5 ways to treat your Dad this Father’s Day

Trying to think of something to get your Dad this Father’s Day? Instead of giving him another pair of socks or a coffee mug, we have come up with a variety of ideas for all the different Dads out there. All these businesses have been able to flourish thanks to your lending.

Organise a trip away

Does your Dad love being outdoors? How about organising a short trip away to the rural village of Alves in Northern Scotland? Here you’ll find North Alves Holiday Park. The company is run by a passionate couple who have come up with their very own unique style of “glamping”. When visiting this park you have the opportunity to stay in a SKARA central-BBQ cabin, which allows you to enjoy the pleasure of socialising and cooking at the same time. In order to continue to cater for the ever-growing needs of their customers, the company borrowed £31,000 on two separate occasions in 2017 and 2018.

 

Get ready for a fishing trip

Does your Dad reckon himself as a bit of an angler? If so head down to Top Tackle for his Father’s Day supplies this year. These guys offer a range of fishing tackle and other accessories. They deal with a number of major fishing tackle manufacturers, such as Korda and Preston Innovations. The company borrowed £5,000 at the beginning of the year. This funding helped to introduce even further ranges to their online portal and renovate their store in central Oxford.

Have some throwback fun

Get the flares out of the cupboard and break out the Dad dancing with at Razza Roller Disco! Razza was created by dance champion Gary Newley in 2012 with the purpose to deliver an incredible customer service for all. You can also book a skating lesson at Razza Skate Academy. The company was able to expand into other areas of the country after they borrowed £47,000.00 at the beginning of 2018, purchasing new DJ gear, safety equipment and uniforms.

Watch an extreme sports performance

Is your Dad more into adrenaline action? Check out Inspire Shows, who provide unforgettable extreme sports performances. You may recognise their team of highly skilled stunt individuals from the popular TV show “Don’t Tell the Bride”, where they conducted the world’s first ever extreme sports wedding. Thanks to your lending, the company purchased more stunt ramps for their nail-biting shows, enabling them to host multiple bookings on the same day.

Get a luxury grooming set

Finally, if your Dad is needing some R&R then you could always spoil him rotten with a gift set from Debonair Male and Fitness Grooming. Whether it’s their Deluxe Beard Oil Gift Box or Daily Shampoo Moisturising Conditioner Set, this luxury British brand provides a range of high-quality products with an innovative approach. Their aim is to make men of all ages and backgrounds feel good about themselves. The company was able to purchase new salon equipment after borrowing £13,000 at the beginning of 2018.

Are you interested in lending to businesses like these?
Lend alongside 79,000 investors and support British businesses by signing up online today. You can use our investor information guide to help you get started. There are 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.

Digging into the data: How your lending helps the UK economy to grow

At Funding Circle, we’re proud of what you have achieved by lending directly to small businesses. Since 2010, more than 75,000 investors have earned an average return of 6.4% per year after fees and bad debt. In addition to earning attractive returns, you’ve also had a significant role in supporting the growth of the UK economy.

Your contribution has been highlighted by research published today by Oxford Economics, a leading economic consultancy firm. Their report, which can be seen in full here, reveals how small businesses are using the funds you lend them to:

  • Create and sustain tens of thousands of British jobs
  • Add billions of pounds to the UK economy
  • Make a significant contribution to UK tax receipts

In this blog, we will investigate how businesses use their loans and how this benefits communities across the UK.

Your lending is an increasingly vital source of funding for small businesses

Small business isn’t small. It forms the backbone of the UK economy, accounting for approximately half of the UK’s GDP¹ and 60% of private sector employment.² Between 2011 and 2017 the number of small and medium enterprises (SMEs) in the UK grew by 28%.³

Despite the demand for small business finance increasing, banks have continued to focus on funding larger businesses. The proportion of outstanding bank loans held by SMEs fell from 38% to 35.6% during this same period.⁴ Your lending is helping to bridge this gap, with over £3.4 billion lent to businesses through Funding Circle since 2010.

2017 net lending figures, Funding Circle and UK banks

Net lending in 2017  

Source: Bank of England, Funding Circle

If small businesses across the UK are to thrive, it’s important that the total amount of credit available to them grows. The above chart shows the net lending—the difference between new lending and repayments received on existing loans—of both Funding Circle and the 30 largest UK-resident banks combined in 2017.

Net lending is used by the Bank of England to discover the new amount of lending to small businesses throughout the economy. When looking at new sources of finance for small businesses, investors like you are providing nearly as many new funding opportunities as the entire UK banking system put together. Investors lending through Funding Circle created £598 million in net lending, compared to £677 million for all UK-resident banks.

When small businesses win, we all win

To help determine the full impact of your lending, in February 2018 Oxford Economics surveyed more than 500 UK small businesses owners who had previously taken out a loan through Funding Circle. They found that small businesses use the funds you lend them in three key ways:


You can be proud that you not only help the businesses you’re lending to, but your lending also has positive knock-on effects throughout the economy.

You lend to businesses based all over the UK

These benefits are being felt by businesses all over the UK. The chart below shows where businesses who accessed finance through Funding Circle in 2017 are located:

Loans made to UK businesses in 2017, by local authority district

As you can see, in one year alone your lending has benefited towns and cities from every corner of the UK.

Your impact on the UK economy

Business owners were asked about topics such as their revenue, job creation, and tax payments. Oxford Economics were then able to determine the overall impact investors’ lending is having on the UK economy.

