Frequently Asked Questions
What is Funding Circle?
Funding Circle is the world’s leading online marketplace for business loans. Using cutting-edge technology, we match established small businesses who want to borrow with investors who want to lend in the US, the UK and Europe. Since launching in 2010, investors at Funding Circle — including 60,000 individuals, financial institutions and even the UK Government — have invested $3 billion in more than 25,000 businesses globally.
Why do borrowers choose Funding Circle?
We offer competitive rates, manageable repayment schedules and don’t charge hidden fees. We also work hard to make our loans as user-friendly and convenient as possible. Each applicant is provided a dedicated loan specialist who strives to understand their specific financing needs and guide them through the application process.
How do you differ from a bank?
For small businesses, we know that time is money. Unlike a bank, our application process is quick, easy and transparent. Borrowers can apply for a loan online in just 10 minutes, find out if they are approved within 48 hours and get the money in their bank account in as few as 10 days. We also know that a credit score isn’t the only indicator of a healthy business. While the underwriting process at traditional banks is clunky and inflexible, we combine technology and big data with seasoned small business underwriters to better understand the businesses we lend to and find terms that suit their needs.
What differentiates Funding Circle from other marketplace lenders?
Many things. However, if we needed to narrow the list down to three primary ways that Funding Circle stands out as a marketplace lender, we would highlight:
- We focus exclusively on small businesses lending
- Our platform leverages both technology and the human expertise of our seasoned team of underwriting professionals
- Our loans are secured by the business assets of our borrowers (perfected by a UCC-1 filing), and we also require the business proprietor to execute a personal guarantee
What are your loan terms and rates?
Our loans are secured, fully-amortizing small business term loans. They range from $25,000 to $500,000, have 6 months to 5 year terms, and coupon rates between 4.99% and 27.79%.
How long have you been in business?
We are a global company that was founded in 2010 in the UK. Here in the US, our predecessor, Endurance Lending, was founded in 2012 and made its first loans in February 2013.
What do you expect your loan volume to be this year/next year?
Funding Circle is the leading small business marketplace globally and has originated more than $3 billion in loans globally since inception. Our loan origination rate has grown steadily every year, and we anticipate those volumes will continue to grow over time.
Who can invest on Funding Circle’s platform?
Funding Circle works exclusively with accredited investors that are US citizens or permanent residents at this time.
How do you make money as a company?
We charge borrowers an origination fee of 0.99% to 6.99% on a funded loan. We also charge investors an annual servicing fee on the unpaid principal balance of outstanding loans.
How is the investor servicing fee applied?
The 1.00% servicing fee* is applied as a 1/12th of 1% (0.083%) monthly fee on the unpaid principal balance of outstanding loans, which we deduct from the principal payment for each loan every month.
What is a broker-dealer? What is Funding Circle Securities?
A broker-dealer is a person or firm in the business of marketing, buying and/or selling securities. Funding Circle Securities is the affiliated broker-dealer of Funding Circle USA, an online small business loan marketplace.
What is a Borrower Payment Dependent Note (“Note”)?
Borrower payment dependent notes or “Notes” are securities issued by Funding Circle Notes Program, LLC (“FC Notes Program”), providing an investor with a security interest in a fractional portion of a loan.
What should I know before I invest with Funding Circle?
Investing in small business loans carries risk. Returns are not guaranteed and some loans will default. A diversified loan portfolio may enable you to spread your risk among many borrowers. We encourage investors to build a portfolio of at least 100 diverse loans.
What happens if Funding Circle goes out of business?
Notes are issued by Funding Circle Notes Program, LLC (“FC Notes Program”) and held in a special purpose vehicle, Funding Circle Notes Program, LLC, which has been organized in a manner that is intended to minimize the likelihood that FC Notes Program will become subject to a bankruptcy proceeding. However, if FC Notes Program becomes subject to a bankruptcy proceeding, the rights of Noteholders could be uncertain and payments on the Notes may be limited or suspended.
Ways to Participate
How can I participate on the marketplace?
Funding Circle Securities offers two options for building a diversified portfolio of Notes on the marketplace. Login to pick and choose Notes that suit you, or set your desired investment criteria for Notes and your portfolio will build automatically. It’s your choice.
