A record week for loan requests! Weekly Lending Review

Week 24: 9 – 15 June 2014

It was a record-breaking week last week as over £7.5 million of new lending opportunities came onto the marketplace. Included in last week’s bumper week for listings were 23 loans valued at £100,000 and above and our largest loan to date. This £650,000 loan is currently on the marketplace and is still available to bid on.

New loans

There were 115 new business loans listed last week and there are currently 76 auctions on the marketplace.

The total value of the new listed loans was £7,548,380; that’s an average of £65,638 per loan. The largest loan value was £650,000 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 of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 9-Jun represents the week of 9th – 15th June.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

News you should know

Bringing more businesses to the marketplace

Over the past few months we have become conscious that a one size fits all approach to borrower requirements will not always work, so we are removing the £150k threshold for loans without asset security. Our credit team will now have more flexibility to assess the security required on a case by case basis.

May’s roundup of peer-to-peer industry news

In last month’s roundup we have the Queen’s Speech, the launch of a global investment fund and figures showing another decline in bank lending to businesses.

Investor evening

Thank you to all who attended our first investor evening held at the end of May. We’ve now completed our write-up of the event so you can read what the collections and tech teams had to say, and what was discussed in the Q&A session with 2 of the co-founders.

Recommend a friend and share £80

If you recommend a friend to Funding Circle and they lend at least £1,000 to businesses, you could each have £40 cashback* paid into your Funding Circle accounts!

Community Discussions

This week we’re talking about the largest ever Funding Circle loan that’s on the marketplace. You can join the discussion on our community forum.

Loans defaulted last week

Document collection service. Loan ID 2855

This Blackburn business has been trading since 2005 and has entered into administration.  The original loan amount was £150,000 and all 1,994 investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

Enjoy lending, The Funding Circle Team

* Terms & conditions apply.

Helping more businesses access finance

At Funding Circle we are constantly looking at how we can improve and innovate our offering to build a successful and sustainable marketplace for all of our community.

Over the past few months we have become conscious that a one size fits all approach to borrower requirements will not always work, especially as we see a more diverse range of businesses coming to the marketplace. To address this, we have revisited how we assess the types of security required for businesses loans, and are removing the £150k threshold for loans without asset security. Our credit team will now have more flexibility to assess the security required on a case by case basis.

First and foremost we always assess a business’s ability to repay a loan, and only accept those that pass our credit assessment. As part of lending to businesses, a small proportion may not be able to fully repay their loan which is why we take either a personal guarantee from the director(s) or some form of security, for all loans listed on the marketplace. This includes security on a specific asset (eg a coach), security across all assets in the business, or a charge on a business’ property.

Having guarantees or security in place puts us in a stronger position to recover funds for investors, should the business be unable to repay their loan in full. The type of security or guarantee available will continue to be shown clearly on the marketplace.

An example

A business might apply to Funding Circle for a loan of £170,000, pass our credit assessment and be able to afford their repayments. However, it may not have sufficient unencumbered tangible assets for us to secure the loan against, e.g. professionals including surveyors or medical practitioners, where the assets can be the directors themselves. Or if it does, then the process of registering a security, where a bank already has first charge, can sometimes be too cumbersome and expensive for the business to proceed.

In the past this type of business would not have been listed on the marketplace, even though we believe the business would be able to afford the repayments on the loan. By removing the threshold and assessing each individual loan on its own merit, we may be able to now take personal guarantees from the directors, and list the loan on the marketplace.

By assessing a loan’s security requirements on a case by case basis, we’ll be able to help even more creditworthy businesses to access finance they can afford, and put in place the appropriate security for their loan, for both the business and the investor involved.

If you have any questions about today’s news, please visit our FAQs or join us on our forum where we will be happy to discuss this in more detail.

The Funding Circle team

 

Queen’s Speech promises focus on access to finance. May industry news

George Osborne to force banks to promote alternative lenders

There was much speculation in May as to whether the Queen’s Speech would include more detail on whether the government are going to make banks refer small businesses to alternative finance providers. Although the speech was light on detail, it did mention a focus on access to finance as part of the Small Business Bill. More information on this proposed bill is due to be published next week and we also expect to see the government’s response to the consultation announced in the Budget very soon. The Evening Standard said the potential legislation “might actually make a real difference in tackling the problem of funding for small businesses”.

P2P Global Investment fund launches

Also in the news last month were details of a new fund set up to invest in peer-to-peer loans. This growing interest from bigger investors is a sign that the industry is maturing, and will mean that thousands more small businesses will be able to access finance. At Funding Circle, we believe there is a need for a diverse mix of investors in order to create a sustainable marketplace for the long term. This doesn’t mean our individual investors will become any less important to us over time and if you have any questions about this, then please don’t hesitate to get in touch. This story was also covered in The Times.

