Lending through Funding Circle unlocked 45,000 British jobs in 2017

13 Jun 2018

  • New report shows Funding Circle is filling the gap by facilitating lending to small businesses
  • Report reveals full economic impact of the global lending platform, including £2.4 billion contribution to UK economy and £730 million generated in tax receipts in 2017
  • Funding Circle also announces expansion in the UK with 200 new jobs to be created in 2018

A new report published today by Oxford Economics reveals that lending through Funding Circle, the global small business loans platform, unlocked 45,000 jobs in the UK in 2017.

Launched in 2010, Funding Circle facilitates lending from a wide range of investors to small businesses in the UK, US, Germany and the Netherlands. In 2017, investors lent £1.7 billion through the platform to small businesses across all four markets, contributing £4 billion to the global economy (measured in Gross Value Added), unlocking 75,000 jobs. For every £1 lent through the platform, an additional £2 was contributed to GDP across these four countries.

A detailed look at Funding Circle’s impact in the UK:

  • Lending through the platform contributed £2.4 billion to the economy and generated £730 million in annual tax receipts for the HM Treasury in 2017.
  • The report also found that these loans had a significant impact on the UK labour market, with almost 45,000 jobs found to be powered by lending through Funding Circle in 2017.
  • 92% of businesses believed that the Funding Circle application process was faster than through a traditional route.*

Small and medium sized businesses make up approximately half of the UK’s turnover and half of all employment** yet continue to face difficulties accessing finance through traditional channels. In the last quarter of 2017, the combined net lending (total minus repayments) of the major high street banks to small and medium sized businesses in the UK was negative (-£75 million).*** These difficulties have been compounded with the closure of some 423 bank and building society branches across the UK in 2017.****

At the same time, the number of small businesses has grown and today’s report suggests an increasing number are turning to Funding Circle’s platform for finance. In the same quarter of 2017 that bank net lending was negative, investors lent £156 million through the platform to UK small businesses on a net basis alone. This strong growth means Funding Circle is set to hire 400 people in 2018, 200 of which will be based in the UK, bringing the total number of employees to 1,200 worldwide.

Commenting on the news John Glen, Economic Secretary to the Treasury said: “The way people and businesses access borrowing is evolving, and with this new players like Funding Circle are making great contributions to our world-class financial services industry. The success of peer-to-peer lending has brought about real benefits, not only for the businesses of Britain, but as this report shows, our economy at large too.”

Samir Desai, Funding Circle co-founder and CEO said: “It has become evident that small businesses are underserved in every country in which we operate. From butchers and bakers, to IT consultants and accountants, these are the businesses that are creating jobs, boosting productivity and driving our economies forward. The economic impact that these businesses have had as a result of accessing finance through Funding Circle is hugely rewarding to see.”

Ian Mulheirn, Director of Economic Consultancy, Oxford Economics: “The report highlights the growing importance of Funding Circle to small businesses in the wake of the financial crisis, which impaired traditional banks’ willingness and ability to lend. As a result, small businesses have shown an increased appetite for other forms of finance, with online lending at the forefront of these options. Funding Circle is having a significant impact on employment across its four markets and boosting the economy on an impressive scale.”

James Meekings, UK Managing Director and co-founder: “The measurable effect that lending through Funding Circle is having on the UK economy and employment is particularly gratifying. In the UK alone, the activity stimulated by small businesses generated £730 million in annual tax revenues for HM Treasury in 2017. Small business isn’t small – it accounts for around half of the UK’s turnover and half of all employment. That’s why we’ve put their needs at the forefront of our mission, because when they grow, so does our economy.”

By combining a simple online platform with advanced data analytics and proprietary risk models, Funding Circle is expanding the small business ecosystem; 16% of borrowers participating on Funding Circle’s platform stated that they believed they would have been unable to access finance elsewhere.* Businesses are also drawn to the platform by the speed and simplicity of the process. As a result, approximately 30% of businesses are repeat customers, and an overwhelming 90% said they would return to Funding Circle first in the future, rather than a bank.*

The Funding Circle model has opened up small business lending to a wide range of investors for the first time, including more than 70,000 retail investors, banks, asset management companies, insurance companies, government-backed entities and funds across Funding Circle’s geographies. Through its platform, Funding Circle is contributing to the growth of the small business lending market and expanding access to financing at competitive and transparent pricing. Funding Circle provides borrowers with fast and flexible financing through a simple online application, allowing small businesses to access the capital they need in days rather than months.

Download the full report here.

ENDS

For more information

press@fundingcircle.com / +44 (0) 203 667 2245

gduncan@oxfordeconomics.com / +44 (0) 203 910 8025

Director of Communications, Oxford Economics

Notes to editor

* A sample of 522 UK small businesses that had previously borrowed through Funding Circle, surveyed as part of the research conducted by Oxford Economics.

** At the beginning of 2017, firms with less than 250 employees were responsible for 51.3% of all employment in the UK and 49.1% of all turnover. Department for Business, Energy & Industrial Strategy, Business population estimates for the UK and regions 2017: detailed tables, table 2.

*** Data taken from Bank of England ‘Bankstats (Monetary & Financial Statistics)’ – Table A8.1 ‘Monetary financial institutions’ loans to non-financial businesses, by size of business’ under ‘Net loans (excluding overdrafts).

**** Either closed or put on notice of closure. House of Commons Library briefing, Bank branch closures, 9 February 2018.

About Funding Circle

Funding Circle (www.fundingcircle.com) is a global small business loans platform, matching small businesses who want to borrow with investors who want to lend in the UK, US, Germany and the Netherlands. Since launching in 2010, investors across Funding Circle’s geographies – including more than 70,000 retail investors, banks, asset management companies, insurance companies, government-backed entities and funds – have lent over £4.5 billion to more than 45,000 businesses globally. Funding Circle has raised approximately £250 million in equity capital from some of the same investors that backed Facebook, Twitter and Airbnb.

About Oxford Economics

Oxford Economics was founded in 1981 as a commercial venture with Oxford University’s business college to provide economic forecasting and modelling to UK companies and financial institutions expanding abroad. Since then, the firm has become one of the world’s foremost independent global advisory firms, providing reports, forecasts and analytical tools. The company employs more than 200 professional economists, industry experts and business editors—one of the largest teams of economists and thought leadership specialists.