Aegon and Funding Circle announce strategic partnership to support growth of UK small businesses
17 Aug 2017
- Dutch financial services group Aegon will lend directly to small businesses through Funding Circle’s online lending platform over the next four years
Today Aegon and Funding Circle announced a strategic long term partnership to support the growth of UK small businesses. Aegon will invest in loans to UK small businesses originated through Funding Circle, the world’s leading lending platform for small businesses.
The partnership will see Aegon fund £160 million of loans in the first 12 months under a framework agreement, with the intention to extend this step-by-step into a four year funding program. In the first year the investment will help approximately 2,600 UK businesses to access finance, creating an estimated 6,400 new jobs* and providing a much-needed boost to UK small businesses.
Aegon joins a wide range of investors lending directly to small businesses through Funding Circle, including 65,000 individuals, local councils, the government-owned British Business Bank, the European Investment Bank and other financial institutions. By bringing together industry leading risk management and cutting edge technology, investors in the UK have earned an average 6.6% per year** and £135 million of net interest over the last seven years.
The Economic Secretary to the Treasury, Stephen Barclay, said: “Small businesses are the lifeblood of our economy and it’s fantastic news that Aegon are investing through Funding Circle to help them thrive and grow. This partnership with one of the UK’s largest FinTech firms is further proof that the UK remains the global leader in FinTech. Aegon’s venture also shows that there is significant appetite for inward investment into the UK and we hope to see more deals of this scale in the future.”
Mike de Boer, CFO Aegon Bank NV said: “Funding Circle allows small businesses to access much needed funding. The strategic partnership we have signed with Funding Circle is another important step in the strategy of Aegon to cooperate with Fintech partners in the direct lending landscape. This partnership gives Aegon access to attractive small business loans over the next four years, which helps to further diversify our investment portfolio. High savings inflow of our successful Fintech Knab banking operation is used to invest in the Funding Circle loans.
“This agreement follows an extensive due diligence on the loan origination, compliance and risk-returns of the Funding Circle loans. Funding Circle has shown that their robust process, technology and financial innovation capabilities have a positive impact on the UK economy and small businesses in particular. Funding Circle provides quick and transparent funding to small businesses.”
Samir Desai, CEO and co-founder of Funding Circle said: “This partnership is validation of the attractive risk-adjusted returns that are being generated to investors by lending through Funding Circle. Now investors of all shapes and sizes can benefit from the stability of the asset class whilst also providing much-needed job creation and economic growth. We hope our joint programme with Aegon will develop to deliver increased lending to UK small businesses over the coming years.”
To date, Funding Circle has facilitated more than £2.5 billion of loans to 26,000 businesses in the UK. The platform allows any investor, big or small, to lend directly to small businesses and today’s news is recognition of the role lending platforms have to play in stimulating the real economy, whilst providing investors with attractive risk-adjusted returns.
By opening up small business lending to a wide range of investors, Funding Circle has improved competition in the market, supported job creation and reduced small business dependency on bank lending. Creditworthy businesses typically access the capital they need in days rather than months. Research found that 94% of borrowers would come back to Funding Circle first in future, ahead of a bank.***
Notes to editor:
* Based on average loan size of £60,000, and an average 2.6 jobs created directly and indirectly by each business that borrows through Funding Circle (CEBR research, 2016).
** This is the weighted average return across all investors lending for one year or more through Funding Circle over an annualised period. It includes all earnings and is calculated after fees and bad debt but before tax. Data is correct as of 1st July 2017.
*** ‘Small Business, Big Impact’ research commissioned by Funding Circle from the Centre for Economics and Business Research, August 2016.
For more information:
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Dick Schiethart +31 6 2288 9925; Nienke Torensma + 31 6 2261 4765
Funding Circle (www.fundingcircle.com) is the world’s leading lending platform for small businesses, matching investors to businesses who want to grow in the UK, US and Europe. Since launching in 2010, investors at Funding Circle – including 70,000 individuals, local and national government and financial institutions – have now lent £3.3bn to 34,000 businesses globally. Approximately 10% of investor money now comes from Government sources, including the British Business Bank, European Investment Bank, KfW, the German government-owned development bank, and local councils across the UK. The business has raised £250m in equity capital from the same investors that backed Facebook, Twitter and Airbnb.
Aegon is one of the world’s leading providers of life insurance, pensions and asset management. Our Dutch roots date back to 1844. Today, we have operations in over 20 countries, including the USA where we’re known as Transamerica. Over 29,000 Aegon employees help over 26 million customers take responsibility for their financial future. As of June 2017, we managed more than EUR 815 billion of our own and our customers’ investments.