1) Login to browse & select investments
Investors can browse through Funding Circle’s marketplace to view listed loans and purchase Notes issued by Funding Circle Notes Program. Loans are listed daily at 1pm PT with a one hour preview period beginning at 12pm PT.
2) Enroll in automated investing
Investors on Funding Circle’s marketplace can set their desired investment criteria and automatically build a diversified portfolio of Notes by enrolling in automated investing.
How do I set up automated investing?
Investors can enroll in Funding Circle’s automated investing program with these three easy steps:
1) Authorize investment for specific maturities and FC Ratings.
2) Specify a maximum amount to commit per series of Notes (must be units of $500 and no more than your set max per loan amount).
3) Turn the automated investing program on.
Once these investment criteria are set, the platform will automatically build the investor’s portfolio. We reserve a portion of all loans and allocate on a pro rata basis prior to listing on the marketplace. Investors can ensure that they gain exposure to Notes corresponding to borrower loans that meet their investment criteria – without having to login!
Can I invest with an IRA?
Funding Circle USA welcomes investments via traditional or Roth IRAs. Combine the benefits of Funding Circle returns with the tax advantages of an Individual Retirement Account by opening a Funding Circle self-directed IRA. Self-directed IRAs are offered in partnership with our preferred custodian, Self Directed IRA Services, Inc. (SDIRA).
What is the investment minimum to open an account?
The minimum investment to open an account on the Marketplace is $50,000. A diversified loan portfolio may enable you to spread your risk among many borrowers. We encourage investors to build a portfolio of at least 100 diverse loans.
Is there a secondary market for Notes (i.e. fractional loans)?
We do not have a secondary market at this time. It is possible that we may launch a secondary market in the future, but investors should invest with the intent and expectation of holding purchased Notes until maturity.
When are new loans listed?
New Notes (i.e. fractional loans) are listed daily. There is a one hour preview period at 12PM PT before loans go live on the Marketplace at 1PM PT.
What is the minimum amount I can invest in a fractional interest in a loan?
The minimum amount is $500 per Note.
When are the loans funded?
Loans are funded the first business day following the initial listing date. Investors pay only the par value of the loan, even if several days of interest have accrued. This means - investors purchasing Notes on the Marketplace will receive a pro-rata share of previous accrued interest at no additional charge!
Why is a portion of every loan listed on the market already sold?
The Marketplace serves three different primary groups of investors, each with different investment mandates and objectives: 1) funds, 2) Automated Investing participants, and 3) pick and choose participants. Funding Circle reserves a portion of every Note listed on the Marketplace for each of the three groups, ensuring that investors in each group can participate. Funds and automated investing allocations are made prior to loan listing on the Marketplace for pick and choose investors (i.e. this is why a portion of every listed loan is already sold).
Do you have API capabilities for investing in the Marketplace?
Yes. Funding Circle’s API was built using REST in order to ensure fast and efficient access to your data. We’ve created multiple endpoints allowing you to see information about your holdings, pending orders, portfolio and transactions, as well as allowing you to view and purchase current listings. For more information on our API capabilities, click here.
Automated Investing Platform
Do you have automated purchasing capabilities?
Yes. We have an automated investing option that all Marketplace investors can use at no additional cost. It allows investors to specify term and risk band criteria that they would like to automatically purchase. You can turn on automated investing once your account is open by completing the form provided in your Investor Portal.
How does your Automated Investing program work?
Automated Investing is open to any and every marketplace participant. Investors are provided a form to complete, wherein they authorize Funding Circle to make investment on their behalf, up to a maximum amount per Note (specified by the investor) for each Note that meets the investor’s specified term and/or risk-band criteria. There is no cost to participate, and it can be canceled any time.
Will I receive the maximum amount per Note that I specified with automated investing?
No. Funding Circle reserves a portion of every Note for Automated Investing participants, and treats all automated investing participants equally regardless of their sign-up date. In situations where the cumulative requested purchases via the Automated Investing program exceed the dollar amount of the loan reserved for auto-invest participants, each automated investing participant will be invested pro-rata relative to their specified maximum purchase amount.
