Introducing a third ISA: What does it mean for Funding Circle investors?

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

Last week, during the Summer Budget 2015, the Chancellor confirmed a third ISA, the ‘Innovative Finance ISA’, which will allow lending through marketplaces such as Funding Circle to be held within an ISA from 6th April 2016. This is fantastic news for investors who will soon be able to lend up to £15,000 per year tax free.

Funding Circle co-founder James Meekings said the “inclusion of peer-to-peer lending within ISAs is a pivotal moment for our industry.”

The change follows HMRC’s consultation earlier this year, and is another sign that lending through marketplaces is becoming a mainstream way for individuals to earn attractive returns on their money. We calculate that if just 3% of ISA money is channelled through Funding Circle, it would create £1.5 billion of new lending to small businesses annually, creating 75,000 new jobs.* This ISA will sit alongside the traditional cash ISA and stocks & shares ISA as a third option.

What does this mean for investors?

This third ISA will give investors more flexibility and allow for a higher level of diversification, as you will be able to choose how best to allocate your £15,000 ISA limit across the three types of ISA.

It will also mean that Funding Circle can become an ISA manager. With Funding Circle as an ISA manager, you will be able to own all of your investments yourself, rather than investing through a third party ISA manager. This will give you greater control over your investment and keep you closer to the small businesses you lend to, as well as allowing you to avoid paying additional fees to an intermediary.

When and how do I start using my ISA allowance?

Further information about how the ‘Innovative Finance ISA’ will work in practice will be published later this year, including whether investors will be able to transfer existing investments into the new ISA. We will keep you up to date with any developments on the blog, however our recommendations to the Treasury on how the ISA should work can be found in our Lending ISA blog post.

Will you be taking advantage of the new ISA from April next year? Let us know your thoughts below.

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

A fantastic benefit from our partner, Virgin Trains | Weekly Lending Review

Week 28: 6 – 10 July 2015

Earlier this year we announced our partnership with Virgin Trains, and brought members of the Funding Circle community 20% off train travel on the Virgin Trains West Coast Mainline. We’re pleased to announce the offer has been extended until 29th December 2015. You can read more about the announcement, and how to book on the blog.

New loans available to you

There are currently 75 loan requests on the marketplace which are all available for you to lend to.

The total value of new loans listed on the Funding Circle marketplace was £11,599,200, averaging at £59,002 per loan. The largest loan value was £500,000 and the smallest loan value was £5,000.

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 of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans, value of loans and amount lent are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 6-July represents the week of 6th – 10th July 2015.

Weekly average gross yield (2 weeks rolling)

WLR 28 - yield

Number of listed loans per week

WLR 28 - listed

Listed loan value per week

WLR 28 - loan value

Total amount lent

WLR 28 - amount lent

Loan parts available to buy from other investors

WLR 28 - loan parts 2

News you should know

Lend to more businesses in these 3 easy steps.

Following the introduction of the E band, you may wish to update your autobid settings by following the 3 easy steps below. You can read more about our new risk band on the blog.

(1) Log back into your account and navigate to Autobid.

(2) If your Autobid is on:

Take a note of your current settings
Click ‘Turn Autobid Off’
Use the ‘Advanced Settings’ to include the E risk band
Click ‘Turn Autobid On’

(3) If your Autobid is off:

Use the ‘Advanced Settings’ to include the E risk band
Click ‘Turn Autobid On’

Providing more information around defaulted loans

If you have any defaulted loans you may have noticed we apply a RAG (Red, Amber, Green) rating system, also known as a traffic light system, in the loan comments on your dashboard. This is to help you assess the quality of your defaulted loans, and your expected return over a certain period of time.

Loan defaulted last week

E-cigarette supplier. Loan 11038. Risk band B

This Cardiff business has been running since 2011, and is entering insolvent liquidation. All affected investors have been notified.

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

Enjoy lending, The Funding Circle Team

 

Funding Circle & Sage announce partnership to support more small businesses

We’re delighted to announce our new partnership with Sage, one of the world’s leading providers of software solutions for small businesses.

Sage provide a range of invaluable business tools including software for accounts, payroll, HR and payments, and has in excess of 6 million customers worldwide.

The tie-up involves Sage referring their small business customers to Funding Circle in cases where their customers are in need of business finance.

We believe that signposting alternative finance providers from such a trusted brand will help to raise the profile of the options now available to business owners, and bring more lending opportunities to the 40,000 Funding Circle investor community.

This partnership follows our agreement with Santander last year, who are also referring their business customers to Funding Circle where we are better placed to help.

Are you helping transform a former school into family homes?