For example, the chart below shows the direct, indirect and induced economic impact of the outstanding funds lent by investors in 2017:

The economic impact of outstanding loans in 2017

Source: Oxford Economics

From this you can see three key areas of the UK economy where your lending is having a significant impact:

  • Your lending creates and sustains jobs – In 2017, investors’ lending supported 45,000 jobs across the UK, either by creating new jobs, or preventing existing ones from being lost.
  • Your lending boosts the overall economyIn 2017, investors’ lending supported a gross value added⁵ contribution to the UK economy of £2.4 billion.
  • Your lending grows the public pursethe taxes paid by small businesses help build schools and hospitals all over the country. In 2017, investors’ lending supported the generation of more than £700 million in tax revenues.⁶

Make a return and a difference

At Funding Circle, our aim is to allow you to earn attractive, stable returns by lending directly to businesses. Although the return you earn is important, it’s rewarding to take a step back and appreciate the positive impact your lending is having. By continuing to provide small businesses with access to the finance they need to grow, you are playing a vital role in the growth of the UK economy.

By lending to businesses, your capital is at risk.

Enjoy lending,

The Funding Circle team

¹  Source: http://researchbriefings.files.parliament.uk/documents/SN06078/SN06078.pdf

²  Source: http://www.fsb.org.uk/media-centre/small-business-statistics

³  Source: ONS, UK business: activity,size and location — 2017, 1 November 2017.

⁴  Source: Bank of England

⁵  This gross value added measure of production, or GVA, is similar to the well-known gross domestic product measure (GDP). The only difference is that GVA is valued at the ‘basic’ price received by the producer, excluding taxes on sales such as VAT, rather than at the ‘market’ price paid by the purchaser, including those taxes.

⁶ The taxes included are corporations tax, employers’ national insurance and business rates paid by the firm, income tax and national insurance paid by its employees, taxes on the firms’ purchases from other firms, and VAT and duties targeting final consumers of the firms’ products.

The world needs small business

Small businesses play a vital role in driving prosperity around the world. They create jobs, provide essential services, develop exciting new products and support local communities. In the UK alone they account for 50% of GDP and 60% of private sector employment. In short, small businesses are the unsung heroes of our economy, so we decided to do some singing.

Funding Circle was founded to help small businesses get the finance they need to thrive. Having worked with thousands of businesses, we’ve seen first hand how access to funds allows them to keep progressing and achieve even more. To celebrate the contribution they make, we’ve partnered with Oxford Economics to produce an in-depth report looking at the economic impact of lending through Funding Circle.

Below you can find the key findings from the report, a summary video and the report in full. Watch it, read it, share it and help spread the news of our amazing small businesses up and down the country.

Download the full report – The Economic Impact Report of Lending Through Funding Circle.

You can also find more information in our blog – Digging into the data: How your lending helps the UK economy to grow.

Figures taken from the FSB. By lending to businesses your capital is at risk.

VIDEO – Watch how this mini golfer grew thanks to his business caddie

With its unique decor, delicious cocktails and amazing atmosphere, Lost City Adventure Golf is not your typical mini golf venue. Like Barry, the co-founder, the place is made to do more.

cocktail bar lost city adventure mini golf

Located in the centre of Nottingham, this indoor mini golf business has got it all. Exceptional premises, friendly staff and two amazing cocktail bars with lots of seating space to enjoy a drink with friends.

This is exactly the vision Barry had for his business when he launched Lost City Adventure Golf in 2013. However, like many other small businesses, the journey to get where it is today was far from easy. After long hours, hard work and some careful consideration, Barry knew that funding was needed to take his business to the next level.

Looking for finance is always an important decision for any business owners. As well as looking into all the different options, the pressure of making the right decision for the business can be overwhelming.

So he could focus on running his business, Barry chose to avoid stressing about this dilemma and approached Steve at Central Finance. Steve helped him weigh his options, and they decided that a Funding Circle loan was the best choice for Lost City Adventure Golf. Barry could then get on with what he does best – driving his business forward.

Our relationship with commercial finance brokerages like Central Finance have helped thousands of small businesses access the funding they needed to grow. As a Funding Circle Business Champion, Steve was able to quickly complete the whole application on Barry’s behalf, with approval in 24 hours.

Are you interested in lending to businesses like Lost City Adventure Golf?
Lend alongside 79,000 investors and support British businesses by signing up online today. You can use our investor information guide to help you get started. There are 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.

Are you a commercial finance broker?
We are always looking to extend our network of partners to help small businesses across the UK fulfill their potential. Email our Introducer team at introducer@fundingcircle.com to find out how we can work together.

Introducing your new statistics page

At Funding Circle we are committed to providing you with access to easy to understand loan performance information. Today marks the next phase of this commitment as we launch a new and improved statistics page, which will be updated every three months and will provide you with a clearer and more accessible view of how loans are currently performing.

Exploring your new statistics page

Alongside our global lending figures, your new statistics page is designed to allow you to easily understand three key areas of information:

  • Lending – How much have investors in the UK lent to businesses?
  • Returns – How are loans currently performing in the UK?
  • Businesses – What kind of UK businesses are you lending to?

Providing you with the full picture of loan performance

The performance information we provide you on our statistics page uses our most up-to-date estimates, or projections. It’s important to remember that over an investment period there will always be some businesses who are unable to repay their loans. To reflect this, our projections are updated every three months using the actual performance data experienced so far. You can see an example of how this works in the chart below:


The projected return is the return we estimate loans will achieve over their lifetime. This is an annualised number and is updated every three months. It is calculated using the actual return received to date, plus the estimated return for outstanding loans that have not yet been fully repaid.

The return is shown as a range to reflect that the actual number of businesses who are unable to repay their loans could be higher or lower than estimated. As loans are repaid, the range of return shown will narrow and will be updated to reflect actual performance. Full explanations of all our statistics can be found in our definitions section on the statistics page.

Presenting you with data in a relevant format

It’s important that the data we provide continues to be presented in a way that’s relevant to investors’ needs. As part of this latest update we have withdrawn the downloadable loanbook.