Bank lending to small business shrinks

May’s Funding for Lending figures showed yet another decline in bank lending to small businesses via this scheme. This was surprising given the refocusing of the scheme away from consumer lending and towards business lending at the end of 2013. A great opportunity for the alternative finance industry however, and this BBC article mentions www.alternativebusinessfunding.co.uk as a good place to start if you’re a small business looking for finance. James Meekings, one of our co-founders, was also on CNBC and Bloomberg responding to the figures.

We try harder

This Economist article discusses the rise of peer-to-peer lending. Whilst banks are often still sceptical, peer-to-peer lending firms believe that traditional means of finance are outdated with expensive branch networks and cumbersome technology.

Prosper marketplace announces $70 million investment round

Peer-to-peer lending continues to grow rapidly across the globe. In May, Prosper, a leading US peer-to-peer lender, announced they had completed a $70 million investment round to aid their growth. Exciting times for the entire industry.

Investor evening part 3: co-founder Q&A

Following on from part 1 and part 2 of our investor evening write up, we take a look at the points raised during the co-founder Q&A.

Q&A with Funding Circle co-founders

A lot of ground was covered with Samir and James, two of our co-founders, about the future of Funding Circle. Crucially, as we come towards the end of the whole loans trial, we discussed the need for a diverse mix of investors in order to create sustainable marketplace for the long term. The ambition for Funding Circle is to become like the London Stock Exchange for small business, where any investor, be they small or large, can lend to small British businesses.

James

This doesn’t mean our individual investors will become less important to us over time. If we look to the US market, regulation of the industry currently means we have more institutional investors but over time, we will work to ensure more individuals can lend. And vice versa in the UK market. Having this diversity will allow us to help thousands more businesses access finance, whilst ensuring investors continue to earn good returns.

Samir

Other key things to come out of the Q&A included:

Q: When will peer-to-peer lending be included within ISAs?

A: This was announced in the Budget earlier this year and consultation with Treasury is ongoing. We’re part of those conversations about exactly how it will work and when, and will update you as soon as we know more detail. In the meantime though, we expect the process to take about a year.

Q: The secondary market was less liquid at times earlier this year? Why was this and could we have more data on the performance of secondary market sales?

A: Just like any exchange, both the primary and secondary markets rely on supply and demand, and as we grow, we will need to ensure that one does not vastly outweigh the other at any one time. Record numbers of businesses came to Funding Circle at the beginning of the year and we saw 100+ loan requests listed a week, which led to a slow down for people looking to sell their loan parts. This has since improved and we will work hard to find a balance between the two. The aim is for both markets to be very liquid, which is why a diverse mix of investors – both individual and organisations – will be increasingly important, as business demand grows. We will also provide more data on secondary market fluctuations in the next couple of months.

Q: What does regulation mean for investors?

A: We actively campaigned for regulation for a number of years as we believe that as the industry grows, consumers must be protected. Specifically regulation means that peer-to-peer lending platforms will be required to have arrangements in place to continue to return available funds and administer existing loans in the event that the platform fails. All platforms will be required to hold capital reserves (extra cash) to help mitigate any business and financial risks, and every platform must have a complaints procedure in place (you’ll find ours in the FAQs).

The regulator has also issued guidelines on the information that a peer-to-peer lending platform should provide to investors. These include information on the average returns (after fees and bad debt but before tax) from the last few years, expected bad debt rates going forward, and information on whether a loan is secured, and if so, what form the security takes.

As part of our membership of the Peer-to-Peer Finance Association we already adhered many of these requirements and welcomed formal regulation.

Thank you!

We hope this has a useful overview of what was a very interactive and engaging session. We really enjoyed meeting more of you in person and found your feedback very useful. If you’ve got any further questions, then don’t hesitate to get in touch or join us on the forum, and we look forward to doing it again soon.

Meet the wider teams!

If you missed some of team interviews, then check out credit assessment, credit analytics and collections & recoveries. Tech and product interviews coming soon.

Highlights from our investor evening. Weekly Lending Review

Week 23: 2 – 8 June 2014

Last week we saw one of the largest loans come onto the marketplace; a loan for a rail business in Kent for £429,000, which is still available for bidding on. The south east was by far the most popular region for business loans, and the majority of loans were allocated to the B risk band.

New loans

There were 92 new business loans listed last week and there are currently 51 auctions on the marketplace.

The total value of the new listed loans was £5,781,660; that’s an average of £62,844 per loan. The largest loan value was £429,000 and the smallest loan value was £6,000.