Last month we met Jonathan Jay, director of Birchmead Homes Limited, at the former Abbey School in Gloucestershire. A former retail banker, Jonathan turned his hand to property development 15 years ago and is currently part-way through converting 19 homes in the idyllic market town of Tewkesbury.

Birchmead Homes Property Development

The local community has welcomed the project as the building, which overlooks the magnificent Tewkesbury Abbey, had become an eyesore. The project has even been featured in the local press, for example the Gloucestershire Echo.

Jonathan has borrowed more than  £2 million from 21,000 Funding Circle investors since July 2014 to develop the school building, and already has 70 potential buyers.

In this short video you’ll meet Jonathan, and have an understanding of how your lending is helping to build homes across the UK.

Property development loans were available between April 2014 and April 2017. If you work in the property industry and are looking for finance, we may still be able to help you with an unsecured loan up to £350,000 with a personal guarantee, or a secured loan up to £1 million.

Get an instant quote online or speak to our dedicated team today on 0800 048 8747.

Why you can’t ignore the rise of mobile friendly websites

You’ve probably seen headlines with statistics about the growing proportion of our lives now dedicated to technology, or you’ve noticed the average person on the street glued to their mobile phone. Whether you surf the web while you walk, talk or eat, it’s safe to say that mobile phones, and the way we interact with the internet, is now integrated into our daily lives.

UK adults now spend an average of 2 hours, 26 minutes a day on mobile devices according to research from eMarketer, up almost fivefold since 2011. They also forecast that the average time spent searching online using a mobile phone will surpass time spent at a desktop or laptop later this year.

What does ‘mobile optimised’ really mean?

A website that is optimised for mobile is designed specifically to be read and navigated on a mobile phone (rather than a shrunken version of a website designed for desktop). For example, a mobile friendly site will have easy to use ‘finger friendly’ buttons. If you aren’t sure where to start, Google has an easy to follow guide to help make your website look great on mobile.

What does this mean for small businesses?

Consumers are searching for businesses while on the go and want to find shops, restaurants and bars near to where they happen to be. This provides a great opportunity for small businesses as they can now pinpoint customers in their local area.

mobile friendly business“People searching in their local area are more likely convert

Curious to understand the search activity of potential business customers Google undertook an independent study. It concluded that people searching in their local area are more likely to be ready to act and so convert better than non-local searchers.

In February this year Google also announced a new algorithm for browsing on a mobile device. This update, which came into effect on 21 April, means people searching on mobile will only see the most popular and mobile friendly websites. For example, Funding Circle borrower Cable & Cotton’s mobile friendly website ranks highly if you search ‘fairy lights’ in Brighton.

On the flip side, businesses who have not yet optimised their website for mobile might have seen a decrease in traffic since April as their website’s Google ranking may have dropped. Most importantly, the change will make it harder for potential customers to find you.

Is your website mobile friendly?

Making sure you have a mobile friendly website is a great opportunity to put your business ahead of the competition. You can check if your website is classed as mobile friendly by entering a web address into the Google mobile-friendly analyzer.

There are also handy online tools to help you start thinking about your Google shopfront, including My Business Be found, customize your website software and guidelines for representing your business on Google.

It’s never too late to change!

The good news is that when you switch to a mobile-friendly website Google will pick it up immediately, so you should start seeing the difference straight away.

What would you like to find out in our next Google post? Please add your suggestion to the comments section below.

Want to find out more about how using Google can help your business?

You’re helping even more small businesses | Weekly Lending Review

Week 27: 29 June – 3 July 2015

It was an exciting week at Funding Circle as we introduced a sixth risk band, to help even more small businesses access finance, whilst offering you more lending opportunities on the marketplace. More than £10 million made its way to businesses across the UK in just one week alone, thanks to your lending.

New loans available to you

There are currently 75 loan requests on the marketplace which are all available for you to lend to.

As part of lending to businesses, some may be unable to fully repay their loans, which is why diversification is so important. We’ve created a short video which runs through the basics of diversification and how you can diversify at Funding Circle.

The total value of new loans listed on the Funding Circle marketplace was £8,709,500, averaging at £66,484 per loan. The largest loan value was £588,000 and the smallest loan value was £5,000.

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 of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans, value of loans and amount lent are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 29-June represents the week of 29th June – 3rd July 2015.

Weekly average gross yield (2 weeks rolling)

Yield 2 27

Number of listed loans per week

Loans listed 27

Listed loan value per week

Loan value 27

Total amount lent

Amount lent 27

Loan parts available to buy from other investors

Loan parts 27

News you should know

Following the introduction of the E band, C- has been renamed to D

C- has been renamed to D to make our risk grading easier to understand. The new risk band structure is: A+, A, B, C, D, E,  where A+ is lowest risk.