While the loanbook was a useful resource for early-investors lending through Funding Circle, as the platform has grown and become popular with a broader group of investors, the number of people downloading it has fallen significantly. For example, approximately only 0.3% of investors downloaded the loanbook in the last month. It’s important that you are still able to access loan-by-loan information on the businesses you are lending to, which you can download from your Funding Circle account.

Validating our performance data

As part of our commitment to providing transparent loan information to investors, we have partnered with AltFi Data. AltFi Data are independent and well-respected industry experts with deep knowledge of online lending, and they will provide independent verification of the figures we provide to you. They will review the loan information every three months to ensure it is accurate and up to date.

If you have any questions or would like more information, please don’t hesitate to get in touch.

Enjoy lending,

The Funding Circle team

May Round-Up

Welcome to May’s round-up. This month we have usual stories and advice, plus thoughts on the Royal Wedding from a bridal boutique you’ve helped to fund. Read on below to find answers to more of your most asked questions, plus we look at bad debt, defaults and why you shouldn’t be afraid of them.

Business owner quote of the month

“This has provided a cash flow lifeline to my business, enabling me to fund new staff members and build my business” — Andrew.

Investor quote of the month

“I am really enjoying being a lender and love the way I can watch my investment grow” — Diane.

7 steps to planning your dream wedding

To celebrate the coming together of Prince Harry and Meghan Markle, we bring you 7 businesses to plan the wedding of your dreams. From finding the perfect dress to booking the ideal honeymoon, these businesses have all been able to flourish thanks to your lending.

With the wedding only a day away, we also spoke to bridal boutique and Funding Circle borrower Froufrou for their thoughts on Meghan’s dress:

“We’re hoping she goes more demure and stylish compared to the more traditional gown of Kate Middleton. We love the embellished gowns from potential designers Ralph & Russo, but whatever she chooses will be breathtakingly beautiful!”

Top 5 investor questions answered – part 2

Our investor support team are on hand to help with any queries you have about your account, how lending works or Funding Circle in general. Continuing from last month’s article, we have more of the answers you’re looking for in your top questions answered – part 2.

Bad debt, defaults and why not to be afraid of them

In this blog, we describe what these terms mean and discuss how you can reduce their impact to still earn a good return at Funding Circle. Find out more here.

April round-up

In case you missed, here’s our April round-up. In this blog you can find industry news, business success stories, your top 5 questions answered and changes and opportunities for the new tax year from Simon Read.

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

Enjoy lending, the Funding Circle team

Cath Keers joins Funding Circle board

Today we’re pleased to announce the appointment of Cath Keers to the Funding Circle board. Cath brings over three decades of professional and leadership experience across the retail, consumer, digital and technology sectors.

Currently serving as a Non-Executive Director for Sage Group and TalkTalk, Cath is also Chair of ustwo Company. Her previous roles include a main board directorship at O2, and non-executive directorships at Royal Mail, LV= and Home Retail Group.

Commenting on joining the team, Cath said “Funding Circle is changing how the world’s small businesses access finance, and the impact it’s had on the economy and job creation over the past eight years is inspiring. I am impressed by the management team’s depth of insight and experience. I share the team’s commitment to delivering the best results for customers, and the company’s high levels of repeat business demonstrate that both investors and borrowers also recognise this passion.”

At Funding Circle our aim is to allow investors like you to become the leading source of small business finance globally, with today’s news coming as the amount lent by investors through the Funding Circle platform surpasses £4.5 billion. This includes more than £3.4 billion lent by 70,000 investors in the UK alone.

You can read more about today’s announcement in our full press release here.

Enjoy lending,

The Funding Circle team

You can now transfer your existing ISAs into Funding Circle

Since last November more than £90 million has been lent directly to businesses through the Funding Circle ISA, and we’re pleased to see so many of you taking advantage of the opportunity to earn attractive, stable returns tax-free. From today, you are now also able to transfer any existing ISAs you hold over to your Funding Circle account, subject to any restrictions set by your current provider.

This means that any funds you hold in a Cash, Stocks & Shares, or Innovative Finance ISA can be transferred into your Funding Circle ISA, allowing you to earn a projected return of 7.2%* per year after fees and bad debt. Existing ISA transfers will not affect your £20,000 ISA allowance, unless you are transferring funds you have used to subscribe to an ISA this tax year.

How do I transfer my existing ISAs?

Please don’t directly withdraw funds from any existing ISAs you hold, as you may lose the tax-benefits associated with them.

We’ve made the process for transferring your existing ISAs as smooth as possible. All you need to do is fill-out an ISA transfer form online, then print, sign and return it to us. Simply follow these steps and we’ll do the rest for you:

1. Navigate to the Transfers page in your account

Sign in to your Funding Circle ISA account and navigate to the Transfers page. Select the ‘Transfer existing ISA’ option.

If you do not have an ISA account you will need to open one before being able to access this option.

2. Select the type of ISA you would like to transfer

You can choose from Cash, Stocks & Shares or Innovative Finance ISA depending on the type of ISA you wish to transfer. Remember you can submit a separate transfer request for each ISA you hold.

3. Answer a few quick questions

We’ll use the answers you provide us to fill out your transfer form. Please take care to ensure every answer is entered accurately. If anything isn’t clear, our friendly team are on hand to help.

 

4. Print, sign and date your transfer form

Please post it to the following address:

Freepost FUNDING CIRCLE INVESTOR ISA

That’s it – no need for a street address or postcode. Please remember to write in capitals where indicated. As a Freepost address, you don’t need to attach a stamp or pay for postage.

5. We’ll do the rest

We’ll get in touch with your ISA provider and arrange for your funds to be transferred over to your Funding Circle ISA account.

