Meet a business you’ve lent to: Tatty Devine

Tatty Devine, from the East End, design custom jewellery

Tatty Devine was started in 1999 by two friends from art college, Harriet Vine and Rosie Wolfenden. They are an independant British micro-manufacturer and specialise in creating ‘stand out’ jewellery and fashion accessories.

In the past 14 years the company has been recognised by numerous awards and honours including an MBE for the co-founders. They have two stores in London, a concession at Selfridges and over 300 stockists worldwide.

In May, they took out a peer-to-peer loan through Funding Circle for £100k which was funded by 1,211 people in 7 days. In this video we explore their life story from starting the business to where they are now and what their experience of Funding Circle has been as a small business borrower.

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Weekly Lending Review: week 26

Weekly Lending Review, week 26, 24 - 30 June 2013

Weekly Lending Review, week 26, 24 – 30 June 2013

£2.8 million worth of new lending opportunities were listed on the marketplace last week, including a Yorkshire-based hotel and a food flavouring manufacturer. The majority of the loan requests were allocated to the C risk band.

£11.6 million was lent to businesses across the UK in June alone; accounting for nearly 10% of the total amount ever lent.

New loans

There were 44 new business loans listed last week and there are currently 18 auctions on the marketplace.

The total value of the new listed loans was £2,792,500; that’s an average of £63,466 per loan. The largest loan value was £150,000 and the smallest loan value was £10,000.

Business loans still available for bidding on for the next 3 days or more:

Weekly marketplace trends

These graphs show the most recent activity on the marketplace. The average gross yield graph is reported weekly and shows a rolling two week average. Number of loans, value of loans and secondary market are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 24-Jun represents the week of 24th – 30th June.

Weekly average gross yield (2 weeks rolling)


Number of listed loans per week


Listed loan value per week


News you should know

Were you one of the 1,211 people who lent £100k to Tatty Devine earlier this year? We visited their shop on Brick Lane to film them and to ask them more about their business. In the video, we explore how they started their unique jewellery business in 1999, which has lead both of the founders to receiving MBEs at the start of this year.

Community Discussions

This week we’re talking about the introduction of new minimum bid rates and you can join the discussion in our community forum.

Loans defaulted last week

No loans were defaulted last week.

Enjoy lending, The Funding Circle Team

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Picture story: how 1,211 people lent £100k to a fashion company through peer-to-peer lending

1,211 people lent £100k to Tatty Devine. Read their story

Tatty Devine design unique fashion accessories from their Base in Brick Lane in London. In May, they took out a peer-to-peer loan through Funding Circle for £100k which was funded by 1,211 people in 7 days.

Here’s the story of their business and their experience of Funding Circle in their own words:


If you’d prefer to view the images in full screen, click the full screen button, bottom right, on the Slideshare below:

The complete guide to growing your business internationally: part 1

Our series on how to grow your business internationally

Welcome to part one of our guide to growing your business internationally. In this edition, we’ll give you an overview of the steps and decisions you’ll need to consider when thinking of expanding overseas. In the next edition, we’ll dive deeper into finding ways to distribute your offering across borders.


Why expand your business overseas?

Britain, like many of the developed nations, is losing economic dominance on the world stage. By 2020 The Economist predicts that the emerging markets – specifically BRIC (Brazil, Russia, India, China) – will be the new global leaders(i).

There has never been a better time, or need, to think about where your business growth might come from outside of the UK.

But many growing businesses are concerned about the level of difficulty in setting up overseas. There’s a lot of advice available out there but what steps do you really need to take to make trading abroad a reality? Here’s our step-by-step guide how.

Step One: Get Real

“We moved into exports when a UK client asked us to take on a major contract in the States. At the same time we started working with a firm in Taiwan to make circuitry, who said in return, ‘We have a contract in Ireland, could you take it on?” – Harry Everington, Chairman of signage manufacturer and installer Pearce Signs (iii).

Growing your business overseas is not a Plan B if you’ve failed to grow your business in the UK first. Ideally, you’ll know you’re ready to expand abroad because:

  • You’ve dominated the local market and growth has flat lined and/or…
  • You’re already selling to, or getting order requests from, other countries

You also need to consider whether your business relies on your physical presence i.e. if you’re a florist famed for your floral arrangements your business probably needs you around to deliver the work. This barrier is a very real consideration to those who deliver services.