Providing more information around defaulted loans

If you have any defaulted loans you may have noticed we apply a RAG (Red, Amber, Green) rating system, also known as a traffic light system, in the loan comments on your dashboard. This is to help you assess the quality of your defaulted loans, and your expected return over a certain period of time.

Loans defaulted last week

Industrial fastening stockist. Loan 3824. Risk band A

This Cambridgeshire business was incorporated in 2001 and is entering insolvent liquidation.

Building design. Loan 1839. Risk band B

This London business has been running since 1997 and has entered administration.

Vehicle recovery and repairs. Loan 3564. Risk band D

This Durham business was established in 2012 and has ceased trading.

Sports optics supplier. Loan 3788. Risk band D

This Surrey business was incorporated in 2010 and has ceased trading.

Agricultural contractor. Loan 6127. Risk band D

This County Fermanagh business has been running since 2014 and is 3 months in arrears.

Tarpaulin manufacturer. Loan 5387. Risk band A

This Suffolk business was incorporated in 2007 and has entered insolvent liquidation.

Digital agency. Loan 1372. Risk band C

This London business was established in 1996 and is 3 months in arrears.

All affected investors have been notified.

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

Enjoy lending, The Funding Circle Team

 

Virgin Trains extends their travel discount for the Funding Circle community

Earlier this year we announced our exciting partnership with Virgin Trains as part of our ongoing commitment to helping small businesses stay ahead.

The partnership brought all Funding Circle customers, including investors and borrowers, 20% off train travel on the Virgin Trains West Coast Mainline.

virgin trains

We’re pleased to tell you all that Virgin Trains have extended the offer period until the end of the year, so you can book advance train tickets with a 20% discount until 29th December 2015.

Offer details: 20% off!

All Funding Circle customers can access a 20% discount on travel anywhere on the Virgin Trains West Coast Mainline until 29th December 2015. To book your advance tickets:

1. Go to http://www.virgintrains.co.uk/funding-circle/

2. Enter ‘Funding Circle’ as the company name

3. The password is ‘FCinvestor’ if you lend to businesses through Funding Circle, or ‘FCborrower’ if you are a small business customer

4. Terms & conditions apply

Tickets can be booked from 3 July – 29 December 2015, for travel between 4 July and 30 December 2015, whether it be for work or leisure.

For more information, please visit our partner page.

The Funding Circle team

Business lending through marketplaces surges. June’s industry news

Newspapers - Copy

P2P business lending to eclipse consumer sector

Last month, business lending through marketplaces overtook lending to consumers in the UK for the first time. Marketplace lending to consumers began in 2005, whilst business lending began in 2010. However, the small business lending market is worth approximately £7 billion per month, and the options available to small businesses has historically been narrower than for consumers, so it was only a matter of time before business marketplace lending overtook consumer.

The lenders of the revolution look familiar

Big news in June as Goldman Sachs announced their intention to launch a marketplace lending platform at some point in the future. They plan to offer loans to both consumers and small businesses. A sign that the industry is maturing as larger institutions become more involved, particularly those who are historically used to dealing only with other institutions rather than consumers. In this Financial Times article, Morgan Stanley estimates that marketplace lending could become a $290 billion market within the next five years.

2015 Digital Masters Awards

The Digital Masters Awards recognise Europe’s top leadership talent across the digital space. Our very own UK COO, Pam Burton, won the ‘Google Award for Women in Digital’. Pam has helped make Funding Circle one of the fastest-growing technology companies in Europe and the marketplace is currently the 5th largest net lender to small businesses in the UK.

Peer-to-peer lending must mature to thrive

Back in May, Metro Bank and Zopa announced a new partnership where Metro Bank will lend to British people alongside existing investors through the Zopa platform. This type of relationship aids further expansion of marketplace lending and is a great example of how technology companies can work alongside traditional banks in the best interests of customers.

From couriers to car clubs: How the power of sharing could help you save money, cut costs and share the love

In this final piece, Laura Shannon describes the rise of ‘people power’; the rapidly expanding personal marketplace where people deal directly with other people to invest, save or anything from house sharing to car rentals. The sector is expected to be worth £230 billion a year within a decade. Within this falls marketplace lending, and the attractive rates you can earn if you diversify your individual investments across hundreds of loans. To learn more about what diversification could mean to you, check out our blog. And remember, when you lend, your capital is always at risk.

3 top business tips from Jason, director of Spartan Motor Factors

In June we caught up with Jason Farrugia, director of Spartan Motor Factors, who shared his top tips for running a small business.