How long does the ISA transfer process take?

Once we’ve received your form, we’ll get to work straight away. It can take approximately 20-40 working days depending on the type of ISA you want to transfer:

  • Once we receive your transfer form we will send this to your previous ISA provider
  • Your old provider will then process the request and transfer your funds to us. Cash ISAs can take up to 15 working days to process, with Stocks and Shares and Innovative Finance ISAs taking up to 30 working days.
  • Once we have received your funds we will transfer them to your Funding Circle ISA. This can take another five working days.

Q&A

 

Why can’t I sign and return the form online?

Many ISA providers require the transfer form to be signed with a ‘wet ink signature’ before they proceed with any transfer.

Do ISA transfers count towards my subscription limit?

Transfers of existing ISA accounts do not count towards your subscription limit for this current tax year. However, if any of the funds you are transferring were paid into an ISA this tax year then these funds will count towards your subscription limit.

Are there any limits to how much I can transfer?

You can choose to transfer all or part of any funds you have paid into an ISA in previous tax years. However, if you are transferring funds you have paid into an ISA during this tax year, you must transfer it in its entirety. You can transfer as many existing ISAs as you wish.

Can I cancel an ISA transfer?

Please get in touch with both us and your ISA provider as soon as possible if you would like to cancel your transfer. If your existing ISA provider hasn’t started processing the request, then we may be able to cancel it and your funds will stay where they are.

You can find more information on the Funding Circle ISA in our FAQs, or please feel free to get in touch.

Remember, by lending to businesses your capital is at risk.

Enjoy lending,

The Funding Circle team

*The projected return is an estimate of the annual return, after fees and bad debts, that a diversified investor could earn by lending through the Balanced lending option as of 2nd May, 2018. You can see how the return is calculated here. Actual returns may be higher or lower and by lending to businesses your capital is at risk.

April Round-Up

In this month’s round-up you can find industry news, business success stories, your top 5 questions answered and finally changes and opportunities for the new tax year from Simon Read. Read on below to find out more.

Trustpilot quote of the month

“We really like what Funding Circle are doing. From our initial enquiry, funds had cleared into our bank within 7 working days. We can now focus on growing our business. Thank you Funding Circle – for doing the work the banks should be doing!”

Bobbin Bicycles shows how to keep the export wheels turning

It’s great to see one of the businesses in our community featured in The Sunday Times, highlighting how selling overseas can help small businesses thrive.

Founded in 2007, Bobbin Bicycles supply a range of trendy leisure bicycles for everyday cyclists across the world. In 2016, they borrowed £250,000 through Funding Circle to buy stock for their new online sales channel. They’ve recently come back for second loan of £150,000 for working capital. Thanks to your support, we can continue to help small businesses, like Bobbin Bicycles, and push the economy forward.

Top 5 investor questions – answered

Our investor support team are on hand to help with any queries you have about your account, how lending works or Funding Circle in general. We spoke to the team to find out the most common questions you were asking. Here are your top 5 questions answered.

March industry news

In this issue, we discuss how technology has sparked a cultural shift within financial services, and how businesses are turning away from banks for financial support. Read more on this in our industry news.

A new tax year means new opportunities – Simon Read

To help you get the most from your finances, we regularly bring you a column from Simon Read, a personal finance expert. In this issue, Simon discusses how the new tax year can bring new opportunities.

March’s Lending Impact and Borrower Stories

In case you missed it, here’s last month’s post. In March’s lending impact we met Michaela, the founder of Arapina Bakery, in our latest case study video.

By lending to businesses, your capital is at risk.

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

Enjoy lending, the Funding Circle team

Read between the lines – A new tax year means new opportunities

We regularly bring you a column from Simon Read, a personal finance expert with extensive experience in helping people make the most of their money.

We’re into a new tax year and you could understandably be forgiven for thinking, ‘so what?’ But there are two things you need to be aware of.

First is the fact that if you don’t want to fall foul of any new tax laws, you need to be aware of them. Don’t worry, I’ll run through them in a bit.

But second is the opportunity you have right now to get ahead of the game. By that I mean rather than waiting until the end of the financial year to sort out your tax affairs, if you do so now you’ll end up better off – and I’ll explain how.

New tax rates

First, what are the changes in the tax law that have come into effect for the 2018-19 year? Frankly, there’s not a lot, just some tinkering with the tax rates. So the personal allowance – the amount you can earn without paying any tax – has climbed to £11,850.

The basic rate band – the amount you earn on top of your personal allowance and pay 20% tax on – has increased to £34,500. The crucial bit is that means you’ll only start paying the higher 40% tax rate on income you earn this year above £46,350.

Meanwhile, the capital gains tax annual exemption is £11,700 this year and it’s well worth making the most of it if you have assets you’re planning to sell and make a profit on. It’s also worth bearing in mind that if you’re married, your spouse has a similar capital gains tax exemption which may be worth using.

In essence, selling some assets this year could help avoid a tax bill later which could hit if you sell a lot of items at a profit.

Plan early to make the most of tax breaks

That brings us right back to how you can be better off by sorting out your tax affairs now.

To begin with, if you start an ISA now rather than waiting until the deadline at the end of the tax year, you’ll benefit from a whole year’s extra growth on your nest egg. You can stick £20,000 into an ISA now, which would mean an extra £1,000 by the end of the financial year if you managed to get growth of 5% over the course of the next 12 months.

For example, the Funding Circle ISA is now open to all investors, which offers a projected annual return of 7.2% tax-free*. If you were to use your allowance now you could be in great shape by the end of the year.

Thinking longer term, you may want to stick some more money into your pension. It’s not just about building up a decent pot that you’re likely to need in your later years, but also taking advantage of one of the best savings tax-breaks around.

