Watch our 'How it works' video
to get a quick overview of Funding Circle.
Every business loan is funded through the marketplace
1. You can choose from a variety of UK businesses to lend to.
2. Place your bid by deciding how much you want to lend and at what interest rate. Most loans are auctions where investors compete by offering different interest rates, with the lowest interest rates accepted on the loan.
3. The business makes monthly repayments which we distribute back to investors.
You can earn a great rate
When lending you choose the gross interest rate you want to lend to businesses at.
Each business that borrows through Funding Circle is given a risk band from A+ to C- by our experienced credit assessment team, with A+ representing the lowest risk. This helps you set the gross interest rate you bid at, taking into account estimated bad debt by risk band.
Investors are currently earning an average return of 6.1%* after fees and bad debts. Remember, you are lending to businesses so your capital is at risk.
Our fees are simple and easy to understand without any hidden cost:
1% annual fee on the amount of money you have lent, collected when you receive a payment.
0.25% fee on the amount outstanding if you sell your loan parts to other investors.
The government has pledged millions of pounds to stimulate lending to small businesses and has made a particular effort to direct some of this money to new lenders as part of a drive to diversify the sources of finance available in the UK
Meet people already lending to businesses on Funding Circle
I can take control of my return on investment and risk involved
Lending to businesses: what's the risk?
Every business has been assessed by our experienced credit team. We only allow creditworthy businesses to borrow through Funding Circle. Our businesses have typically been trading for around 10 years. However, it's important to remember that some businesses will not be able to fully repay their loan.
The bad debt rate is currently 1.4%
Based on the total £266 million of lending to businesses since we launched in 2010. The current bad debt is the percentage of all Funding Circle loans in default which have not been repaid.
See more detail on our stats page
Managing risk: Diversification
Diversification simply means spreading your lending across lots of different businesses, so you lend a small amount to each one. This becomes important when a business is not able to fully repay its loan as the impact on your overall return will be less. You can choose the level of diversification that suits you. Many investors spread their risk across lots of businesses, whereas others prefer to lend to a handful of businesses that have been carefully selected. You can diversify easily by using the Autobid tool, which automatically lends your money across a number of different businesses.
The 100 Club:
Diversifying your investment
Every investor in the 100 club is lending their money following these two guidelines, leading to a well-diversified approach:
- Lending to at least 100 different businesses
- A maximum of 1% of their total amount is lent to any one business
100% of investors who have followed this approach and maintained this level of diversification for 12 months or more are earning a positive return.
Last updated 19 Feb 2014. Past returns are not necessarily a guide to future returns.
Frequently asked questions
- What's the minimum I can lend?
- The minimum bid amount is £20 for loans on the marketplace. You can credit your account by debit card or you can make a bank transfer. The average Funding Circle investor lends £6,000.
- When is my money repaid?
Typically, you'll receive monthly repayments which you can lend on to other businesses. Businesses can borrow from 6 months up to 5 years.
about accessing your money.
Read all our frequently asked questions
- What returns can I expect?
- The current average return is 6.1% after fees and bad debts*. Remember, you are lending to businesses so your capital is at risk.
- Is my money secure in Funding Circle?
- All loan contracts are directly between you and the businesses you've lent to. If Funding Circle ceased to exist, these would continue to be serviced on your behalf by our backup servicer, Link Financial Outsourcing Ltd. Any funds that you have in your account but have not lent out are also covered as these are held on trust in a secure client account at Barclays Bank plc. Learn more
Meet the businesses borrowing from people like you
This isn't just one person saying they believe in me, this is a whole group of people that think this is a good idea.
Start lending today
Signing up to lend on Funding Circle can only take a few minutes. Enter your email address and choose a password below to get started.
* This is the weighted average return across all investors lending for 180 days or more through Funding Circle over an annualised period. It includes all earnings and is calculated after fees and bad debt but before tax. 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. Data correct as of 19 February 2014. See the full calculation here.