Investor monthly banner - spartan 3

Spartan Motor Factors are the fastest growing vehicle parts supplier in South Wales, with branches in Newport, Cardiff and Bridgend. They stock a wide range of batteries, clutches, springs, braking and services parts, lighting and much more.

Established in 2012, Spartan Motor Factors has impressively been voted CAT Awards Small Factor of the Year for the past three consecutive years. The directors feel it’s essential that all customers are provided with truthful and accurate information regarding the price, availability and delivery time for vehicle parts, and they take great pride in having advisors with over ten years experience in the industry.

Back in May 2014, Spartan Motor Factors borrowed £75,000 from 1,251 investors to open a new branch. In this short video you’ll meet Jason and find out why he believes constantly analysing your stock profile is so important.

These are his top tips:

  • Know your stock and customer needs
  • Keep on top of cashflow
  • Build great relationships with your suppliers

If, like Jason, you’re looking for business loan, You can check your eligibility online in just 30 seconds.

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

We’ve helped more than 8,000 businesses in the UK and US access finance for a range of finance needs.

Furnishing the set of Downton Abbey, thanks to over 2,000 people | Weekly Lending Review

Week 26: 22 – 26 June 2015

The Stripes Company, based in Chester, supplied delightful deckchairs and sun shelters for the set of Downton Abbey! A striped fabric specialist, they have borrowed over £175,000 across 3 Funding Circle loans since 2011 to help with cashflow. Founder Maria discusses her experience of Funding Circle on the blog.

New loans available to you

There are currently 47 loan requests on the marketplace which are all available for you to lend to.

As part of lending to businesses, some may be unable to fully repay their loans, which is why diversification is so important. We’ve created a short video which runs through the basics of diversification and how you can diversify at Funding Circle.

The total value of new loans listed on the Funding Circle marketplace was £11,375,820, averaging at £64,811 per loan. The largest loan value was £430,000 and the smallest loan value was £7,500.

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 of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans, value of loans and amount lent are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 22-June represents the week of 22nd – 26th June 2015.

Weekly average gross yield (2 weeks rolling)

WLR 26 Yield

Number of listed loans per week

WLR loans listed

Listed loan value per week

WLR 26 Loan value

Total amount lent

WLR 26 Amount lent

Loan parts available to buy from other investors

WLR 26 Loan parts

News you should know

We’re introducing a new risk band and renaming C-

We’re excited to announce that we’re introducing a sixth risk band, E, to help more small businesses access finance, whilst offering investors more borrowers to lend to. These loans will be listed on the marketplace over the coming weeks.

Within the next few weeks, C- will also be renamed to D to make our risk grading easier to understand. The new risk band structure will be: A+, A, B, C, D, E,  where A+ is lowest risk. Please note all loans parts you hold which are C- will be renamed to D shortly.

More information about the new risk band and renaming risk band C- to D can be found on our blog or if you have any questions about this update please contact us.

Providing more information around defaulted loans

If you have any defaulted loans you may have noticed we apply a RAG (Red, Amber, Green) rating system, also known as a traffic light system, in the loan comments on your dashboard. This is to help you assess the quality of your defaulted loans, and your expected return over a certain period of time.

Loans defaulted last week

Retail outlet. Loan 8629. Risk band B

This Glasgow business was established in 2008 and is entering liquidation.

Building contractor. Loan 3322. Risk band C

This Merseyside business was incorporated in 2007 and has entered insolvent liquidation.

Heating control specialists. Loan 3156. Risk band A

This Hertfordshire business has been running since 2004 and has entered insolvent liquidation.

Dairy cow herd. Loan 7966. Risk band A+

This Staffordshire business was established in 2014, and the borrower has become unresponsive.

Car accessory specialist. Loan 9129. Risk band C

This West Midlands business was incorporated in 2011 and has ceased trading.

Legal service. Loan 6344. Risk band B

This Bedfordshire business has been running since 2014 and the owner is proposing an individual voluntary arrangement.

All affected investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans. Read how our collections and recoveries process works on our blog.
Enjoy lending, The Funding Circle Team

The new 10 minute application process at Funding Circle

We have launched a new 10 minute application process for introducers. This will allow you to submit loan applications twice as quickly as the previous application. In three easy steps, and on any device, you can prequalify your client for a loan. And in just 30 seconds, you will receive an indicative quote which you can discuss with your client.

Information required

As part of the new process, we only need to see total new debt over £25,000 and management accounts if filed accounts are older than 16 months.