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 and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 2-Jun represents the week of 2nd – 8th June.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

 

Update to minimum bid rates

We review the minimum bid rates in the middle of every month to decide whether they should be changed or kept the same. A number of factors are considered when reviewing the rates, including general economic conditions and costs of alternative borrowing products. This month, we have decided to increase rates by 0.1% on C risk band and 0.2% on the C- risk band. The new rates will take effect on Tuesday 1st July. The new minimum bid rates for loan requests listed after 9am on 1st July are as follows:

A+: 6% (no change)

A: 8% (no change)

B: 9% (no change)

C: 10.1% (+ 0.1%)

C-: 11.9% (+ 0.2%)

Our first investor evening

Thank you to all who attended our first investor evening held at the end of May. As promised, here’s the first installment of the write up. Stay tuned this week for the rest!

Recommend a friend and share £80

If you recommend a friend to Funding Circle and they lend at least £1,000 to businesses, you could each have £40 cashback* paid into your Funding Circle accounts!

Community Discussions

This week we’re talking about the the £429,000 loan that’s on the marketplace.You can join the discussion on our community forum.

Loans defaulted last week

Vehicle products manufacturer. Loan ID 3243

This Keighley manufacturer has been trading since 2002 and is insolvent. The original loan amount was £100,000 and all 1,126 investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

Enjoy lending, The Funding Circle Team

* Terms & conditions apply.

Investment through Funding Circle involves lending to small and medium sized businesses, so your investment can go down as well as up. Remember, past returns are not necessarily a guide to future returns.

Investor evening part 2: collections and tech

Following on from part one of our investor evening write up, part two looks at themes discussed with both the collections & recoveries, and tech & product teams.

Collections & recoveries

Next up, Andrew Jackson, our Head of Collections & Recoveries, outlined the changes we’ve made to our processes since he joined the Funding Circle team about a year ago. Since then we’ve brought our entire debt collection and recoveries process in-house, which has allowed us to streamline our processes. This includes re-writing our documentation to be more effective,  and it also means that we’re not held back by the policies of a third party provider – thereby allowing us to act swiftly, robustly and within timescales that we consider fair.

AJ

Overall though, bringing everything in-house means we have a committed team of four professional working to deliver results for investors. This care and commitment is far more than any outsourced agency would provide. We know this is your money and we care very much.

By bringing debt collection in-house has led to our our ‘late rate’ recently reaching an all time low of 0.83% of our total living loan book – something we’re really proud of and will work hard to maintain and improve upon.

Key things to come out of the Q&A included:

Q: How do you strike the balance between recovering a debt and ensuring businesses are not asset stripped unnecessarily?

A: There is a huge trust element in the recoveries process. When a company director initially realises that they are unable to repay the loan, the first response is often fear. By turning this fear into trust, we improve the chances of Funding Circle investors being paid in full. Regular communication builds trust, and with transparency and responsiveness we can find fair and affordable solutions. We want to see as many businesses succeed as possible, because a successful business will deliver a full recovery.

Q: Do investors pay for expenses incurred during recovery?

A: At the moment the expenses and costs of court proceedings are not deducted from repayments by borrowers – they come out of the 1% servicing fee. There is currently a discretionary 15% administration fee for borrowers on late payments which can be used to offset the costs of court proceedings (if necessary). One expense that is borne by investors is the 16% fee which our former outsourced debt collectors used to charge on all recoveries. Clearly now that this is in-house those fees do not apply to most recoveries, but for historic cases those fees are still borne by the investors.

Tech & product

Steve, our Product Director, began by thanking all of you for your feedback via the surveys we regularly send out and the user experience sessions we run. Priorities you highlighted include: ensuring a good rate of return; managing default risk and improving recovery rate; and making the site easier to use.

Steve

In response to this feedback, we have extended the types of loans we offer to give investors more lending opportunities across various sectors such as property, to allow for well-diversified lending portfolios. The tech and product teams have also spent a lot of resource on creating data systems to support our credit models, new underwriting systems, and systems to bring recoveries in-house.

Andy, our Chief Technology Officer, discussed how we split our developer time between working on new functions and systems and cleaning up the site to make it easier to work on and more reliable by replacing old legacy code. We’re also in the process of introducing newer, faster servers which will improve site speed and responsiveness.

Andy

Key things to come out of the Q&A included:

Q: What are you doing about the security of the site and our accounts?

A: We are also going to be rolling out further security around investor fund transfers, including the addition of nominated bank accounts to receive transferred funds. We make use of two external agencies to undertake frequent site penetration testing, and to review and work with us on making sure that the code used is safe and secure. Further to this, we have an internal technology security team who work on maintaining and implementing code updates, as well as technology infrastructure security hardening.

Q: Is it possible to have access to more data around the performance of loans and how quick it is to sell loans?

A: We want to be the most transparent financial services company out there, and will always look to provide investors with as much data and transparency possible. As one example of this we have recently launched a new statistics page. Take a look here and let us know what you think.

Look out for…

tomorrow’s post which will include key points raised during the co-founder Q&A! As always, please get in touch with any comments or feedback.

A pleasure to meet you!