Step Two: Think Strategically

“Business is done between people, not companies, so you need to ask yourself if people get your strategy and whether they will adopt it.” – Richard North, chief executive of toy manufacturer Wow! Stuff (iv)

Even if the demand for your product is there, does it make sense strategically for you to grow overseas?

Only you know what the overarching mission is for the company and only you have access to all the insight, knowledge, and figures to determine if expanding overseas will drive growth or send costs spiralling out of control.

You may have found success to date felt ‘spontaneous’ or that you rely on ‘gut instinct’ to make decisions. That’s OK but the logistics of operating in another market involve a huge amount of effort and jumping through official hoops which may not excite you in the way running your existing business does today. You’ll need a sound, strategic plan, to see you through the tough times and convince key stakeholders along the way that you’re headed for success.

In particular you’re going to need to plan your finances. You’ll need a plan for working capital, bonds and credit insurance to reduce financial risk. You’ll also probably want to take out a foreign-exchange contract to protect the business from unpredictable and fluctuating currency rates – even a shift of one percentage point can make a significant impact on your margin. All of this should be considered while developing your strategy.

Step Three: Find a Mentor/s and or Local Advisor to guide you through the process

“I needed to attract new business on a tight deadline. Thanks in part to UKTI’s assistance, we were able to secure a new contract in just six months, exceeding even their expectations.” – Tom Elvidge, Principle Consultant of Consultancy Moorhouse. (v)

There’s no way you and some late night Googling are going to do this on your own. You need expert, local knowledge and maybe even the support of someone who’s been there. (And we don’t mean just been there on a holiday.)

In the UK there are some organisations dedicated to helping businesses like yourselves do this very thing.

UK Trade & Investment: UKTI s going to be your first stop. They are the official Government body set-up to work with UK businesses expanding internationally. Working with them will get you access to loads of practical advice, market research, and potentially even funding. They also operate offices in key markets so should be able to connect you with someone in your market of choice

The Department for Business, Innovation & Skills: Another government resource, the Department for Business, Innovation & Skills, advises on specific areas such as trade agreements, market assessments and intellectual property law

The Institute of Directors: If you’re already a member of the IOD you may or may not be aware that they offer advisory services on trading abroad. Even for non-members there is some handy information available on their website

Business Councils: Some economic relationships between Britain and other countries are already very strong and joint initiatives have been established to encourage trade. For example there’s the China-Britain Business Council, the British-American Business Council, and others you can look up for market specific support

Professional Associations: Is your business supported by a professional association? Many of these are global and can connect you with local market contacts and advice relevant to your profession or industry. Wikipedia has this list of UK Professional Associations to find yours – if you work in manufacturing The Manufacturers Association is a great place to go. There may even be dedicated international organisations such as the British Chinese Law Association.

Image source: Flickr UKTI

Mentoring might seem a bit ‘new-age’ but even Warren Buffet believes in the value of a mentoring. The whole point of a mentor is to connect you with someone who has already trodden the same or similar path you intend to take and offer you their knowledge, expertise, and experience so you can replicate their successes and avoid their failures. At the very least they’ll be someone who understands your highs and lows and can help support you through the process.

How to find one? As part of connecting with any of the organisations above ask if someone can make introductions to a possible mentor – this tends to be done via word of mouth.

Step Four: Research, research, research

“We did lots of research. You can’t assume that what works in the UK will work abroad. For instance, we found that the UK had a large range of PC and internet-based magazines, and we got lots of press coverage. In the US, PC Magazine had a circulation of over one million and dominated the landscape. It was horrendously difficult to get PC Magazine’s attention.” – Chris Barling, CEO of IT provider Actinic (vi)

Knowledge is power. For example never underestimate the cultural differences which may exist even in going in to a country which speaks even the same language – these brands all found out that hard way:

  • The Pepsi campaign that translated “Come Alive With The Pepsi Generation” into Chinese as “Pepsi Brings Your Ancestors Back From The Grave”
  • The GM Nova car that was launched to the Spanish speaking market where “no va” means “It Doesn’t Go”
  • Vacuum cleaner manufacturer Electrolux marketed in America with the slogan “Nothing sucks like an Electrolux”

Image source

While these examples are all giggle worthy it’s staggering how these expensive mistakes could’ve been avoided with some simple upfront research. Even a large multi-national with 100s of people on the ground in the local market can miss business critical information.

