Retail investors have earned average net returns (after fees and bad debts) of c.5% annually lending to businesses on the platform. Lisa Jacobs, CEO, said retail lending represents only circa 5% of Funding Circle’s total loans under management, with 90,000 customers using it to lend to small businesses since its launch in 2010. Funds can be withdrawn at any time and Funding Circle added that for any loans which have defaulted, it will “continue to work hard to recover these funds through our Collections, Recoveries and Litigation teams, or by returning funds to you immediately through future sales of debt to third parties”.
It will continue to manage customer loan portfolios on an ongoing basis until all remaining loans have been repaid or recovered. This includes buying and selling loans through the secondary market. However, since the pause, retail investors have continued to receive payments from existing non-CBILS borrowers with funds returned on a monthly basis.īut, Funding Circle’s annual results (to 31 December 2021) confirmed it is permanently closing the retail platform to new investments. The secondary market for retail investors was also paused as Funding Circle concentrated on supporting the government’s SME stimulus programme after being accredited to offer the Coronavirus Business Interruption Loan Scheme (CBILS). The company's growth trajectory suggests it is likely to benefit from strong investor interest.įunding Circle already has a presence on the stock market, having listed an SME income fund on the London Stock Exchange in 2015.Ī successful float of the broader group, which would emulate that of rival Lending Club in the US in 2014, is likely to spark a race among UK competitors to go public.įunding Circle declined to comment on Ms Keers' appointment, which is expected to be announced on Thursday.The SME loans platform paused peer-to-peer (P2P) lending for retail customers in April 2020 to protect investor returns amid the uncertain economic environment. It would also be likely to crystallise a more modest windfall for Eric Daniels, the former chief executive of Lloyds Banking Group, who sits on the company's board as a non-executive director.įunding Circle is chaired by Andrew Learoyd, a former Goldman Sachs banker, who has been involved with the company since its launch. If an initial public offering is successfully completed, it will value the stakes of the three Funding Circle founders in the tens, and probably hundreds, of millions of pounds. He subsequently moderated his warning, acknowledging that peer-to-peer lending was "likely to become a stable, significant and useful part of our total credit supply system". However, some prominent City figures, including Lord Turner, the former FCA chairman, have previously raised concerns about the industry's lending standards.
Peer-to-peer lending has come under growing scrutiny as the asset class has expanded, with rivals including Ratesetter recently following Funding Circle by gaining full authorisation from the Financial Conduct Authority.
The company has struck partnerships with Royal Bank of Scotland and Santander UK. They identified opportunities offered by new technology to provide access to finance for businesses frozen out by mainstream banks, while also promising superior returns to investors. Temasek Holdings, the Singaporean state-owned vehicle, is also an investor.įunding Circle was set up by executives including Samir Desai, who remains its chief executive. The company's rapid growth has earned it the status of one of the UK's few fintech "unicorns" - companies which have achieved a prized $1bn price-tag.įunding Circle's big shareholders include funds such as Baillie Gifford, the Edinburgh-based manager, DST Global, Index Ventures and Rocket Internet. Its pitch to borrowers is that it offers rapid and flexible financing, truncating the traditional process on which they would have depended from mainstream banks.
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