2014 has already seen a number of new developments at Funding Circle, including the introduction of regulation, the announcement of additional funding by the Government-backed British Business Bank and the start of our tailored property loans for businesses. With the number of investors fast approaching 30,000 we wanted to host an investor evening to meet more of you in person, and hear first-hand about your experience of investing through Funding Circle.

Last Thursday we had the pleasure of meeting about 30 of you at our first event for investors. It proved to be a great forum for debate and feedback, with many interesting and useful points raised – we hope those that attended agree, and many thanks to you for giving up your time to come and say hello.

We appreciate that not everyone is able to travel to London, so we filmed the event and will be publishing a video shortly. In the meantime though, we wanted to write up some of the key themes discussed in a three part blog series. This first post will take a look at some of the key points raised during the credit assessment and analytics session.

Credit assessment & analytics

Rahul, our Head of Credit Analytics, and Ari, our Head of Underwriting, kicked things off with a discussion on our credit assessment process and the risk models we build to help us determine which businesses to list on the marketplace.

Rahul

We discussed how these models ensure we remain within our estimated loss rate and why we’re constantly improving them so that only the most creditworthy businesses make it through to the credit assessment team. We also covered off our five-stage credit assessment process, and why ‘big data’ analytics, combined with a personal review of every application delivers superior credit performance.

Ari

Key things to come out of the Q&A included:

Q: How many pairs of eyes look at a single loan application?

A: Businesses go through a five stage credit assessment process at Funding Circle. Two of these are automated; the first is a credit model we have built and continue to improve following data from past performance of loans, and the fourth is a model which looks at whether the business meets the criteria for a Funding Circle loan. We manually assess stages 2, 3 and 5, and the sales, underwriting assistants, and underwriting teams respectively all work incredibly closely together to ensure that information is shared and assessed at each stage.

Q: Are you prepared for another economic downturn?

A: The answer to this is two fold. In terms of listing new loans on the marketplace, our risk bands are calibrated to target the expected annual loss rates that we publish on the site and this would not change in the event of a downturn. Loans that might have previously been listed as A+ would simply be listed as a B, for example, and loans that might have been listed as C- would be rejected.

In terms of our existing loan book, we take three factors into account when calculating the expected annual loss rate. The first is whether or not the business is expected to default. The second is the time at which the business defaults; for example a business which defaults after 1 repayment compared to a business who is unable to repay after 50 of 60 repayments will owe considerably more. The third factor is how much we expect to recover following the default. For both the second and third factors, we have taken a significant downturn into account and calculated the loss rate using stressed estimates.

Next week…

…we’ll be posting the second and third part of this series which will include key points discussed with collections & recoveries, and tech & product, as well as a Q&A with the co-founders.

Update to our whole loans trial. Weekly Lending Review

Week 22: 26 May – 1 June 2014

It was a very busy week at Funding Circle as we saw 58 business loans come onto the marketplace in four days, as well as hosting our very first investor evening at our office. Further details of the event will be on the blog later this week.

New loans

There were 58 new business loans listed last week and there are currently 52 auctions on the marketplace.

The total value of the new listed loans was £3,286,000; that’s an average of £56,655 per loan. The largest loan value was £250,000 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 and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 26-May represents the week of 26th May – 1st June.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

Update on whole loans trial

We are continuing with the trial for another few weeks, and we expect a full roll-out to all investors to take place within the next month.

Small changes to the Borrower T&Cs

We’ve made some changes to the ‘How to become a borrower’ section to reflect our current policies for business who apply for funding. Specifically, (i) amends to the wording to include property development and property investment businesses and (ii) in view of the growing marketplace and size of businesses applying for loans, we need greater flexibility surrounding County Court Judgements. If the overall assessment of the business allows, we will consider listing businesses which have in excess of £250 in CCJs.

Our first investor evening

Thank you to all who attended our first investor evening held at our London office. Later this week we’ll be posting a write up of the evening on our blog, so you can find out about how it all went.

Recommend a friend and share £80

If you recommend a friend to Funding Circle and they lend at least £1,000 to businesses, you could each have £40 cashback* paid into your Funding Circle accounts!

Community Discussions

This week we’re talking about the Property development loan in Fulham that was on the marketplace last week. You can join the discussion on our community forum.

Loans defaulted last week

Vehicle repair centre. Loan ID 1143

This Milton Keynes business has been trading since 1996 and has entered into administration. The original loan amount was £50,000 and all 457 investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

Enjoy lending, The Funding Circle Team

 

* Terms & conditions apply.

Investment through Funding Circle involves lending to small and medium sized businesses, so your investment can go down as well as up. Remember, past returns are not necessarily a guide to future returns.

Update on whole loans trial

At the start of May we announced that we will be trialing whole loans at Funding Circle. The trial has been successful with approximately £1.3 million lent to UK businesses as whole loans.