Things you’ll want to be confident about before launching in another market are:

  • Is there are a market need for your product and service? You’ll want to use your own insight i.e. existing demand from another country, as well as research local buying needs and behaviours. You’ll also need to find out who local competitors are and what you’re up against in launching alongside them.
  • Can you provide your product or service in another country to the same standard as in the UK? This is going to include everything from knowing there’s local suppliers and pre-scoping the cost of local production, to legal and regulatory knowledge and knowing there’s local human resource available. We’ve also called out the importance of maintaining standards; you need to protect your brand equity and consider that local suppliers may not provide resource that’s either up to scratch or as affordable as it is here.

The organisations you identify in Step 3 will be able to help you with this.

Step Five: Choose a model

“You have to set it up as a separate business model rather than simply take a punt at getting some business from a different part of the world.” – Ray Jones, head of business consulting at RTC North (vii)

There are several ways you can enter a new market; open a subsidiary, acquire or merge with an existing local business, or develop a strategic partnership – this could be through franchising, a joint venture, or licensing, or sourcing a local distributor or provider.

These all have various pros and cons which are unique to both your business and the local market you wish to enter. The research you’ve undertaken should be able to indicate which the best option is – you should not have decided this in advance, in absence of any research.

Once you’ve selected a route to market you can then seek out specific advice on how to execute that model in your local market from the organisations you’ll have sourced in Step 3 and organisations set-up specifically support those activities – for example there is the British Franchise Association for those needing advice on franchising. The International Chamber of Commerce can also assist and provide model contracts you can buy for signing partnership and distributor agreements.

Typically, and this may not be right for you, the first step to doing business overseas is through a distribution deal. You can locate and negotiate with a local distributor yourself or many businesses attend trade fairs where they can showcase their product or service and then are approached by businesses who wish to become their local distributor.

So, you see, once you have selected your preferred model for trading overseas the next steps become a little clearer.

Gift manufacturer Wild and Wolf from Bath is exhibiting at key trade shows across Europe.

In Summary

The economic situation today means that growing your business overseas might not just be great opportunity but could be a necessity in the very near future. And the markets with the most potential could be the ones you least expect – the developing nations.

If your UK growth is plateauing and/or you are experience high demand from overseas, now is the time to explore your options. Make sure you avoid making mistakes and benefit from the help available out there by teaming up with specialists – UKTI will most likely be your first stop.

Good luck out there!

– UK Trade and Investment
– Department for Business, Innovation and Skills
– The IOD
– The International Chamber of Commerce
– UK Export Finance
– The Institute of Export
– The Confederation of British Industry
– The Manufacturers Association
(v) UKTI Trade Services Guide 2013
Access to funding is often a barrier to small business growth, if you are looking for capital or growth finance, Funding Circle could help.

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Update on the Minimum Bid Rate trial

Last week we introduced a trial of new minimum bid rates by risk band. Prior to this change the minimum interest rate you could bid on a loan auction was 4% across all risk bands. This was increased on 24 June 2013 and you can read our blog post announcing this initial change here.

When deciding to increase the minimum bid rate, we take into consideration a range of factors. These include the cost of alternative borrowing products, the returns available on other investment products, the general economic conditions, protecting investors from bidding rates significantly below the average and the estimated bad debt rates for each risk band.

Since announcing the start of this trial, we have received valuable feedback from investors on the forum, and also through a survey sent out on Friday, which you can see the results of here. Regular feedback from investors and borrowers is crucial to the success of Funding Circle and we’d like to thank everyone who has taken part so far.

