creating much clearer and easier-to-use business description and auction listing pages. In the coming year, we’ll look to give a similar makeover to all parts of the site.


iPhone and iPad apps

One of the more exciting projects for the year will see us developing iPhone and iPad applications to make it easier to interact with the marketplace wherever you are. We will also be looking to make our site a lot friendlier to use on smartphones and tablets.

What else would you like to see from Funding Circle this year? Tell us in the comments

– See more at: https://www.fundingcircle.com/about-us/our-blog/10-exciting-developments-to-expect-from-funding-circle-in-2013#sthash.Xu3sxFBy.dpuf

The Government to announce plans to lend to small businesses through Funding Circle

Click the image to view the supporting infographic: The Rise of Peer-to-Peer Lending Infographic Rise of P2P lending

In this year’s Budget, the Chancellor announced that the Government was allocating £100 million for investment in ‘non-bank’ channels to help improve the flow of finance to growing businesses.

Today, the Government will announce their plans to join Funding Circle and lend £20 million to businesses directly through our marketplace. This is exciting news and represents the first time a UK Government has directly lent money to growing businesses in this way.

We understand this news represents a significant evolution for Funding Circle and we wanted to share with you how this will work, and the new lending opportunities we believe it will create for all investors.

Why is the Government doing this?

Despite many initiatives to stimulate bank lending over the last few years, net lending to businesses has continued to decline. Whilst bank lending to businesses has deteriorated, Funding Circle has rapidly grown. In two years since we launched, thousands of British people have helped to lend £65 million to more than 1,300 businesses. Last month investors lent £7m to British businesses.

The Government has now recognised the impact that non-bank channels, such as Funding Circle, can play to help ease the flow of finance to businesses.

How will it work?

The Government plans to lend £20 million to British businesses through Funding Circle over the next 12- 24 months. This is subject to parliamentary approval and agreement of legal terms and conditions. The current proposal is that:

  • The Government will lend on every loan that comes on to the marketplace and fund up to 20% of each loan at the average rate
  • We believe this is the clearest option and enables the Government to fulfil its wishes to participate in every loan whilst having no adverse effect on investors’ bidding experience
  • The remaining 80% of a loan will be funded by investors in the normal way, so your investment experience will remain exactly the same
  • Once the auction has closed and the average interest rate has been set for the remaining 80%, the Government will fund 20% at the same interest rate as the rest of the loan

How does it affect me?

We are committed to ensuring all investors continue to enjoy their investment experience and have more opportunities to lend. There is an estimated £7.3 billion worth of small business lending in the UK each month. With the Government’s investment, however, we believe we will be able to help more businesses obtain the finance they need to grow and create more investment opportunities for everyone at attractive rates.

When will the changes take place?

Subject to parliamentary approval and agreement of legal terms and conditions, the Government expects to start lending early in 2013 and we will notify everyone when this occurs. The marketplace will be clearly signposted so you are aware that 20% of every loan will be funded by the Government.

We think this is an exciting time for everyone involved with Funding Circle and represents an important milestone in the journey to redrawing the financial landscape for small business lending. We are looking forward to the beginning of 2013 and creating lots more opportunities for you to invest and support great British businesses.

Click here to read further information about how today’s announcement will work and join the discussion on our new forum. Our team will be on the forum all week and are happy to answer any questions you have.

The Funding Circle team

– See more at: https://www.fundingcircle.com/about-us/our-blog/the-government-to-announce-plans-to-lend-to-small-businesses-through-funding-circle#sthash.MBcScZED.dpuf


Making the most of your investment: Diversification

In the final post on our ‘making the most of your investment’ series, we’re looking at diversifying your investment.

At Funding Circle, you are in control of your money – you choose which businesses you want to lend to and how this is done. You also choose the level of risk you’re comfortable with for the return you’re looking for.

Part of lending through Funding Circle is choosing how you want to lend your money, and spreading amounts across lots of businesses to manage your risk. In the financial world, this is called diversification.

By diversifying and spreading your money to lots of different businesses, if any business is unable to fully repay its loan the impact on your overall return is reduced.

At Funding Circle, it’s easy to diversify. As an investor, there are two ways you can spread your money, whilst remaining in control and choosing the level of risk and return you’re comfortable with:

  1. Automatic lending. Our Autobid tool enables you to automatically place bids quickly and requires little management. You can set the maximum amount of money you want to be lent to any one business (from 0.5% of your total funds). So if you had £4,000 in your Funding Circle account, Autobid would lend a maximum of £20 to any one business.
  2. Hand-pick businesses. If you want to choose the businesses you lend to and focus on companies with characteristics you value, you can hand-pick the auctions you want to bid on. By choosing this option, you can also ask the business questions before deciding whether to bid.

If you are looking to rapidly lend your money out, you can buy loan parts directly from other investors. This takes place on our secondary market. To find out more information about this, click here.

Some people choose to diversify across hundreds of businesses to reduce their risk. By doing so any loss you experience will have a lower impact on your overall return. Every investor at Funding Circle who has lent no more than 1% of their funds to any business, and has been lending for at least 6 months, is currently earning a positive return.

Other investors like to spend more time reviewing and choosing individual businesses to lend to and will therefore lend to less businesses. This means any loss you experience will have a greater impact on your overall return, but the probability of experiencing a loss will generally decrease. Funding Circle allows you the control and transparency to choose the strategy that is most appropriate to you and delivers the maximum returns for the level of risk you are comfortable with.

