* This is the weighted average return across all investors lending for 1 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. 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 is correct as of 02 July 2015. See the full calculation here.
For average annual return by loan origination year, click here.
The below table outlines how our loans are performing by year of origination. Its important to remember that it could take up to 5 years for loans to be fully repaid. This means that the actual return to date shown below will change over time as some businesses will not be able to fully repay their loans. The estimated annual return at origination is the return we expected the loans to achieve when they were made, after all future bad debts have been realised.
|Amount lent (£)||£17m||£49m||£129m||£278m||£224m|
|Average age of loans (months)||34||33||23||11||3|
|Actual annual return to date (%)||3.6%||6.5%||5.6%||8.2%||9.1%|
|Estimated annual return at origination (%)||5.7%||6.3%||5.3%||7.1%||6.9%|
Data correct as at 7 July 2015.
See the full calculations for past performance by loan origination year here.
Past performance is not necessarily a guide to future performance.
The chart shows the minimum, weighted average, and maximum simple interest rate bids that have been accepted on loans at Funding Circle.
These are the interest rates achieved by investors before fees and bad debts. Remember, you are lending to businesses so your capital is at risk.
You can use the dropdown menu to change the number of loans included. This data is updated daily.
At Funding Circle investors lend to lots of businesses to spread their risk. The Funding Circle 100 Club is a guide for investors to diversify their portfolio and maximise their returns.
100% of investors who have been lending for at least 1 year and lent to 100 businesses equally are currently earning a positive return.
Below is the latest distribution of returns for investors by different levels of diversification: for those lending to at least 100, 50 and 10 businesses with a maximum of 1%, 2% and 10% of their lending to any one business respectively. 62% of investors that are lending to at least 100 businesses (with a maximum exposure of 1% of their total lending to any one business) have earned more than 6% average return after fees and bad debts per year*. This data is based off actual returns for people lending for at least 1 year and does not include future expected losses. Remember, past performance is not necessarily a guide to future performance. Data is correct as of 02 July 2015.
The returns shown are based on the 30,756 investors who have been lending for at least 1 year (70.9% of all active investors) and have been at the stated level of diversification for at least 75% of the days they have been lending for. 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. This data is based off actual returns for people lending for at least 1 year and does not include future expected losses. Remember, past returns are not necessarily a guide to future returns.
See the full calculation here.
As part of lending to small businesses, it’s important to remember that a percentage will be unable to repay their loan, because something significant changes in their business. You should consider this percentage when deciding the gross interest rate you’d like to bid to businesses.
To help with calculating, you can use the estimated annual bad debt rates as a guide to what to expect on a year-to-year basis. Simply deduct the below estimated bad debt percentage from your headline yield (ie, interest rate offered to the business) less the 1% Funding Circle annual servicing fee to calculate your estimated net return after fees and bad debt, but before tax.
|Estimated annual bad debt %||0.6%||1.5%||2.3%||3.3%||5.0%||8.0%||1.9%|
The below graphs highlight estimated lifetime bad debt levels versus the actual performance of loans. The graphs are broken down into six month groups with the exception of 2010/2011 which has a lower amount of lending and has been grouped together for better comparison.
The graphs show that the actual percentage of bad debt levels versus expectations has consistently improved. E.g. during the first half of 2013 the number of bad debts is below estimated levels. Data is correct as of 02 July 2015.
We also publish the full history of bad debts and compare these with the estimated lifetime bad debt levels at Funding Circle. Please note, that the C risk band was introduced in October 2011, D in July 2013 and E in July 2015. This data is updated daily.
|Current bad debt %||0.2%||1.2%||2.1%||2.6%||3.1%||0.0%||1.5%|
|Estimated lifetime bad debt %||1.2%||3.0%||4.9%||7.1%||11.2%||20.6%||4.2%|
The current bad debt is the percentage of all Funding Circle loans in default which have not been repaid.
Estimated lifetime bad debt is the percentage of all Funding Circle loans which are not estimated to be repaid over their total lifetime (remember we offer 6, 12, 24, 36, 48 and 60 month loans). For example, for every £1000 of loans in the A+ risk band we expect that there will be around £12 of bad debts over the life of the loans.
The bad debts could happen at different points throughout the lifetime of the loan so the annualised impact could vary.
|Actual arrears as % of outstanding balances||0.0%||0.4%||0.9%||0.2%||0.0%||0.0%|
|Total amount of payments more than 45 days late but not defaulted, as a percentage of all outstanding balances from loans made in a calendar year.|
|Actual lifetime bad debt rate||4.0%||5.5%||3.7%||3.3%||1.2%||0.0%|
|Total bad debt over the lifetime of the loans, as a percentage of amount lent in a calendar year. Please note this is not an annualised number.|
|Estimated lifetime bad debt rate||3.2%||3.3%||4.2%||4.5%||4.6%||4.0%|
|Estimated lifetime bad debt rate as a percentage of amount lent in a calendar year. These figures are based on the weighted average of all risk bands of the loans funded in a calendar year. The estimated lifetime bad debt has increased as we have added C, D and E loans over time.|
|Loans originated in calendar year as a pound amount.|
The table below shows the current performance of all loans at Funding Circle. This data is updated daily.
|Late < 30 days||437,218||619,711||404,656||539,488||160,573||-||2,161,646|
|Late >= 30 days||217,809||542,000||200,485||215,831||98,659||-||1,274,785|
|Late >= 90 days||2,750||-||370,233||151,514||-||-||524,496|
|Fully repaid loans||312||567||563||419||90||-||1,951|
|Late < 30 days||5||14||17||10||6||-||52|
|Late >= 30 days||4||12||5||9||3||-||33|
|Late >= 90 days||1||-||7||6||-||-||14|
Registered lenders can download the entire Funding Circle loan book.
The return is a percentage, calculated to show the return investors* have earned through Funding Circle after fees and bad debt, but before tax, over an annualised period.
To calculate it we take the following:
We take the sum of the cashflows for every day the investor has been lending (ie, from day 1 right through to the current day).
This will reflect the outstanding amount lent to businesses, less any bad debts you have incurred during the period
This is the amount of interest you have earned up until the current day but has not yet been paid to you
The above inputs are taken over a given time period so we can calculate the return for each investor, whereby:
We create an annualised return figure ( r ) by calculating this over a 365 day period.
We then use this formula to calculate the return:
This return expression is just one way to show the returns investors have made through Funding Circle. We think it is the most useful and accurate way to measure investment performance because it takes into account both our fees and any bad debts but as with many calculations it has some limitations, including:
There are other methods for evaluating historical or potential investment return that you could choose to use instead and you may want to consider these methods as well.
This estimated return is your return after fees and bad debt, but before tax. This calculation takes your bid rate and deducts the 1% annual investor fee and estimated bad debts for this risk band (based on a fully diversified portfolio lending to all businesses within that risk band).
Annualised, estimated bad debts by risk band are:
These estimates are provided as a guide only. Actual bad debts vary for each investor. You may incur more or less bad debts than estimated. With lending to businesses, there is the risk that the value of your investment could go down as well as up. Returns are shown before tax, to read more about tax treatment click here.