Following the feedback we will be adjusting the trial minimum bid rates to the following levels:

A+ risk band: 6.0%

A risk band: 7.0%

B risk band: 8.0%

C risk band: 9.0%

Going forward we are committed to reviewing minimum bid rates on a monthly basis and providing two weeks’ notice of any future changes. This will ensure investors are aware in advance of any changes and there is minimal impact on market behaviour or an individual’s investment experience. Additionally, any future adjustments will be introduced incrementally at a maximum of 0.5% (+ or -) of the existing minimum bid rates across each risk band.

Samir, our CEO, and other team members will be discussing the minimum bid rate trial on the forum, and the rationale behind the decisions we took. If you have specific questions or would like to discuss this in more detail, please post a question and we will be happy to answer.


Introducing new minimum bid rates

We want lending at Funding Circle to be as rewarding as possible which is why we are now trialling a different minimum bid rate for each risk band.

Previously the minimum interest rate you can bid on a loan auction is 4% across all risk bands. This will now be increased in steps accordingly across all risk bands and the new minimum rates will reflect the associated risk of each band.

We believe that this will create more stability in the market, promoting a sustainable environment for both investors and businesses.

When will this happen and what will the rates be?

From this morning, 08:00 Monday 24th June, we will begin the trial of the new minimum bid rates for all new loan auctions. Here is the breakdown of the new rates:

A+ risk band: 6.0%
A risk band: 7.5%
B risk band: 9.3%
C risk band: 10.5%

These minimum bid rates may be adjusted as market conditions change and you can view the current minimum bid rates here.

What does this mean for investors?

If you bid manually, then the main change to keep in mind is that there is now a minimum rate you can bid at for all new loans, which depends on the risk band of the business. This will be the minimum rate you can select on the loan auction page where 4% was the previous minimum.

If you’re using Autobid, it will only ever bid on auctions at or above your Autobid rate. If your Autobid settings are below the minimum bid rate, Autobid will automatically bid on the marketplace at the minimum rate.

The minimum bid rate only applies to new auctions, so if you’re buying loan parts from other people, Autobid will buy loan parts at or above your Autobid rate. Remember Autobid only buys loan parts that are sold by other investors at par value.

Additional information on how minimum bid rates will work

There will now also be a limit on the portion of a loan that can be funded by Autobid users at the minimum bid rate, to ensure that both Autobid users and those bidding manually have equal opportunities to lend on a loan requests.

Up to 50% of the available amount of the loan can be funded by Autobid users bidding at the minimum bid rate. So on loans where Government funds 20% of the loan, a maximum of 40% of the loan can be funded by Autobid users at the minimum rate. Autobid users will be able to fund more of the loan if they bid above the minimum bid rate.

The introduction of minimum bid rates for loan auctions will allow the possible introduction of new risk bands in the future.

You can discuss how minimum bid rates may affect your investing strategy with other community members in our forum.

Enjoy Lending,

The Funding Circle Team



Meet the businesses you lend to: Ark Consultants

Meet the businesses you lend to: Ark Consultants

Ark Consultants, based in Lancashire, arrange the Original Mountain Marathon series and design outdoor clothing and equipment under the OMM brand. In January, they borrowed £80,000 from 737 people through Funding Circle. We recently visited the team up in the hills of the Peak District, during one of their mountain marathon events, to give you a stronger flavour of the type of companies your money goes to and the communities and activities you are helping to grow.

The Original Mountain Marathon (OMM) is a two day mountain marathon event that has been running for over 45 years. Each team of 2 carries their own equipment, tent, sleeping bag and food for 36 hours, having planned their route before leaving base camp.

Tom Williams, MD of Ark Consultants, takes us through his business story and explains how he started the OMM brand. Having built up the brand over the past four years in the UK, the focus is now on expanding the business internationally; and this is where the Funding Circle loan comes in.

You can watch Tom’s story in this video, which also includes some fascinating insights into the world of mountain marathons.

Small business accounting software: take the pain out of finance


Running your own business is difficult enough without being driven insane by the amount of bookkeeping you have to do. We guarantee these small business accounting tools will remove some of that pain and hassle.

From receipt scanning apps that automatically generate expense reports, to applications that will check how much to bill clients; accounting applications have revolutionized the most hated of tasks – bookkeeping admin.