For example, let’s say that a new Note to be listed on the marketplace had $40,000 reserved for Automated Investing participants, and the cumulative authorized purchases via the auto-invest program were $80,000. In this scenario, each auto-invest participant whose criteria authorized investment into this loan would have 50% ($40,000/$80,000) of their maximum authorized purchase amount invested into the loan.
Individual Retirement Account (IRA)
Do you support IRAs?
Yes, we do. Accredited investors who desire to take advantage of the tax benefits of an IRA to invest on the Marketplace can do so by setting up an IRA account with our preferred IRA custodian: Self Directed IRA Services.
How do I set up an account with Self Directed IRA Services?
Our investor relations team will work with you to set up your account with Self Directed IRA Services. You will be able to electronically sign and complete the necessary documents.
How long does it take to set up an account with Self Directed IRA Services?
Once our investor relations team has submitted the necessary documents, it takes between 2-4 weeks for Self Directed IRA Services to set up your new account.
Are there additional costs associated with opening and IRA account?
SDIRA charges fees for administering each Funding Circle self-directed IRA. However, Funding Circle will pay all of your first year SDIRA fees as well as all recurring fees in subsequent years if your SDIRA account is used exclusively to hold notes placed by FC securities.
What is an Accredited Investor?
Under the Securities Act of 1933, a company that offers or sells its securities must either register the securities with the SEC or offer the securities under an exemption from the registration requirements. Notes offered through Funding Circle Securities, LLC (“Funding Circle Securities”) and its US-based afiliates (collectively “Funding Circle”) are not registered; Funding Circle uses the exemption allowed by Rule 506(c) of Regulation D to offer its securities. Therefore, Funding Circle may sell its securities only to “accredited investors,” a term defined in Rule 501 of Regulation D.
Generally, to qualify as an accredited investor, an individual must satisfy one of the below conditions:
- earned income that exceeded $200,000 (or $300,000 together with a spouse) in both 2013 and 2014, and reasonably expects the same for the current year, OR
- has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
You can find more details here.
You’re requesting a lot of personal information. Why should I trust you?
Funding Circle Securities is a licensed, regulated broker-dealer, registered with the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC). As such, Funding Circle Securities is subject to the same data protection and privacy rules as the large, well-known brokerage firms at which you may currently hold accounts. We take your privacy very seriously, and will never share or sell any of your personal information without your consent.
Why are you asking me for so much documentation?
Funding Circle, through its affiliated broker-dealer, markets its offerings to the public (this is defined by the SEC as “general solicitation”). In order to use general solicitation and still qualify for an exemption from securities registration, Funding Circle offers its securities under the exemption provided by Rule 506(c) of Regulation D. Rule 506(c), created as a result of the 2012 JOBS Act, includes explicit requirements for verifying the accredited status of investors participating in private securities offerings (full text of the rule can be found here).
I’ve invested in other private placements, and I’ve never had to provide this before.
Prior to the 2013 adoption of Rule 506(c), it was common practice for issuers and broker-dealers to accept self-certification as a means of verifying the accredited status of investors. Today, in fact, issuers who do not actively market their securities and only make offerings to investors with whom they already have relationships may use the Rule 506(b) exemption. Under 506(b), self-certification is still an accepted practice.
The 506(c) rules, however, are very clear, and explicitly do not allow self-certification. If you have self-certified your accredited status for private investments in the past, you likely invested under one of the following scenarios:
- The issuer was not engaged in general solicitation, and was using the 506(b) exemption, or another exemption which allows self-certification;
- The investment took place before Rule 506(c) became effective; or
- The firm or issuer you invested with has not updated its procedures in accordance with the new rules.
We realize that our requirements may seem onerous. However, Funding Circle prides itself on its compliance program, and believes that full and strict adherence to regulations is essential to protect both our investors and borrowers, and build a sustainable business.
Borrowers and Underwriting
How would you describe Funding Circle’s underwriting?
Underwriting is the core of our business, and every Funding Circle loan is analyzed by our dedicated team of seasoned underwriters, who bring years of industry experience in small business loan underwriting (typically acquired at a regional or community bank). Our process is unique because we take a holistic approach to understanding small business credit worthiness. We analyze each borrower using both our proprietary credit models (that process “big data”) and human judgment/review, which we believe is critical to our ability to understand the nuances of each small business and to determine if it is creditworthy.