To assess your client’s application we will need the following, which you can either upload after submitting the application when you are logged in, or email directly to the credit assessment team:

  • Latest full filed accounts
  • Last 3+ months of bank statements
  • If filed accounts are more than 16 months old we need a full year P&L and balance
  • sheet (management accounts, spreadsheets, accounting software reports are
  • acceptable)
  • Statement of personal assets and liabilities – if loan amount is £150,000 or larger

For more information about how to apply for a loan on behalf of your client, take a look at our new guide for introducers – available to download in your summary page. Log in now.

Flexi-fee option

Following feedback that you would like the option to decrease or increase the fee you charge clients based on the time you spend with them, you can also now change the total fee you charge your client. Please speak to your Business Development Manager to find out more about this flexi-fee option.

Next day payments

We have introduced next day payments, so you and your client will receive the loan and commission the day after completion.

New risk band

Finally, we’re excited to announce that we will soon be launching a sixth risk band, to help more of your clients access finance. These loans will be listed on the marketplace over the coming weeks. Here’s what you need to know:

  • the new risk band is called E
  • the minimum bid rate for E loans is 18.2% and the maximum is 20% (gross interest rates)
  • businesses that are rated as an E may generally show lower profit after tax than businesses in other risk bands, but they will not have poor payment performance. We may be able to reconsider clients as long as they were not declined for policy reasons, such as director credit history or trading history
  • C- is being renamed to D to make our risk grading easier to understand
  • this does not mean they have been reassessed and have higher expected bad debt rates, we’re just changing the name

We hope this has been a useful update on improvements to the Funding Circle application process. If you have any questions or feedback, please get in touch with your Business Development Manager or get in touch by emailing introducer@fundingcircle.com

The Funding Circle team

Picture story: Did you help furnish the set of Downton Abbey?

Maria Hopwood set up her online fabric business The Stripes Company in 2007, after spotting the striped fabric business opportunity while on holiday. “After years of French-influenced neutral designs, Britain was just ready for the bright stripes,” she said.

Fast forward to 2015 and the striped fabric movement has become so popular that last year, The Stripes Company supplied delightful deckchairs and sun shelters to the set of Downton Abbey. Fans of the show might remember the scene in the series 4 finale when Molesley takes a quick break!

Like the cast of Downton Abbey, Maria has set her sights on America and recently expanded her ecommerce site across the pond. To help continue IT development to service UK and overseas expansion, The Stripes Company has borrowed more than £175,000 across 3 Funding Circle loans since January 2011.

In April we met Maria to find out how the loan has helped her business. In this picture story below, Maria discusses her experience of Funding Circle:

Stripes 1 - Downton Abbey Set

Stripes 2 - Deckchair canvas

Stripes 3 - antique shop

Stripes 4 - striped fabric

Stripes 5 - Shakespeare's Globe

Stripes 6 - The White Company

Stripes 7 - cashflow

Stripes 8 - identify

Stripes 9 - investors

Stripes 10 - trading

 

Do you need a business loan?

We’ve helped more than 8.000 businesses in the UK and US access finance for a range of finance needs. You can check your eligibility online in just 30 seconds.

We’re introducing a new risk band and renaming C- to D | Weekly Lending Review

Week 25: 15 – 19 June 2015

We’re excited to announce that we are  introducing a sixth risk band, E, to help more small businesses access finance, whilst offering UK investors more borrowers to lend to. These loans will be listed on the marketplace over the coming weeks.

Within the next few weeks, C- will be renamed to D to make our risk grading easier to understand. The new risk band structure will be: A+, A, B, C, D, E,  where A+ is lowest risk. Please note all loans parts you hold which are C- will be renamed to D shortly.

More information about the new risk band and renaming risk band C- to D can be found on our blog or if you have any questions please contact us.

Record value of new lending opportunities

There are currently 70 loan requests on the marketplace which are all available for you to lend to.

The total value of new loans listed on the Funding Circle marketplace was £13,689,600, averaging at £67,159 per loan. The largest loan value was £500,000 and the smallest loan value was £5,000.

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 of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans, value of loans and amount lent are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 15-June represents the week of 15th – 19th June 2015.

Weekly average gross yield (2 weeks rolling)

Yield

Number of listed loans per week

Loans listed

Listed loan value per week

Loan value

Total amount lent

Amount lent

Loan parts available to buy from other investors

loan parts

Are you diversified?

We’ve created a short video about diversification, which simply means lending small amounts of money to lots of different businesses, to help you earn an attractive return in a sustainable way. Remember, by lending to businesses your capital is at risk.

Providing more information around defaulted loans

If you have any defaulted loans you will have noticed that we now apply a RAG (Red, Amber, Green) rating system, also known as a traffic light system, in the loan comments on your dashboard. The purpose of the new system is to help you assess the quality of your defaulted loans, and your expected return over a certain period of time.