How to stop under-quoting for work and accurately track how much to bill clients

How many times have you come to bill a client and had to ‘guesstimate’ how much time you really spent working on it? Wouldn’t it be better to know how long certain tasks usually take so you don’t under-quote in the future?

Time tracking is not about spying on employee productivity (although admittedly it can help) – instead it’s an antidote to logging time sheets. Let’s face it, no one ever fills out a timesheet accurately but under- or over-estimating labour costs hurts the business.

Install a time tracking tool into your PC like RescueTimeHarvest, and minutedock to keep track of exactly how you spend your time.

Don’t sit at a computer all day? No problem, you can log your time on the move. Harvest has a smartphone app you can use, or there are dedicated time tracking apps for iPhone, Android, Blackberry, and Windows Mobile smartphones, just go to your app store and search ‘time tracking’ to see what’s available.

If you have to log your time manually then logging time sheets doesn’t get more pleasurable (that’s right, pleasurable) than using Freckle. Once you see it you’ll ditch the homemade Excel sheets.

How to stop losing receipts and create expense reports more easily

Have you ever left expenses unclaimed simply because you couldn’t be bothered to fill out an expense report? Or do you carry receipts around for ages only to find they’ve mysteriously disappeared when it’s end of month and time to do the expense report?

Not managing expenses regularly can lose you money. It’s even worse when employees store up several months worth of expenses and submit them in one go, wreaking havoc with cashflow.

The good news is, you can now manage receipts more efficiently: digitally. Receipt processing services like ReceiptBank and Keebo take on the burden of processing your receipts and expense reports for less than a tenner a month.

How? First you send them all your receipts by scanning them yourself via a smartphone app, forwarding by email, or simply putting them into a postage paid envelope and sending them off to a scanning centre.

Then you log in to your account and all your receipts are there – VAT calculated, dated, and categorised. You can generate reports by supplier, category, account paid from, or even by employee (Receipt Bank only). You can even export those reports to compatible accounting packages.

Once you use the service you’ll never go back to manually entering receipts into an expense report again.

How to invoice faster and accept online payments from customers

There used to be only two options for invoicing – generate an invoice from a complicated accounting system (incurring fees from your accountants or simply annoying them with your questions) or create your own via a Word document or Excel sheet, which made it look like you were running a business from your kitchen table.

Invoicing systems like FreshBooks and QuickBooks Simple Start have stepped in to make it simple to create quotes, estimates, and issue invoices.

They also come with the added benefit of giving you a way to accept online payments for invoices, generate basic reports like a P&L, and automate the sending of reminder letters to chase late payments.

Why use a dedicated invoicing system? It’s ideal for sole-traders or those businesses just getting started who want some basic sales and record keeping rather than a complete accounting package.

And remember the time tracker tools mentioned earlier? Some of them work seamlessly with invoicing systems to create invoices per client, based on how much time was spent working on individual projects. Genius!

How to pick the Small Business Accounting Software for you

There’s a lot of crossover amongst the tools we’ve mentioned. For example Harvest can track time and manage small business accounting, and QuickBooks is better known for their complete accounting packages rather than their invoicing tool.

Traditionally an investment in accounting software was so expensive many businesses paid for whatever their bookkeeper or accountant had already licensed to use. But today, the cost has come way down, and many growing businesses know it makes sense to keep an eye on all their business financials themselves.

Sage used to be the bog standard option (which came with a hefty price tag and required a good level of accounting knowledge to navigate it). While your accountant might still use Sage, small businesses now have the option to use other systems which are user-friendly for the accounting novice and will integrate seamlessly with Sage software too.

In the UK there are a good range of options with XeroKashflow, and QuickBooks all receiving the most press and a lot of positive reviews online. Newcomer LessAccounting has also entered the market as the “anti-Quickbooks” option focussing exclusively on business with less than 20 employees.

Check them out to find the features relevant to you and a pricing package to suit your budget. Packages are monthly subscription based where you can expect to pay around £20 per month (less than you’d pay a bookkeeper).

Alternatively if you’re just getting started you might like to check out Crunch. These guys combine the type of online apps and tools we’ve discussed in this article with a ‘virtual team’ of accredited accountants for only £59.50 a month. We love that they’ll even contact the taxman on your behalf. No more time spent on hold to HMRC? Yes please.