What are the minimum requirements for a business to qualify for a loan?
We evaluate businesses based on operating history, and FICO among other criteria. There are minimum threshold requirements for a business to be considered. All businesses are located in the US.
Are loans secured? What collateral do you require?
Every Funding Circle loan is secured by the collateral of the business (perfected by a UCC-1 filing), and we also require the proprietors of the business to execute a personal guarantee.
What does Funding Circle do to prevent borrower fraud?
Funding Circle seeks to detect and mitigate fraud by using a variety of tools to help us determine 1) whether the applicant a real person, 2) whether the borrower a real business, and 3) whether we can link the proprietor to the business. Examples of what we look for include multiple names or SSNs, an address match across data sources, web presence (if applicable), LexisNexis business and personal reports, etc.
In addition, underwriters use Funding Circle’s proprietary fraud scorecard to help identify potentially fraudulent loan applications. All signatories to a loan must successfully answer a set of knowledge-based authentication questions that are multiple-choice questions pulled from public records and used to confirm the identity of the proprietor(s) and the applicants prior to receiving funding.
Prepayments, Delinquencies and Defaults
Do you service your own loans?
Funding Circle is the servicer of record on every loan we underwrite and originate. However, we do utilize partners or sub-servicers to service the loans. For example, we work with a servicer to conduct the day to day servicing operations (e.g. borrower ACH debiting and cash management), and we also work with multiple debt recovery and workout firms.
What do your sub-servicing providers do?
Our sub-servicer currently performs customer introduction communications, loan portfolio reporting (including the delivery of cash transactions reports to Funding Circle), payment processing, borrower customer service, delinquency and default management, and other debt and loan collection services on Funding Circle’s behalf.
Who handles liquidations?
Funding Circle has an in-house Portfolio Manager who is responsible for leading internal servicing and collections efforts. If a loan enters a collections process, Funding Circle will generally engage one of two leading national collections law firms to handle specific workout and collections situations at Funding Circle’s discretion. This hybrid collections approach (in-house Portfolio Manager and national collections law firms) enables Funding Circle to appropriately assess each and every loan, and when appropriate, leverage the field expertise of our partners in many states to deal with particularly complex situations.
What is your prepayment policy on the loans?
We do not charge our borrowers a prepayment penalty.
Are there any late payment or default fees?
Funding Circle may assess a late fee, but this fee is used to help cover the incremental costs of collecting a late payment; investors do not receive a late payment fee.
What procedures do you have in place for portfolio management?
We closely monitor our loan portfolio and strive to identify potential payment issues before missed payments occur. Funding Circle and its sub-servicer are notified if there are any additional UCC filings by the borrower or if there are new adverse actions or impairments added to their Experian Commercial Credit Report. In addition, our team proactively calls every borrower at least once a year to check-in and have a dialogue regarding general business conditions.
When a monthly ACH debit fails, our sub-servicer contacts us the same day. Based on the Borrower’s willingness to engage with us, Funding Circle unilaterally determines whether to have our sub-servicer continue the collection effort or whether it should take over all forward communications.
How will I be notified and kept informed when a loan is delinquent?
When a business does not make a scheduled loan payment on time, Funding Circle updates the “Payment status” on our Investor Portal accordingly. Additional information for any loan with a “Late” or “Defaulted” status can be found in the “Notes” section of the “Loan information” tab of each respective listing.
How do you work with borrowers whose payments are delinquent?
Open communication is key to our portfolio management process—we seek transparency from our borrowers about the facts and circumstances of their current and anticipated financial situation that inform our decisions so that we may work together to resolve payment issues as they arise, and/or establish reasonable solutions for delinquent borrowers with the objective of maximizing recoveries for investors. For all loans declared in default, legal collections remedies are utilized.
What happens when a borrower defaults?
Our collections efforts seek to maximize recoveries for investors. For certain delinquent loans, Funding Circle expects to leverage third-party collection firms for technical expertise relating to litigation, bankruptcy and enforcement of security. All third-party collections firms will be required to meet Funding Circle’s data security requirements. We will negotiate industry-standard commission and fee structures for all third-party collections firms that we engage.