Loans defaulted last week

Property management company. Loan 10116. Risk band C

This London business was established in 2010 and is entering a long-term payment plan.

Software products supplier. Loan 6194. Risk band B

This Essex business has been running since 2011 and has entered liquidation.

General engineering manufacturer. Loan 3790. Risk band B

This Stafford business was incorporated in 1970, and has entered liquidation.

Car suspension manufacturer. Loan 3258. Risk band C-

This Hampshire business was established in 2008 and is now two months in arrears.

All affected investors have been notified.

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

Enjoy lending, The Funding Circle Team

 

We’re introducing a new risk band and renaming C-

We’re excited to announce that we’re introducing a sixth risk band, to help more small businesses access finance, whilst offering investors more borrowers to lend to. These loans will be listed on the marketplace over the coming weeks. Here’s what you need to know:

1. Introducing E

The new risk band will be called E and will offer an attractive risk-return profile for investors. The gross interest rates you can bid at for loans in the E risk band will be between 18.2% and 20%, to reflect a higher expected annualised bad debt rate of 8%.

If you’re using Autobid you will need to update your settings to include E, as Autobid will not lend to E loans automatically. We’ll notify you by email when the new risk band has launched so you can do this.

risk band

2. Renaming C- to D in the coming weeks

To make our risk grading simpler, we are going to rename C- to D. Over the next few weeks, all loan parts you hold which were C-, will be renamed to D. This will be reflected in your summary page, and we’ll confirm once the change has been made.

Our risk bands will be:

A+, A, B, C, D, E  where A+ is lowest risk.

This does not mean that C- loans have been re-assessed or have higher expected bad debt rates than they did before. We’re simply changing the name to make the risk grading easier to understand.

3.  The evolution of risk bands at Funding Circle

In 2010 we started with 3 risk bands: A+, A and B. We launched C in September 2011, and D (formerly C-) came in July 2013.

Adding our sixth risk band, E, is a natural step. We have been tracking the performance of all businesses who have come to Funding Circle, including those whose applications were declined, for more than 2 years so we can estimate the risk of these businesses.

4. Estimated returns for all risk bands

For each risk band, the table below shows:

  • the minimum bid rates for each risk band;
  • the estimated annual bad debt rates;
  • the estimated returns (based on minimum rates) after fees and bad debt, but before tax.

Actual returns may be higher or lower and your capital is at risk.

Risk table

5. Higher interest rates to reflect greater level of risk

The minimum bid rate of 18.2% for E loans has been set based on a range of factors including the risk and volatility associated with lending to these borrowers, macroeconomic factors and competition in the market. Estimated returns are therefore higher on E loans, and this is to reflect higher estimated bad debt rates and greater volatility.

It’s worth remembering that estimated bad debt rates are no guarantee of the actual bad debt you will experience for each risk band, so we would recommend spreading your lending across lots of borrowers in different risk bands to reduce the impact of any single bad debt. You can read more about how to do this in our blog about diversification.

6. Helping small, creditworthy businesses

We will still only allow creditworthy businesses to borrow through the marketplace, and every loan application will be assessed by our experienced credit assessment team.

Businesses who have loans in the E band may generally have lower profit after tax than other risk bands – not because they have poor payment performance.

A Delphi score (from Experian, a third party bureau measure of business risk) is one of the many factors which are considered when we assess a loan application. We expect E band loans to have an average of 62/100, which is higher than the UK average of 45 for small businesses.

delphi score

How can you lend to these businesses?

You will see the first E loans listed on the marketplace over the next couple of weeks, and you can place your bids as you would normally. The highest gross interest rate you can bid at will be increased to 20%.

Do you use Autobid?

If you’re an Autobid user you will need to update your settings as your Autobid will not automatically include E loans. When E loans launch, turn your Autobid off, tick the box beside E to include these loans, and turn it on again. Remember by lending to businesses your capital is at risk.

Join us on the forum where we’re discussing this news. If you have any questions at all, please contact us and our team will be happy to help.

Enjoy lending,

The Funding Circle team

Meet Neil McDonagh, a Funding Circle introducer from HCF Commercial Finance

Neil McDonagh is a Director at HCF Commercial Finance, and was first introduced to Funding Circle through the NACFB in 2010.

Neil met the directors at Spartan Motor Factors, a vehicle parts supplier in South Wales, back in early 2014 and could see straight away that it was an established business that traded quickly. At the time, the business was looking for cashflow to secure a third unit in Bridgend, within a small window of opportunity. In this short video, Neil discusses why he felt Funding Circle was a particularly good fit for Spartan Motor Factors.