What are your favourite small business accounting tools and apps?

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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:

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.

How do Funding Circle loan parts work?

How do Funding Circle loan parts work?


When you lend money to a business on Funding Circle, you hold what is called a loan part, which as the name suggests, is your part of the overall loan. Loan parts can also be sold at any time, which creates one of the greatest benefits of lending through Funding Circle: you’re not tied to a loan for the entire loan term. In other words, even though a business repays their loan over a period of up to 5 years, you can sell your repaying loan parts before then to other investors.

Why do people buy loan parts?

  1. It’s a quick and easy way to grow your portfolio and diversify your lending. You can buy loan parts of all repaying loans (over 1800 different business loans) that have originated on Funding Circle. This means you are spreading your risk over a number of businesses and not relying on new loans to come to the marketplace.
  2. You may find loan parts available to buy with higher interest rates than the current market average. You can view the current average rates on our statistics page.
  3. Once you buy a loan part you start accruing interest immediately which has its advantages over bidding on a new loan, as any funds that have been bid and not lent do not earn interest.

Why do people sell loan parts?

  1. Selling loan parts provides a way of withdrawing your funds from Funding Circle, ensuring liquidity.
  2. To make a profit. When you sell a loan part you can add a premium: a one off additional cost to the buyer of the loan part.
  3. To lend to a different business. Perhaps a business in your area is looking for a loan or you find a loan in an industry you’d like to support. Alternatively, if interest rates on new loans are higher than the rates of the loan parts you hold, you may wish to sell these lower yielding loan parts and bid your funds on a new business loan.

How do I sell loan parts?

You can sell loan parts in all repaying loans that have a risk band. You can either sell loan parts by choosing them individually, or, you can select an amount of capital you wish to free up and use the Autosale tool.

1. Autosale

Click on Sell>Autosale. You decide how much of your funds you would like to have access to, in multiples of £100. The Autosale tool will then choose loan parts that fit this criteria, and it will sell them at par value, or in other words, with no premium or discount.

2. Choose individual loan parts to sell and add a premium or discount

Click on Sell>Sell Individually. A list of all available loan parts will appear, and you can select specific loan parts here. You can also choose to add a premium or discount to the value of the loan part using this method, of up to 3% of the loan part value.

How long does it take for a loan part to sell?

This will depend on a number of factors, but on average 50% of loan parts that are listed for sale at par value will be sold within 30 minutes. If you apply a premium or discount to the value of the loan part, it may take a bit longer for you to sell it. Loan parts will be listed for sale for a maximum of 2 weeks, and if they haven’t sold by then you will have to re-list them.

Are there any costs involved?

There is a one off selling fee of 0.25%, based on the principal amount outstanding of the loan part. This is only charged when you have sold the loan part.

Are there any restrictions on selling loan parts?

You can only sell loan parts that have a status of ‘live;’ or in other words repaying. This means that when a monthly repayment is due, you’ll need to wait until the status of the loan changes from ‘processing’ back to ‘live.’ If an event has occurred on a loan we remove the risk band as a precautionary measure. Currently loan parts with no risk band are unsellable.

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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

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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.





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Government to start lending through Funding Circle

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


In December, the Government announced that it was their intention to lend £20 million to British small businesses through Funding Circle, as part of the Government’s Business Finance Partnership scheme (BFP).

Today, we’re pleased to confirm that the process with the Department for Business Innovation and Skills (BIS) has been completed, contracts have been signed and from Monday 25th March, the Government will start lending.

Before this begins, however, we wanted to update you all on how this will work and why we believe Government involvement will increase awareness of Funding Circle in the business community and consequently provide more lending opportunities for 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 nearly £90million to more than 1,700 businesses. In the last 30 days, investors have lent £10m 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 lending work?

From Monday, the Government will start lending to all businesses which meet their criteria (more details on this are available in our FAQs). They will fund each loan at a set amount which will be fixed at any point of time.

This will start at 20% of the total loan amount, as shown in the picture below, and will decrease over time as the £20 million runs down and the value of loans being accepted through Funding Circle increases.