As a result of this success, we are continuing with the trial for another few weeks and planning an official roll-out to all investors, which we anticipate will take place within the next month.

As we get closer to the official launch, we’ll provide further information to all investors and include details about how whole loans will be presented on the marketplace.

The Funding Circle team.

 

Refurbishing a restaurant thanks to 763 people. Weekly Lending Review

Week 21: 19 – 25 May 2014

Nearly £5 million was lent to businesses across the UK last week, including a property development loan in Kent, a soft drinks manufacturer in Bristol and an event solutions company in Cambridgeshire.

As well as this, we saw a further 73 businesses come onto the marketplace, which totalled £4.7 million of new lending opportunities.

New loans

There were 73 new business loans listed last week and there are currently 53 auctions on the marketplace.

The total value of the new listed loans was £4,654,180; that’s an average of £63,756 per loan. The largest loan value was £212,000 and the smallest loan value was £7,000.

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 and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 19-May represents the week of 19th – 25th May.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

Did you help refurbish a second restaurant?

763 people lent to The Exhibition Rooms so they could refurbish and open their second neighbourhood restaurant in South London. View their business story in pictures here.

Recommend a friend and share £80

If you recommend a friend to Funding Circle and they lend at least £1,000 to businesses, you could each have £40 cashback* paid into your Funding Circle accounts!

Community Discussions

This week we’re talking about a London property development loan that was on the marketplace last week. You can join the discussion on our community forum.

Loans defaulted last week

Wholesale food distributor. Loan ID 1366

This Sussex business has been trading since 2002 and has fallen into arrears with repayments. The original loan amount was £45,000 and all 553 investors have been notified.

Furniture designer. Loan ID 904

This business has been trading since 2005 and we have received notice of a change in the director’s circumstances. The original loan amount was £40,000 and all 316 investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for both of these loans.

Enjoy lending, The Funding Circle Team

* Terms & conditions apply.

Investment through Funding Circle involves lending to small and medium sized businesses, so your investment can go down as well as up. Remember, past returns are not necessarily a guide to future returns.

“763 people lent to us, which felt like tiny votes of confidence!”

Business owners David and Geoff share their Funding Circle experience.

After the success of The Exhibition Rooms restaurant in Crystal Palace, David and Geoff wanted to open a second neighbourhood restaurant, and needed a business loan to refurbish the premises.

In this picture story you’ll find out how they met, where they’ve come from, and how peer-to-peer lending has helped their business along the way.

You can also watch their business story in this short video.

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Final Slide

If you’ve got a UK business that’s been trading for at least 2 years and has a turnover of £100,000 or more, you can apply online at any time. We’ll always get back to you within 2 working days of receiving your complete application.

 

First development loan funds in less than 24 hours. Weekly Lending Review

Week 20: 12 – 18 May 2014

We were delighted to see our first formalised property development loan listed on the marketplace last week, which will be used to build eight 3 bedroom houses in Ramsgate, Kent. The loan for £400,500 funded in less than 24 hours and is the first tranche of funding needed to complete the project. Keep your eyes on the marketplace this week as we have another property development loan coming soon.

As well as this, we saw a further 87 businesses come onto the marketplace, which totalled over £5 million of new lending opportunities.

New loans

There were 88 new business loans listed last week and there are currently 53 auctions on the marketplace.

The total value of the new listed loans was £5,389,540; that’s an average of £61,245 per loan. The largest loan value was £400,500 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 and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 12-May represents the week of 12th – 18th May.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

Did you help a small Scottish business with their marketing?

In our latest business story we’re with Don Dennis, in the Inner Hebrides. He runs The Flower Essence Repertoire who manufacture and export a range of flower essences. You can listen to his business story which includes a special message to those who lent to him in this short video.

Recommend a friend and share £80

If you recommend a friend to Funding Circle and they lend at least £1,000 to our great British businesses, you could each have £40 cashback* paid into your Funding Circle accounts!

Community Discussions

This week we’re talking about the first development loan that was on the marketplace last week. You can join the discussion on our community forum.

Loans defaulted last week

Halal meat supplier. Loan ID 2048

This Oxford business has been trading since 2006 and has fallen into arrears with repayments. The original loan amount was £50,000 and all 620 investors have been notified.

Industrial cleaning company. Loan ID 2603

This Ipswich business has been trading since 2006 and we have received notice of liquidation. The original loan amount was £30,000 and all 363 investors have been notified.

Training providers. Loan ID 1373

This business employs and trains domestic care workers and has been trading since 2001. They have fallen behind with their repayments. The original loan amount was £40,000 and all 557 investors have been notified.

Garden furniture wholesaler. Loan ID 974

This Newcastle business has been trading since 2008 and has failed to maintain timely, full repayments. The original loan amount was £35,000 and all 278 investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

Enjoy lending, The Funding Circle Team

* Terms & conditions apply.