Spartan Motor Factors borrowed £75,000 through Funding Circle in May 2014. The loan has ensured positive cashflow allowing them to open a new branch and build a mezzanine floor in their Cardiff branch, doubling their stock.

Neil said “Funding Circle has evolved over the years and provides a very slick service. They’re very approachable if there are any questions you have about the process. They’re very helpful and it’s a very seamless end to end process.”

If you would like to have a chat with our dedicated business development team about how we might be able to help your clients, then please give us a call on 020 3667 2208 or email us.

Did you lend to this Surrey technology company? | Weekly Lending Review

Week 24: 8 – 12 June 2015

In October 2013, Pure Technology took out a business loan to help with cashflow which was funded by more than 1,200 people. Founder Danny Long discusses his experience of Funding Circle on the blog, and has a special message for those who lent to his business.

New loans available to you

There are currently 74 loan requests on the marketplace which are all available for you to lend to.

Lending small amounts of money to lots of different businesses can help you earn attractive returns in a sustainable way. We’ve created a short video which runs through the basics of diversification and how you can diversify at Funding Circle.

The total value of new loans listed on the Funding Circle marketplace was £11,604,520, averaging at £69,147 per loan. The largest loan value was £500,000 and the smallest loan value was £5,000.

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 of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans, value of loans and amount lent are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 8-June represents the week of 8th – 12th June 2015.

Weekly average gross yield (2 weeks rolling)

yield 2

Number of listed loans per week

loans listed

Listed loan value per week

loan value

Total amount lent

Amount lent

Loan parts available to buy from other investors
loans parts

Providing more information around defaulted loans

If you have any defaulted loans you will have noticed that we now apply a RAG (Red, Amber, Green) rating system, also known as a traffic light system, in the loan comments on your dashboard. The purpose of the new system is to help you assess the quality of your defaulted loans, and your expected return over a certain period of time.

Loans defaulted last week

Battery consultants. Loan 3512. Risk band A+

This Hampshire business was incorporated in 2005 and the loan is 4 months in arrears.

Call centre recruitment services. Loan 7263. Risk banc C-

This Cheshire business has been running since 2008 and the guarantor has become unresponsive.

Motor trader. Loan 5617. Risk band B

This London business was established in 2005 and has ceased trading.

Domiciliary care services. Loan 6552. Risk band A

This Milton Keynes business has been running since 2003 and is proposing a company voluntary agreement.

E-commerce beauty company. Loan 3155. Risk band C

This Swansea business was incorporated in 2006 and is proposing a company voluntary agreement.

All affected investors have been notified.

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

Enjoy lending, The Funding Circle Team

 

Picture story: how 1,200 people helped a technology company in Surrey

In October 2013, Pure Technology took out a business loan to help with cashflow which was funded by more than 1,200 people. Based in Surrey, Pure Technology helps other small businesses make sure their IT systems are robust, their communications secure and their processes efficient.

Earlier this year we met Pure Technology founder Danny Long to find out how the loan has helped his business. In the picture story below, Danny discusses his experience of Funding Circle:

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Do you need a business loan?

We’ve helped more than 8.000 businesses in the UK and US access finance for a range of finance needs. You can check your eligibility online in just 30 seconds.

How can small business owners finance their marketing?

A report released by the Government revealed there are 5.2 million SMEs in the UK. Yet how many are committed to the future growth of their business?

For SME business owners committed to putting growth plans in place, funding these essential steps can often be a cause for concern.

However this needn’t be the case as there are a number of grants available to businesses, some of which also cover the essential marketing spend that goes hand-in-hand with achieving sustained business growth.

Grant support

A grant is a specified amount of money that is given to a business to help with a certain project or purpose. There are a number of grants available from the Government, The European Union, local councils and charities.

You aren’t required to pay the grant amount back, but the competition for grants is high, so you have to make sure your business plan is solid to improve your chances of being considered. (For more information about getting your business plan right, read Cognition’s blog, ‘The Marketing Elements Every Business Plan Should Have To Help Secure Financing.’)

Which grant?

There are a number of different grants available (click here to browse through the different options), all of which come with their own specific access criteria.

However, given a bit of research you’ll find that they are often dependent on the location of your business, the length of time you’ve been trading for, your business turnover and the amount of money you’d like to receive.

For a grant that helps cover your marketing activity there are a number of options available, such as Business Development Grants.

These types of grants can be used in a number of ways to help SME owners grow their business, whether they’re being used for marketing, training, or to purchase equipment. The purpose of these grants is to help relatively established businesses reach that next level, by offering them a one off payment that doesn’t need to be paid back.