The remaining 80% of a loan will be funded in the normal way and your lending experience will stay the same. Once a loan closes, the Government will fund the 20% at the average interest rate of all successful bids on that specific loan.

The Government will only take part in new loan requests and will not purchase any loan parts from existing investors.

Will this affect opportunities to lend?

Since the Government first announced plans to lend through Funding Circle we have seen an upsurge in interest from businesses. Many businesses have told us that this is directly as a result of the Government news.

Interest from businesses has particularly picked up over the last two months. As result, in the last 30 days there have been more opportunities to lend than ever before with £10m being lent to more than 170 different companies. The Government’s involvement will also allow us to list larger loans on to the marketplace and as such we have increased the upper loan limit to £1 million.

There is approximately £7 billion of lending to businesses every month in the UK, so the opportunities remain significant. We will be working hard over the coming months and focusing our efforts on attracting more businesses to join Funding Circle.


We hope that you feel this move is an exciting and positive step for Funding Circle, and will help produce more opportunities to lend. We are absolutely committed to ensuring everyone continues to enjoy lending through Funding Circle.

If you would like to find out more information, you can read our FAQs, or head over to the forum to join the discussion with us and other members.

The Funding Circle team

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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: Picture credit: Johnji

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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

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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 through our marketplace. Limited companies, limited liability partnerships (LLPs) and non-limited companies that have at least 2 years of filed or formally prepared accounts can apply. In addition, we’ll typically need to see a minimum annual turnover of £100,000 in your latest accounts.

What do we look for when we make our decisions?

You’ll need to submit an online application which can take as little 20-30 minutes to complete. We will also require you to email or upload your most recent filed or formally prepared accounts and up to date management accounts (no more than 3 months old). 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 £5,000 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, and may include a personal guarantee, a security over a specific asset, or security over all of the assets in the business.

  • Loans from £5,000 – £100,000 are generally unsecured in their nature, but a personal guarantee will be required from director(s) in almost all circumstances. Typically, no business security is required. 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 £100,000 – £1,000,000 are generally secured:
  1. All asset security is where we take a charge over all assets in the business (sometimes as a second charge).

  2. Specific asset security is where we take a charge over specific assets in the business using a chattels mortgage.

  3. Property security is where we can take a charge over specific properties as a mortgage (usually a second charge).

  • Large asset purchase is generally from £30,000 – £1,000,000. This is where we hold the title of the asset that is purchased or refinanced as security and we use a hire-purchase agreement.

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 is a peer-to-peer lending marketplace and most loans are auctions. It’s likely that several hundred different people and organisations (investors) will bid on your loan request and they will be offering as little as £20 to fund your loan. Investors will have access to key financials for the business, the credit score and details of why you need the loan. This is taken directly from your application so it’s best to answer this section in as much detail as possible, so that investors can decide if they wish to lend to the business. They can also ask you questions about your application, and we recommend answering these as quickly and in as much detail as you can!

What’s the interest rate?

If your loan application is successful, the business will be given a risk band according to our in-house risk models. This will be one of five: A+, A, B, C and C-. A+ is considered lowest risk. The final interest rate you will pay back on your loan will depend on many factors, but the risk band is probably the most influential. The rate is calculated as the weighted average of all of the bids from investors at the time the auction closes, and this can range between 6-15%. You can accept the loan and start the acceptance process as soon as the loan is fully funded, but it may be worth allowing the auction to finish as the average interest rate may fall. This is because investors are unable to withdraw or cancel a bid and so the funds have been committed at that point. Only the lowest interest rates are accepted into the loan, and this process is entirely automated. You’ll probably see the highest rates knocked off as investors undercut one another and compete to become part of the loan.

What fees do we charge?

The fee will depend on the term of the loan:

  • 6 or 12 months: 2%

  • 2 or 3 years: 3%

  • 4 or 5 years: 4%

  • Large Asset purchase: 5%. This is always set at 5%, irrespective of loan term.