 

Investment through Funding Circle involves lending to small and medium sized businesses, so your investment can go down as well as up. Remember, past returns are not necessarily a guide to future returns.

Business referrals, the largest peer-to-peer loan & the rest of April’s industry news

Week 19: 5-11 May 2014

It was the first short week of May which brought a further 64 businesses to the marketplace, totalling over £3.6 million of lending opportunities. The most popular region was the South East of England, with leisure & hospitality being the most common sector.

New loans

There were 64 new business loans listed last week and there are currently 50 auctions on the marketplace.

The total value of the new listed loans was £3,615,080; that’s an average of £56,486 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 of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 5-May represents the week of 5th – 11th May.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

News you should know

No change to minimum bid rates

We review the minimum bid rates in the middle of every month to decide whether they should be changed or kept the same. Minimum bid rates for June will remain at May’s levels, as the majority of loans have been clearing above these rates: 6%, 8%, 9%, 10% and 11.7% for the A+ to C- risk bands.

More loan terms coming to the marketplace

Loan terms can now be any number of months between 3 and 60 months, and will be clearly shown on the loan request page. Watch out for a loan this week which will be listed with an 18 month loan term!

April’s industry news

Included in last month’s news roundup was the largest peer-to-peer loan and possible bank referrals to alternative finance providers.

Recommend a friend and share £80

If you recommend a friend to Funding Circle and they lend at least £1,000 to our great British businesses, you could each have £40 cashback* paid into your Funding Circle accounts!

Community Discussions

This week we’re talking about the commercial mortgage that was on the marketplace last week. You can join the discussion on our community forum.

Loans defaulted last week

Harrogate Jewellers. Loan ID 1318

This business has been trading since 1986 and has fallen into arrears with repayments. The original loan amount was £100,000 and all 899 investors have been notified.

Construction firm. Loan ID 1420

This business has been trading since 2001 and has fallen behind with their repayments. The original loan amount was £25,000 and all 256 investors have been notified.

Management training company. Loan ID 322

This Derby business has been trading since 2004 and has failed to maintain full repayments. The original loan amount was £50,000 and all 450 investors have been notified.

Dorset bakery. Loan ID 2617

This organic bakery has been trading since 2009 and has ceased trading. The original loan amount was £20,000 and all 188 investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

Enjoy lending, The Funding Circle Team

* Terms & conditions apply.

Investment through Funding Circle involves lending to small and medium sized businesses, so your investment can go down as well as up. Remember, past returns are not necessarily a guide to future returns.

 

Meet Don: our latest business owner who has benefitted from your lending

We’re in Scotland for our latest case study video, telling the story of how Funding Circle investors helped to make a difference to another UK business.

The Flower Essence Repertoire is based on the picturesque Isle of Gigha, in the Inner Hebrides. The business manufactures a range of flower essences, including orchid essences from orchids grown in their greenhouse, and they export them worldwide.

In December, they took out a peer-to-peer business loan through Funding Circle which was funded by 266 people and organisations across the UK.

In this short film you’ll meet Don Dennis, director and founder of the Flower Essence Repertoire, and he’ll explain to you why he started the company. There’s also a special message to all of the people who lent him the money, which will be used to purchase a range of materials to make and bottle the essences.

Watch the video here:

Business referrals to peer-to-peer lenders. April industry news

A small business guide to alternative funding

Banks seem to be closing their doors to small and startup businesses, but that shouldn’t deter entrepreneurs from seeking funding. In fact, there are more funding options open to businesses than ever before as new services have emerged to fill the gap. This article discusses the various options including peer-to-peer lending, crowdfunding and angel investing, and suggests businesses looking for finance should take a look at alternativebusinessfunding.co.uk.

Saber

Power up your small business with hi-tech finance

Did you lend to powerboat experience company, Saber Powersports last year? This month they featured on the BBC, having taken two Funding Circle loans to fuel their growth. The article quotes speed as the key advantage, with businesses typically accessing the finance they need to grow and expand within two weeks.

Would starting your own business put your family savings or home at risk? How to protect yourself from your start-up

More advice for businesses looking to access finance. This is Money recommends businesses think about turning to peer-to-peer lending due to the flexibility borrowers can have when it comes to borrowing against a business, rather than personal assets.

Largest P2P loan to fund urban regeneration scheme

April saw the largest loan ever listed by a peer-to-peer lending platform. A British urban regeneration scheme landed £8.3m funding from Wellesley & Co. The bridging loan, which is more than twice the size of the previous largest amount raised by a peer-to-peer lender, is backed by a range of 27 properties inside the M25 as collateral. This month we also extended the types of loan we offer to include more small businesses who develop or invest in property.