What happens if a borrower/business proprietor or primary guarantor passes away?
If the business is still operating, we will continue to collect payment and ask for a new personal guarantee for the remainder of the term. If the business stops operating, then we will file a claim against the borrower’s estate to attempt to recover the outstanding loan balance.
What happens when the business or the individual guarantor files for bankruptcy?
When we receive notice of a bankruptcy filing on either the business or individual guarantors, an automatic stay immediately halts all of our contact and collections activities with the business and individual guarantors. Accordingly the loan is defaulted and we wait for the bankruptcy proceeding to finish. Once the bankruptcy is either dismissed or discharged by the court, Funding Circle is able to commence legal action against the entity which did not file for bankruptcy (this is because of the dual UCC-1 lien and the personal guarantee).
How do you use the personal guarantee in recoveries?
We are committed to having the best collections and recoveries process in the industry — ensuring investors feel confident in investing in businesses on our platform. As part of this, we’ve designed an open, honest and transparent collections process that provides us with multiple paths to pursue a resolution. That’s why, in addition to filing a UCC-1 against a business’ assets, we also require business owners to provide a personal guarantee.
A personal guarantee gives us the right to also go after personal assets — such as real estate, savings, or other valuables – should a business default on their loan. Research has also shown that borrows with personal guarantees are more likely to continue to repay their loan, especially ahead of other debts they may have.
If a borrower cannot or will not pay for their arrears, we will leverage all Fair Debt Collection Practices Act compliant collections processes up to and including filing a lawsuit against the borrower to obtain judgment. Our approach is always one of cooperation to resolve these situations.
Taxes and Reporting
This section is provided for informative purposes only, please contact your tax professional for additional questions or concerns.
What does reporting on the Marketplace look like?
Investors receive account statements on a monthly basis that detail information including portfolio holdings, payment history, and unpaid principal balance.
Do you withhold any taxes when loans are sold on the Marketplace?
No, Funding Circle does not withhold any taxes. Please consult your tax professional to address your specific taxation requirements.
What tax forms do you provide investors?
Funding Circle provides investors on the Marketplace with Tax Form 1099.
What is Phishing?
Phishing is a method used by fraudsters to access valuable personal details by purporting to be Funding Circle. Phishing communication can involve the sending of emails, letters, text messages or even phone calls.
How to recognize phishing:
Email communication from Funding Circle will always have “@fundingcircle.com” as the domain name. If the domain name has been varied in any way, including the capitalization of certain letters, this may indicate that the person purporting to be an employee of Funding Circle is a fraudster. However be aware, fraudsters can falsify (spoof) the ‘from’ address to look like a legitimate Funding Circle address.
Communication from Funding Circle will:
- Never ask you to verify both your username and password, whether over the phone or by email.
- Never ask you to disclose personal or payment information by email.
- Always refer to its customers by their name, and will not begin greetings with wording such as “Dear Customer” or “Dear Valued Customer”.
- Never send links, other than in answer to any question directed to our Customer Service team, in any email.
What should you do if you suspect phishing:
Unfortunately, in the majority of cases, Funding Circle will be unable to recover any monies paid over in a scam. However, we do take phishing very seriously, and involve third-party organizations to take down websites where required.
If you suspect that you have been a victim of phishing, please contact one of our Customer Service representatives on firstname.lastname@example.org or (855) 849-1940.
Alternatively, you may wish to report your incident immediately to the FBI’s Internet Crime Complaint Center (IC3) on their website (https://www.ic3.gov/complaint/default.aspx).
*Subject to change
 A UCC-1 financing statement is a legal form a creditor files to give notice that it has or may have an interest in the property of a debtor. No communication, through this website or in any other medium, should be construed as a recommendation for any security offering. This website provides general and preliminary information about securities offered through Funding Circle Securities, LLC (member FINRA/SPIC and subsidiary of Funding Circle USA, Inc.) and is intended for initial reference purposes only. It is not a summary or compilation of all applicable information and is not complete. This website does not constitute an offer to sell or buy any securities. There shall be no offer or sale of any securities without the delivery of confidential offering materials (the "Offering Materials") and related documents. This information contained herein is qualified by and subject to more detailed information in the Offering Materials.