The fees are paid upon acceptance of the loan only and you will receive the loan amount net of our fee. E.g. If you are successful in applying for £100,000 over 3 years, you will receive £97,000. If you are not happy with the rate at the end of the auction then 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 usually 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. The first repayment is due one calendar month after the auction closes so it’s really important to get your documents in to us as early as possible as we are unable to be flexible with this! Unlike banks and other lenders, there are no early redemption fees so you can settle your loan early. 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. It’s exactly the same process as before, but you’ll need to use a different email address when you sign up again. 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.

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 0207 401 9111 and press option 2 for the business team.


Case Study: Kennedy’s Restaurant

The team behind Kennedy’s Restaurant were looking to open up a new branch in Whitecross street in London. After their bank wouldn’t entertain the idea of financing a fish and chips shop, even an upmarket one, they came to Funding Circle to get the £100k small business loan they needed to transform a rather rundown shop into the upmarket experience they like to associate with the Kennedy’s brand. The new restaurant now employs 15 staff members and we have it on good authority that lunchtimes are manically busy, particularly on a Friday when people queue out the door to get their hand on a quality Kennedy’s fish and chips dish or a freshly baked pie.
The owners are keen to grow even further and are considering a variety of models to expand on their success, making Kennedy’s another example of a great British business growing in tough times and doing its bit to employ people and get the economy moving.
If you are interested in a business loan from Funding Circle, you can find out more on the Funding Circle website

Our CEO looks at the year ahead for Funding Circle

In 2012, Funding Circle and peer-to-peer lending transitioned from a fledgling industry into a real alternative for small businesses looking for investment and investors wanting a better return on their money. I believe 2013 will be the year that peer-to-peer lending becomes mainstream.

2012 was a great year for both our investors and small business borrowers on Funding Circle alike. Over £70million has now been lent by individuals in the UK directly to businesses, providing a viable alternative to bank finance for the first time.

With the reduction of auction times, small businesses can now get access to finance in less than a week versus sometimes months at the banks. And for investors, our secondary loan parts market saw a peak of £2.5 million worth of trades in a month, allowing people to sell their loans in an average of just 20 minutes. All of this means that investors get better returns and access to their money, businesses get efficient access to the funds they need to grow and the economy is able to expand. It is a win, win, win.

The announcement that the Government will for the first time lend public funds directly to businesses through the internet, and that the FSA will regulate peer-to-peer lending, represented a seminal moment for our industry. In 2013 we will continue to campaign hard for tax relief on loans to businesses – either through an extension of EIS or allowing business loans to be included in ISAs.

In 2013 we expect over £100million to be lent through the marketplace which would represent more than the previous two and a half years’ lending combined. We expect significantly more loans to be taken out to purchase assets following tax relief changes. Soon, it may not be uncommon to drive past cranes, coaches or tractors that you will have helped finance.

We also expect larger companies to start borrowing directly from people and their own customers through peer-to-peer platforms. You might not see John Lewis or Sainsbury’s borrowing just yet – but we would certainly hope a household name will emerge on your lending screens this year.

On the investors’ side, we understand you increasingly want to access Funding Circle in different ways, particularly through tablets and mobiles. We’re working on apps and a mobile-friendly website that we hope will significantly enhance your experience of lending through Funding Circle. You can also expect the look, feel and functionality of the site to change radically this year – from the secondary loan parts market, to summary pages and throughout the bidding process.

Even though we have experienced rapid growth since we launched, the opportunity for further growth remains massive. On the 19th December we hit a record of £8 million lent in a 30 day period. But over £7.6 billion is lent to small businesses every month by banks and other finance companies in the UK. That equates to just 0.1% market share. In addition, a recent survey by the Federation of Small Businesses found that less than 1% of businesses had even heard of peer-to-peer lending, let alone got around to considering it. As we all work hard to raise awareness of Funding Circle we expect more and more of this huge market to slip out of the control of banks, and an increasing number of British businesses to embrace peer-to-peer lending.

This can only be good for all of us. Small businesses are the lifeblood of the UK economy, making up 50% of GDP and 60% of the private sector workforce. So, not only are people earning a great return, but together we’re helping businesses to grow and to create jobs.

Thank you for your continued support. I hope that you will find your Funding Circle experience in 2013 a rewarding one, and that we can meet and exceed your expectations.

Samir Desai, CEO Funding Circle

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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

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