High Street banks could be obliged to name alternative lenders for small businesses

Banks could be required to refer small businesses to alternative funding providers under proposals being considered by the government. The consultation was announced in the Budget last month and closed on 25th April. We believe that a referral needs to take place much earlier than it currently does. Industry data shows that 50% of businesses exploring finance with their bank do not reach the formal application stage. Signposting to alternatives therefore needs to start much sooner than the formal rejection stage. The Mail on Sunday also covered the story.

£270m lent & £5m of new lending opportunities available to you

Week 18: 28 – 4 May 2014

We’ve just passed the £270 million lent milestone, with £18 million of lending coming from April alone. Over £5 million worth of new lending opportunities were listed on the marketplace last week, including a Farnham bakery. The Midlands saw the most businesses and the majority were in the property and construction sector.

New loans

There were 79 new business loans listed last week and there are currently 44 auctions on the marketplace.

The total value of the new listed loans was £5,035,840; that’s an average of £63,745 per loan. The largest loan value was £150,000 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 and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 28-Apr represents the week of 28th April – 4th May.

Weekly average gross yield (2 weeks rolling)

yield

Number of listed loans per week

number

Listed loan value per week

value

Recommend a friend and share £80

If you recommend a friend to Funding Circle and they lend at least £1,000 to our businesses, you could each have £40 cashback* paid into your Funding Circle accounts!

Community Discussions

This week we’re talking about the commercial mortgage that is currently on the marketplace. You can join the discussion on our community forum.

Loans defaulted last week

Sports shop. Loan ID 2070

This Newcastle business has been trading for 5 years and has fallen into arrears with repayments. The original loan amount was £30,000 and all 333 investors have been notified.

Recycling business. Loan ID 3051

This business has been trading for five years and has fallen behind with their repayments. The original loan amount was £25,000 and all 294 investors have been notified.

Alcohol retailer. Loan ID 5034

This Hartlepool retailer has been trading for eight years. The original loan amount was £90,000 and all 1,085 investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

Enjoy lending, The Funding Circle Team

 

* Terms & conditions apply.

Investment through Funding Circle involves lending to small and medium sized businesses, so your investment can go down as well as up. Remember, past returns are not necessarily a guide to future returns.

 

Signposting to alternatives needs to begin earlier than a bank rejection letter

The government consultation into the mandatory referral of small businesses from banks to alternative providers, announced in the Chancellor’s Budget in March, closed last Friday and Funding Circle provided its recommendations to the consultation.

Mandatory referrals have received a great deal of interest from the small business finance community (both alternative and traditional) and could provide us all with a big opportunity to help more small businesses whilst increasing lending opportunities for investors.

Crucially though, we believe that a referral needs to take place much earlier than it currently does. Industry data shows that 50% of businesses exploring finance with their bank do not reach the formal application stage, 61% don’t get to the formal rejection stage, and only 12% actually receive a rejection letter from the bank. Signposting to alternatives therefore needs to start much sooner than the formal rejection stage.

Funding Circle is proposing that the government mandates banks to signpost alternative finance providers much earlier in the process, either during initial face to face meetings with a business owner, or in early marketing materials. There are many situations where a bank is willing to lend but on terms that are not acceptable to the business and it is important alternative providers at signposted at this stage.

This signposting could either be directly to alternative providers, such as Funding Circle, or to an independent platform that provides applicable information and contact details for vetted alternative finance providers. We currently suggest businesses who don’t meet our lending criteria look at their options via the alternativebusinessfunding.co.uk portal.

We believe that working closer together, with both banks and other alternative providers, to ensure the business community receives the right signposting at the right time, will ensure businesses access the finance they need to grow, creating more lending opportunities for investors.  

We are supportive of the consultation and looking forward to seeing the government’s recommendations.

News

Whole loans trial and 51 new listings

Week 17: 21 – 27 April 2014

Over £3 million made its way to businesses across the UK last week and we saw 51 new lending opportunities listed on the marketplace, including thirteen loans for over £100,000. Nearly half (24) of the new loans were for working capital and just under a third (18) were for expansion and growth. This week the Midlands saw the most businesses listed.

New loans

There were 51 new business loans listed last week and there are currently 41 auctions on the marketplace.

The total value of the new listed loans was £3,108,000; that’s an average of £60,941 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 of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 21-Apr represents the week of 21st – 27th April.

Weekly average gross yield (2 weeks rolling)

Yield.jpg

Number of listed loans per week

Number.jpg

Listed loan value per week

Value.jpg

News you should know about

Whole loans trial from 1 May

We announced last week that we will be trialling listing whole loans to help us to continue to grow and become a significant part of the small business lending market. You can read more on our blog and FAQs as well as join the discussion on our forum.