The fact is that contributions to a pension attract tax relief at your highest marginal rate. So if you’re a higher rate taxpayer, you’ll attract tax relief of 40% on any money you stash in your pension. To put it another way, that means that for every 60p you put into your retirement savings, the government effectively tops it up to £1, once the tax relief is taken into account.

If you’re in a decent company scheme, your employer may even match your contributions which would turn your 60p contribution into a £2 addition to your pension pot.

You can put up to £40,000 into a pension every tax year. However, if you haven’t used that allowance in previous years you can use it now to make extra contributions to your retirement nest egg. The so-called carry forward rules mean you can use up pension allowances from up to three years ago. That means in the current tax year you can use up allowances dating back to 2015/16 – but you must do so before 5 April 2019.

If that all seems too much to think about, think about this: there are deadlines to making the most of these tax allowances. If you miss the deadlines, you lose them. But acting now means giving yourself plenty of time to examine your options. And that means giving yourself plenty of time to cash in rather than losing out.

Key things to remember:

New rates

  • Personal tax allowance is now £11,850
  • Higher 40% rate tax threshold is now £46,350

Plan early to make the most of tax breaks

  • Using your ISA allowance early will help you earn more
  • Take advantage of 40% tax relief on pension contributions
  • Carry forward pensions allowance from previous years

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

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

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

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

*The tax-free entitlement of an ISA depends on the individual circumstances of each investor, and may be subject to change in the future. The projected return is an estimate of what investors could earn on the Balanced lending option, after fees and bad debts. It uses the loans we expect to be funded on the platform, and the estimated bad debt rate of those loans based on our all-time loan data. See the full calculation here. Your actual return maybe higher or lower, and by lending to businesses your capital is at risk.

Culture shifts and funding boosts – March industry news

How Funding Circle is keeping the little guys in the loop – City AM

Up until now, finance companies have typically been viewed as dull and corporate, but we’re pleased to see that this perspective is changing. Technology has sparked a culture shift within financial services, bringing enthusiasm, passion and fun back into the workplace. As our co-founder James Meekings says, “When we think about the people we hire, it’s all about energy.” Fostering an empowering culture and staying true to a set of values is key to a successful business, and is something we are firm believers in at Funding Circle.

China could snatch the crown of FinTech capital, Britain is warned – The Times

Talking about the FinTech sector more broadly, the chancellor Philip Hammond recently told an industry conference that the UK was the “global capital of FinTech” and that the emerging industry contributes £7 billion to the economy. Mr Ramsden of the Bank of England added “The UK can’t afford to be complacent even with London’s pre-eminent position, commercial advantage must be constantly worked for and renewed.” As well as boosting the economy, FinTech companies are creating new opportunities for investors, consumers and businesses. Whether you want to transfer money overseas, get a faster loan or a better return on your investment, these platforms are making such services quicker and easier to use.

FT City Network transcript: the outlook for ‘Global Britain’ – Financial Times

As well as changes in technology, trade partnerships play a crucial role in creating opportunities for businesses. Looking ahead to a post-Brexit world, there will be a lot of excitement about new global partnerships we can build in distant lands. In the long-term these could be very beneficial, but for small businesses who depend on exporting, their greatest opportunities in the short term will continue to lie with our European neighbours. Small businesses do not typically have the time or resources to form long-distance trading partnerships. Consequently, access to fast, fair and affordable finance will be critical to taking advantage of the opportunities exporting can bring.

Small firms say no to bank loans – The Times

Another shift we’re seeing across the UK is the number of businesses that are turning away from banks for financial support. Research suggests that only one in three businesses indicated a willingness to borrow finance in 2017, down from almost half in 2015. However, it’s hugely positive to see the increased amount of innovation and choice being brought to the market thanks to the emergence of online lending. These platforms are helping small businesses  seize growth opportunities, hire more staff and go even further.

Innovations to utilise your tax allowance – City AM

Finally, we’re really excited to announce that the Funding Circle ISA is now available to all investors. This will allow investors to make the same attractive returns tax-free, helping them better provide for their future while helping businesses get the funds to thrive. As with the Classic account, there are two investment options to choose from: ‘Balanced’, for a projected return of 7.2 per cent; and the lower-risk ‘Conservative’, for a projected return of 4.8 per cent. For more information on the Innovative Finance ISA (IFISA) check out this article in The Times or visit our ISA page.

News

Your top questions – answered

Our investor support team are on hand to help with any queries you have about your account, how lending works or Funding Circle in general. We spoke to the team to find out what were the most common questions you were asking. Read on below to find the answers to your top 5 questions.

1. Can I move money from a Classic to an ISA account?

Unfortunately you can’t transfer either loan parts or available funds from your Classic account to your ISA.

ISA regulations state that investors can only make cash subscriptions into an Innovative Finance ISA. Instead, you must first sell your loan parts to other investors, then withdraw the funds raised into your nominated UK bank account. You can then transfer the funds into your ISA account.

Likewise if you have available funds in your Classic account, you are unable to transfer directly to your ISA. Again, you will have to withdraw and transfer in from your bank account.

The same is true if you want to move funds from your ISA to your Classic account.

2. Why can’t I sell all my loan parts?

Although the majority of loan parts will typically be sold within 24 hours, to ensure all investors are protected and treated fairly, we have specific rules and restrictions on which loans can be sold. Investors can’t sell loan parts that:

– Have had their risk band removed (for example when a CCJ has been registered against the business)
– Are late (currently behind on repayments) or are in default
– Have only one payment remaining

The first two restrictions are often temporary. If a business gets back on track with their repayments and there are no remaining issues, we can reinstate the risk band and the loan part can be sold.