We hope you have found the blog posts helpful over the last few weeks. If you have any questions please feel free to get in touch with us by leaving a comment below, or email contactus@fundingcircle.com.

The Funding Circle team

– See more at: https://www.fundingcircle.com/about-us/our-blog/making-the-most-of-your-investment-diversification#sthash.wQsbQuHB.dpuf

Making the most of your investment: Understanding your returns

One of the things people have told us they like about investing through Funding Circle is that it complements their other investments and offers attractive returns and less volatility than some other investment products, such as shares.

While shares can deliver attractive returns, they are volatile and won’t necessarily rise steadily over time. Facebook’s IPO and Google accidentally publishing its results early last week, which led to a 20% fall in its share price, are good examples. Funding Circle is different in that its return profile fluctuates less than shares.

FTSE 100 performance in the last 12 months


Illustrative Funding Circle performance over 12 months


As you can see from the graph above, the shape of your returns at Funding Circle will fall when you experience bad debts and increase again as other businesses pay you interest.

It’s important to remember that Funding Circle is not a savings account: it is a stable, risk-based investment. As an investor you should expect that some of the businesses you lend to will be unable to fully repay their loans – at Funding Circle we call this bad debt. Our current level can be found on our statistics page.

On the statistics page, we also provide estimated annualised bad debt levels so you can use these to calculate your expected net return. We estimate that you should expect a bad debt of 2.0% of your investment annually, although this will vary by the risk bands you lend to. These figures can help you calculate your estimated net return. In line with other risk-based investments, such as such as corporate bonds or gilts, we quote your rate as an average gross yield. The average gross yield is the return that you receive on your investment if you immediately reinvest all the monthly repayments (both interest and principal) you receive over the course of a year. This is before bad debt, our 1% annual fee and tax.

You can calculate your overall net return (before tax) by using this formula:


Unlike other peer-to-peer lending sites, where individuals lend to other individuals, relief from Capital Gains Tax is also available on loans which become irrecoverable at Funding Circle because you are lending to businesses. This is known as ’loss relief’ and even if you experience a bad debt, but do not use loss relief in the year it is incurred, it can be used in the future. You can read more information on our FAQshere.

If you do experience a bad debt, we will try to recover as much of your money as possible. We take security on more than 90% of all loans to ensure in the eventuality of a business not being able to fully repay their loan we have opportunities to recover the money. This includes personal guarantees, assets (such as coaches) and all-asset security (everything a business owns). Each recovery process will take a different amount of time to complete depending on each specific case. Whenever you experience a loss, we will communicate this to you and keep you updated on the recovery process within your account summary. You can read more information on our debt recovery processes here.

Next week, in our third post of the series, we’ll look at diversifying your investment.

The Funding Circle team

– See more at: https://www.fundingcircle.com/about-us/our-blog/making-the-most-of-your-investment-understanding-your-returns#sthash.2q2qqT37.dpuf

Making the most of your investment: Competitive bidding

As Funding Circle has grown over the last two years, we’ve seen thousands of people join, unlock their money and start lending to great British businesses. As we continue to grow we wanted to share with you some top tactics many members employ to make the most of lending at Funding Circle.

To do this, we will be publishing a series of short blog posts over the next three weeks. This week, we’re looking at competitive bidding, next week we’ll look at understanding returns and lastly we’ll discuss diversification.

Competitive bidding

As most of you will know, at Funding Circle people lend money to businesses via auctions. You bid the gross interest rate you want to earn and the amount you are happy to lend, and the lowest rate bids become part of the loan. So, your offer is successful depending on how competitive your bid is compared to other investors.

Popularity varies by loan request, but the number of bids placed can often increase significantly in the final few hours of an auction.

The graph below indicates how popular the final few hours of auctions can be. In this auction for £250,000, more than £1.1 million worth of bids were placed by investors with more than 70% of all winning bids taking place on the final day of the auction.

Percentage of loan funded by auction day – example loan, Sept 2012 %


Winning interest rate by day of auction – example loan, Sept 2012 %


If this has happened to you, a good way to manage this is to monitor your offer rates and check the interest rate you have offered is competitive and in line with the level of return you are looking for and the level of risk you are comfortable with. This will ensure you are successful as often as possible.

It’s also useful to remember that once a business loan is 100% funded, a business can choose to accept the loan early and approximately 40% of businesses choose this option. The majority will wait until the auction ends to see if the interest rate will fall. This means that if a business loan is 100% funded and still on the marketplace, you can place a bid at any point until the end of the auction. You do this by offering an interest rate lower than the maximum interest rate which you can see on the loan request page.

If you are unsure whether your bid has been successful, you can check the ‘My Bids’ summary page in your account. If you cannot see your bid and your available funds have increased, then your bid will have been knocked out of the auction. If you wish to re-bid check your new rates is sufficiently competitive, or if you’re using Autobid, lower the interest rate settings. We will be developing new tools to automatically let you know the state of your bids in the future.

We hope you found this post useful. We’d love to hear your feedback about what strategies you employ to ensure you maximise your return. Leave a comment below or get in touch at contactus@fundingcircle.com.

The Funding Circle team

– See more at: https://www.fundingcircle.com/about-us/our-blog/making-the-most-of-your-investment#sthash.SezxqtoB.dpuf