Loans defaulted last week

Portable water provider. Loan ID 2612

This business has been going for nine years but we understand the borrower discovered some financial anomalies created by certain employees shortly after taking the loan. This resulted in the borrower having to pay a number of invoices which it could not afford due to the seasonality of the business. The business has entered into administration in order to precipitate a sale to a third party.The original loan amount was £100,000 and all 1490 investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for this  loan.

Enjoy lending, The Funding Circle Team

 

Investment through Funding Circle involves lending to small and medium sized businesses, so your investment can go down as well as up. Remember, past returns are not necessarily a guide to future returns.

Introducing whole loans

It’s been a fantastic start to the year at Funding Circle. The announcement of additional funding by the Government-backed British Business Bank and the introduction of regulation by the FCA helped to drive a record quarter of lending, with more than £53 million lent to small businesses across the UK – more than two and a half times the amount during the same period of 2013.

At Funding Circle our goal is to build a better financial world by helping as many businesses as possible to access finance, and investors to earn attractive returns.

Over the last few months you will have seen an increase in lending opportunities with record levels of demand from businesses across the UK. Within the next 12 months we expect demand to increase substantially, and our aim over the next few years is to grow to become a significant part of the small business lending market. In the UK, this is an estimated £7.5bn per month market.

To achieve this we want to ensure we have a diverse range of investors at Funding Circle. More investors helps us to attract more businesses, as we have seen from the Government’s involvement. This helps to deliver more lending opportunities for everyone and ensures long-term stability and sustainability for the Funding Circle marketplace.

As you will probably be aware, we have mentioned before that there is a lot of interest from organisations, such as pension funds, insurance companies, family offices and hedge funds, to join Funding Circle to lend.

We have been considering the best way to introduce these new types of investors to the marketplace in a way that is sustainable and also protects the experience of individual investors.

As part of our considerations we have closely followed the developments of the US peer-to-peer lending market over the last 18 months, where larger investors have purchased whole loans rather than lots of individual loan parts. This has shown to us that introducing the ability for investors to buy whole loans is a successful way of creating more lending opportunities for everyone, whilst also protecting individual investors’ Funding Circle experience.

Today we’re announcing that from early May we will be starting a one month ‘whole loans’ trial with a small group of non-bank financial institutions who will lend up to £3m in total. These whole loans will be purchased in full and it will not be possible for individual loan parts to be purchased, as is the case with the ‘partial loans’ that are listed today.

Initially, this will be a closed trial and last for one month beginning 1st May. During the trial whole loans will not be visible on the marketplace; however we will continue to publish details of every loan in our loan book and clearly indicate whether a loan is a whole loan or a partial loan.

While we anticipate most investors will continue to prefer lending on partial loans, once the trial has been successfully completed we will make whole loans available to any interested investors. You can register your interest after the trial by contacting us at community@fundingcircle.com.

Today’s news does not mean individual investors will become any less important to us. Helping individuals earn attractive returns by backing British businesses is in the DNA of Funding Circle. It is something we are very proud of and will remain a core part of the business as we grow.

For more information about today’s news, visit our FAQs or join us on our forum where we will be discussing this in more detail. You can also read more here about how whole loans have worked in the US.

The Funding Circle team

Over £3 million lent and nine £100,000+ loans listed

Week 16: 14 – 20 April 2014

Over £3 million made its way to businesses across the UK last week and we saw 57 new lending opportunities listed on the marketplace, including nine loans for over £100,000. The South East saw the most businesses listed, with the North West and Midlands coming a close second. The majority were in the manufacturing and professional services sectors.

New loans

There were 57 new business loans listed last week and there are currently 36 auctions on the marketplace.

The total value of the new listed loans was £3,059,400; that’s an average of £53,673 per loan. The largest loan value was £265,200 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 of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn. Number of loans and value of loans are reported weekly. The dates on the graph should be read as ‘week beginning’, for example: 14-Apr represents the week of 14th – 20th April.

Weekly average gross yield (2 weeks rolling)

Yield.jpg

Number of listed loans per week

Number.jpg

Listed loan value per week

Value.jpg

News you should know about

Business case study video

Did you help a 40 year old yarn business based in Bradford expand and modernise? Watch the video here.

Loans defaulted last week

Language school. Loan ID 251 and 1336

This business has been trading for twelve years and has fallen into arrears with repayments by more than three months on two Funding Circle loans. The first was taken three years ago for £35,000 and the second was taken two years ago for 30,000. All 912 investors have been notified.

Renewable energy business. Loan ID 2612

This family business of 35 years has been placed in voluntary liquidation and we are in the process of contacting the guarantors to seek a full recovery. The original loan amount was £20,000 and all 292 investors have been notified.

Our collections and recoveries team are working to recover the outstanding amounts for all of these loans.

Enjoy lending, The Funding Circle Team

* Terms & conditions apply

Investment through Funding Circle involves lending to small and medium sized businesses, so your investment can go down as well as up. Remember, past returns are not necessarily a guide to future returns.