As a result, investors can only sell loans that are in good health, which helps to protect the investors who buy them.

3. Why is my money not being lent out?

Our automatic lending tool is designed to help more than 70,000 investors lend their funds to businesses quickly and fairly. We have a dedicated team who monitor the balance between the supply of investor funds and demand from businesses. Liquidity has been excellent in recent months with approximately 97-99% of the total amount of investors’ funds lent out to businesses at any time.

It’s important that the remaining available funds are allocated fairly, so all investors have the chance to lend their funds to businesses. To help achieve this, the lending tool is more likely to match investors who have a large proportion of their funds available.

It’s worth noting that the lending tool will typically start matching your available funds once they reach 0.5% of your portfolio, and you will usually have a small proportion of funds not lent at anytime. Lending will be slower at weekends as new loans are only listed within working hours, but you may still purchase loan parts that are being sold by other investors.

In addition, if you are lending through our Conservative lending option, it can take longer to lend all of your funds out to businesses as you are only lending to our A+ and A risk bands, rather than across all businesses.

4. Why do I get negative interest at the beginning of lending?

This is a common occurrence when investors first start lending and is not a cause for concern.

When lending through Funding Circle, you will typically lend the majority of your funds to businesses who are taking out a new loan. However, you will also use some of your funds to purchase loan parts that are being sold by other investors.

As loan parts are often sold mid-way between repayments, it’s important that both the seller and buyer of a loan part receive the interest owed for each day they hold it for.

As a result, when you buy a loan part, you’ll pay the seller the amount of interest owed to them since the business last made a repayment. This interest will be taken from your available funds, and may show as a negative amount on your account total if you are just starting to lend. When the business makes their next repayment, you’ll receive a full month’s worth of interest.

5. Can I split my funds between Conservative and Balanced?

Only one lending option can be applied to your account at a time, so funds cannot be lent out using both Conservative and Balanced options simultaneously.

However, you could lend out half your funds using one option, then switch to the other and lend out the rest. This would split your funds across the two options, although any repayments would then be lent according to your current lending option.

If you’d like to change your lending option, you can do so at any time via the “Lending settings” tab.

More information can be found in our investor guide. Remember, by lending to businesses your capital is at risk.

Your April Review – Insight and Analysis

In March, you and other investors lent over £123 million to UK businesses, allowing them to achieve their business goals. Dive in below for your monthly analysis.

Last month, you helped over 1,800 UK businesses grow and take new opportunities — thank you for your continued support! Together we can continue to drive energy into the UK economy.

How Funding Circle is keeping the little guys in the loop City A.M.

“When I step into the lively hive that is Funding Circle’s office, it’s a breath of fresh air” says Katherine Denham, writer at City A.M. This article highlights our culture, our team and how our investors are supporting thousands of small businesses across the county.

These graphs show the most recent activity on our platform.

You’ve helped more than 10,500 small businesses access finance in the last 6 months…

 

Totalling over £701 million lent

March 2018 sector breakdown

Amount lent to each sector

March 2018 regional breakdown

Amount lent to each UK region

As part of lending to businesses, a small percentage will not be able to fully repay their loan. This is known as bad debt and is a normal part of business lending. We believe diversification, where you lend no more than 1% of your total to each business, is the best way to reduce the impact this has on your return. Our automatic lending tool will help you diversify by splitting your investment across lots of businesses. We suggest lending £2,000 or more, so you can lend to at least 100 businesses, with no more than 1% going to each one.  

Each week, we publish a list of the loans being defaulted on the Customer support section of our website under ‘Announcements.’ To see a breakdown of the loans defaulted last week simply click on loans defaulted 29th March 2018  For further information on why Funding Circle defaults loans you can read our FAQ here.

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

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

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

Enjoy lending, the Funding Circle team

*Data from CEBR report

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

March’s Lending Impact and Borrower Stories

In this month’s lending impact, we bring you our latest case study video featuring an award-winning bakery. We’ve also got your Easter weekend covered, with five booming businesses who can help you have a great weekend. Dive in below.

We’re pleased that so many of you are already benefiting from tax-free returns with the Funding Circle ISA. Thanks to your support, we can continue to help businesses take opportunities, create new jobs and drive energy into the economy.

Trustpilot quote of the month

“When others turned their back, Funding Circle helped us turn our dreams into reality. Thanks to their trust in us we are now able to expand our business and move things forward. We can’t thank them enough. If you wish to fulfil your business ambitions then there’s only one place to go, FUNDING CIRCLE!”


In January we introduced Michaela, the founder of healthy lifestyle bakery, Arapina. Originally from Crete, Michaela grew up eating natural and healthy home cooked food. After moving to London, Michaela’s passion for food led her to trade in food markets in 2013. She began with one single product – the Arapina chocolate cake – but as demand kept growing so did their menu. In May 2017, Arapina accessed finance through Funding Circle to expand their business and have since doubled their turnover. Watch the case study video to learn more about their exciting journey.

Make the most of your Easter break with friends and family

The long Easter weekend is nearly here! Here are five Funding Circle borrowers who can help you make the most of the long break. From visiting a chocolate factory to feeding the farm animals, there’s something for everyone. All of these businesses were able to flourish thanks to your support.

February’s Lending Impact and Borrower Stories

In case you missed it, here’s last month’s post. In February’s lending impact we met Jake, the founder of Bristol Bicycles. Additionally, we announced that the University of Huddersfield has lent to over 2,000 UK business through our platform. Finally, we listed five Funding Circle borrowers to keep the Winter Olympics spirits high.

Up next

At the beginning of April we’ll publish our Insights and Analysis blog to review March’s activity, including statistics from across the platform and helpful tips to make the most of your investment.