Business Development Grants are available from local governments and depend on which county your firm is located. To find about more about them, click here.

You could also consider applying for a Business Growth Service grant, designed to help businesses that have the ambition, capability and capacity to improve and grow. There are a number of criteria you’ll have to pass to be eligible for this type of grant, including having fewer than 250 employees and a turnover less than £40 million. You can find more about this grant, here.

So as you can see, there are a number of options for business owners committed to growing their business, and these are just two of the different types of grants available – there are many more out there. So do your research, and make sure that the grant you apply for supports a marketing strategy that will drive forward your business growth.

By Chloe McHugh, Cognition Agency

You read more tips by downloading any of Cognition’s free eguides.

Cognition is a full-service marketing agency and a Funding Circle borrower. It’s known for its commercial approach, linking marketing activity to revenue and growth.

If you’re interested in taking out a Funding Circle business loan, you can apply online at anytime.

You’ve helped lend £10.5 million to businesses | Weekly Lending Review

Week 23: 1 – 5 June 2015

Last week Funding Circle investors lent more than £10.5 million to businesses across the UK. The majority of businesses looking for funding were in the property and construction sector and the most popular reason for needing funding was to expand.

New loans available to you

There are currently 65 loan requests on the marketplace which are all available for you to lend to.

As part of lending to businesses, some may be unable to fully repay their loans, which is why diversification is so important. We’ve created a short video which runs through the basics of diversification and how you can diversify at Funding Circle.

The total value of new loans listed on the Funding Circle marketplace was £11,107,040, averaging at £94,152 per loan. The largest loan value was £630,000 and the smallest loan value was £8,000.

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 of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans, value of loans and amount lent are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 1-June represents the week of 1st – 5th June 2015.

Weekly average gross yield (2 weeks rolling)

Yield

Number of listed loans per week

Loans listed per week

Listed loan value per week

Loan value listed

Total amount lent

Amount lent

Loan parts available to buy from other investors

Loan parts

News you should know

Spartan Motor Factors is  the fastest growing vehicle parts supplier in South Wales, with branches in Newport, Cardiff and Bridgend. They are dedicated to providing high quality vehicle parts at competitive prices to local garages. We met director Jason Farrugia who told us why he started the company and how his Funding Circle business loan has helped his company. Hear Jason’s Funding Circle story on the blog.

Providing more information around defaulted loans

If you have any defaulted loans you will have noticed that we now apply a RAG (Red, Amber, Green) rating system, also known as a traffic light system, in the loan comments on your dashboard. The purpose of the new system is to help you assess the quality of your defaulted loans, and your expected return over a certain period of time.

Loans defaulted last week

Nail and beauty products supplier. Loan 5917. Risk band C

This Tyne and Wear company was incorporated in 1998 and is now 3 months in arrears.

Industrial pipework specialists. Loan 7743. Risk band A

This Carlisle business has been running since 2010 and has entered liquidation

Engineering inspection services. Loan 9588. Risk band C-

This South Yorkshire business was established in 2007 and has entered voluntary liquidation.

Domiciliary care services. Loan 4117. Risk band A

This Milton Keynes business has been running since 2003 and is proposing a company voluntary arrangement.

Safety consultants. Loan 3931. Risk band C-

This Manchester business was incorporated in 2001 and is proposing an individual voluntary arrangement.

All affected investors have been notified.

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

Enjoy lending, The Funding Circle Team

 

Channel 4 Dispatches

As you may have seen, Funding Circle was included as a part of Channel 4’s Dispatches this evening. The show was called “Where to Save Your Money” and examined how individual savers have been affected since the financial crisis.

Since we launched nearly 5 years ago, investors have lent to thousands of UK businesses and earned more than £32 million net interest – an average 6.6% after fees and bad debt, but before tax.

In brief, the programme covered a specific loan that was made in 2013 and defaulted after one payment.

Whilst it is always frustrating when loans default, Funding Circle is an investment, and all investors who have been lending for at least 1 year and to 100 businesses equally are currently earning a positive return. Of the 10,800 loans issued in the UK, only six loans have resulted in a loss to investors after one or zero repayments.

We have built Funding Circle on the principles of openness and transparency. Details about specific loans would not be publicly available if we did not publish data on every single loan that has been made on the marketplace. We think it’s very important investors can see who they are lending to and the performance of these loans over time. This brings extra scrutiny, which we welcome. It makes us stronger and committed to getting things right.

Transparency makes Funding Circle unique and we remain absolutely committed to this principle and it will not change.

We appreciate there may be further questions so please join us on the forum or get in touch with our customer service team directly.

The Funding Circle team