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

Enjoy lending, the Funding Circle team

Healthy treats for everyone, thanks to your support

Michaela is the founder and owner of award-winning healthy lifestyle bakery, Arapina. The bakery focuses on reinventing Mediterranean cooking, specialising in free from and guilt-free treats.

After finishing university, Michaela went straight into work. It wasn’t long before she became bored and found herself dreaming about running her own business. Being an avid home baker herself, Michaela began trading in food markets in 2013 with one single product – the Arapina chocolate cake. Her delectable treat was an instant hit, and she started to receive requests from wholesalers. Demand kept growing and there quickly became a need to relocate into a larger premises. Shortly after, they moved into an industrial kitchen between Greenwich and Deptford.

The bakery was minimal and there was a need for funding to refurbish the premises. Michaela came across Funding Circle through an advert on social media and decided to take a loan in May 2017. “I found that I could communicate with them. They understand the mindset of an entrepreneur and that really helps” she said. Since receiving funds from Funding Circle investors, Arapina have doubled their turnover. “Without them we wouldn’t be in the position we are today”.

In this short video, meet Michaela and discover more about the exciting evolution of Arapina.

Are you interested in lending to businesses like Arapina?

Lend alongside 78,000 investors and support small businesses across the UK by signing up online today. You can use our investor information guide to help you get started and there are 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.

Make the most of your Easter break with friends and family

The long Easter weekend has arrived! If you’re stumped for things to do, we’ve pulled together a list of Funding Circle borrowers to help you make the most of the break.

Visit a chocolate factory

5 years ago NOMNOM moved into an abandoned chocolate factory in South West Wales. They found an extraordinary collection of chocolate moulds, and have been steadily turning them into hand-painted sculptures of edible art. At the old factory they now offer a range of experiences to go with their treats, including workshops to design, fill and paint your own chocolate mould. For something a little more special, indulge in their 5 course Easter feast or stay the night in the farm house. NOMNOM has borrowed £176,000 across multiple loans since 2016 to continue their growth.

Embark on a countryside walking tour

Like Christmas, Easter wouldn’t be complete without an unnecessarily long family walk. But are you bored of your usual route? Check out Shepherd’s Walks for a superb collection of guided walks, including in Northumberland and Cumbria. If guided tours aren’t your thing, purchase a handheld navigator with GPS and determine your own route in an area of your choice. Since July 2015, Shepherd’s Walks have borrowed £108,000 across 3 loans to keep up with company growth.

Feed the farm animals

If you find yourself in Leicestershire for the Easter break, head to Little Jack’s Farm in Bottesford. The family run business includes a children’s farm and a garden centre – fun for all the family. At the farm, you can feed a range of animals including sheep, rabbits and ponies. If the weather doesn’t hold up, there’s also an indoor play and crafts area for children. Little Jack’s Farm has borrowed £81,000 across multiple loans to expand the children’s farm and improve their facilities.

Create your own Easter egg hunt

We appreciate that a weekend away isn’t feasible for everyone. Instead, build the excitement at home by creating your own Easter egg hunt in your garden or nearby park. D&D Chocolates specialise in chocolate and confectionery for people with allergies to dairy, gluten and nuts. They also supply to hospitals and clinics so that children don’t miss out on a chocolate Easter egg. D&D Chocolates needed to purchase a larger chocolate moulding machine and a walk in refrigeration room to keep up with interest in their dairy free chocolate. Since September 2014, they have borrowed £24,000 across two loans.

Get your garden ready for Spring

Perhaps indulging in copious amounts of chocolate over a 4 day weekend isn’t your thing. Now it’s officially Spring (and about time too!) make sure your garden looks the part. Gardening Express has a great online store, with the perfect selection of Spring Flowering Bulbs to brighten up your flower beds. To boost seasonal buying power and cash flow, Gardening Express borrowed £157,900 in April 2016.

Are you interested in lending to businesses like these?

Lend alongside 78,000 investors and support small businesses across the UK by signing up online today. You can use our investor information guide to help you get started. There are 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. Not covered by the Financial Services Compensation Scheme.

 

Small businesses diversify funding. February industry news

Small businesses look to specialist lenders for loans – Financial Times

According to recent research by the British Business Bank, small businesses are diversifying their sources of funding away from the banks and seeking support from other avenues, such as online lending platforms. This shift shows that there is much more choice for available for small businesses today than there was only a few years ago, which is excellent to see. Business can now access fast, affordable finance online in a matter of days, without even leaving their homes. Read more about the report in the Telegraph.

Banks stress-test themselves but don’t say how they’ll support business – The National

Another recently published report, the Scottish Business Report, shows that little information is available on how banks are planning to support their small business customers post-Brexit. The report also looks at how bank net lending (which is total lending minus repayments) has significantly dropped following the referendum. In 2017, 30 of the UK’s largest banks lent £679 million to small businesses on a net basis, whilst investors at Funding Circle alone lent £600 million. This encouraging growth wouldn’t be possible without to your continued support, so thank you!

2017 was a record year for UK fintech investment – City AM

There was record venture capital investment in UK FinTech in 2017 with £1.3 billion invested in companies working in financial technology. This represents a rise of 150 per cent since 2016 which is a bigger increase than either the US or China. Globally, two of the biggest deals were for Transferwise and Oaknorth, both UK firms. Funding Circle, Interactive Investors and Monzo made up the rest of the top five biggest deals in the UK. This is encouraging as it shows the UK shaking is off concerns of a Brexit slowdown.

University of Huddersfield Lends to More Than 2,000 UK Small Businesses – Crowdfund Insider

In 2013, the University of Huddersfield became the first University to lend directly to businesses through a lending platform – and it continues to lead the way in this area today! Since then, the University has gone on to support over 2,000 UK small businesses through Funding Circle, including Ushiwear, a British clothing brand. Launched by husband-and-wife team Neil and Jilly Kapusi, the passionate duo were able to build on their success and go for growth after accessing finance through the platform. Read more on our blog.

The Sunday Times Best 100 Companies – The Times

To finish up, we were delighted to be named 16th in The Sunday Times Best 100 Companies. We’ll leave it to our UK MD and co-founder, James Meekings, to summarise: “Even though we now have 800 employees, we still feel like a small business. We still push for opportunity and for people to be creative.”

Your March Review – Insight and Analysis

Last month you and other Funding Circle investors lent over £113 million to UK businesses to help them grow and develop. Dive in below for your monthly analysis.

We’re also very proud to announce we are 16th in The Sunday Times 100 Best Companies to Work For 2018. You can see the full list here.

In February, you and other investors helped over 1,700 UK businesses take new opportunities and reach their goals — thank you for your continued support!

Meet our Collections and Recoveries Team

Our aim at Funding Circle is for you to earn stable returns when lending directly to businesses. Dive into our Q&A with Andrew Jackson, Head of Collections and Recoveries in Europe, to find out how the team has evolved over the years to ensure the best possible outcome for you and other investors.

These graphs show the most recent activity on our platform.

You’ve helped more than 10,200 small businesses access finance in the last 6 months…

Totalling over 678 million lent

February 2018 sector breakdown

Amount lent to each sector

February 2018 regional breakdown

Amount lent to each UK region

LoansDefaultedLastWeek

As part of lending to businesses, a small percentage will not be able to fully repay their loan. This is known as bad debt and is a normal part of business lending. We believe diversification, where you lend no more than 1% of your total to each business, is the best way to reduce the impact this has on your return. Our automatic lending tool will help you diversify by splitting your investment across lots of businesses. We suggest lending £2,000 or more, so you can lend to at least 100 businesses, with no more than 1% going to each one.  

Each week, we publish a list of the loans being defaulted on the Customer support section of our website under ‘Announcements.’ To see a breakdown of the loans defaulted last week simply click on loans defaulted 1st March 2018  For further information on why Funding Circle defaults loans you can read our FAQ here.

Collections

HowItWorks

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

Up next in March we’ll be looking at the impact your lending is having on the UK economy. We’ll also bring to life some of the businesses you’ve helped access finance.

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

Enjoy lending, the Funding Circle team

*Data from CEBR report

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

Meet the Collections and Recoveries team, who help keep your returns healthy

At Funding Circle our aim is for you to earn stable returns by lending directly to businesses. With any type of lending, your capital is at risk and it’s normal for some businesses to be unable to repay their loans. We call this bad debt, and we expect a certain percentage of it to occur each year.

When a business falls behind with their repayments, our Collections and Recoveries team will work closely with them to achieve the best possible outcome for investors. We spoke with Andrew Jackson, who heads up the team, to find out more about how Collections and Recoveries have evolved over the past few years.


Andrew joined Funding Circle in 2013

Hi Andrew, thanks for speaking with us today. A lot has changed since we brought Collections and Recoveries in-house in early 2014.  What does the team look like now?

In the beginning it was just a part-time colleague and myself handling everything. Now we have more than 20 people in five specialist teams:

  • The Loan Servicing team deals with borrowers who are on time with their repayments, but may have queries or requests such as asking for statements of account or settlement figures.  
  • The Business Advisory team carries out portfolio monitoring on the whole of the loan book. They look for warning signs and work with borrowers to find ways to keep payments on time.
  • The Collections team deals with missed payments. They know as soon as a direct debit is cancelled, or 3 days before the due date if a direct debit bounces.
  • The Recoveries team deals with any loans where the borrower or guarantor has entered a formal insolvency process, or that are defaulted.  
  • Last but by no means least, the in-house Recoveries Litigation team carries out our legal work, with the help of an external panel when required. Bringing litigation into my team in 2016 enabled us to work faster and cheaper in commencing bankruptcy proceedings, obtaining security and commencing legal action.

We also work closely with external tracing agents, private investigators, surveyors, insolvency practitioners, turnaround experts and lawyers.

How has the approach of the team changed since 2014?

In the early days we were testing out new approaches and ideas, which set us apart from the usual strategies taken by banks. We found our approach seemed to work much better than industry expectations, and resulted in lots of positive feedback as well as recovering more money for investors.  

You mentioned your strategies are working? What results have they had?

We’ve seen exceptional performance over the past few years. Moody’s (the ratings agency) have published reports suggesting that we should get 30% lifetime recovery on our asset class*. However, we have seen significantly higher results, and we predict that will continue. Over the last few years, investors have consistently earned returns on average between 6-7% per year after fees and bad debt.

The difference with Funding Circle is that we don’t give up on borrowers simply because they are going through a rough patch. Entrepreneurs are a tenacious bunch. They learn from their mistakes, get back on their feet, and start new businesses – and it is from those new ventures where we see a significant portion of our recoveries. I think businesses understand this.

When we explain our policies to them they often agree that they are fair – even those who we believe are not being as cooperative as they could be. When we explain to them why we have reached that conclusion they tend to see things from our perspective, and then work alongside us in a much more open and honest way.

Thanks Andrew, we appreciate you taking the time to speak with us!

You can learn more about how the Collections and Recoveries process works at Funding Circle with the blog posts below:

Bad debt, defaults and why not to be afraid of them

How our collections process works (part 1)

How our collections process works (part 2)

How long does it take to receive recoveries?

Alternatively, if you have any questions please feel free to get in touch.

Enjoy lending,

The Funding Circle team

*Frank J. Faboozi, Handbook of Finance, Volume 1: Financial Markets and Instruments: v. 1, (J. Wiley & Sons, 2008)