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Funding Circle Gets Approved For Coronavirus Scheme in America - But Still No Approval In The UK

Posted 3 years ago

Funding Circle Gets Approved For Coronavirus Scheme in America - But Still No Approval In The UK
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Author: Sacha Bight & Oliver Murphy

The peer-to-peer lender Funding Circle has received approval for the US scheme to provide funding to small businesses impacted by the economic implications of Covid-19.

Funding Circle is a member of the Responsible Business Lending Coalition, a group of both non-profit and for-profit lenders and small business advocates that share a commitment to innovating small business lending.

The Small Business Administration (SBA) and the US Treasury have given the go-ahead for Funding Circle’s US platform to provide Paycheck Protection Program (PPP) loans.

The program, which provides small businesses with loans of up to $10m to cover payroll costs, mortgage interest and utilities, forms part of the $2tn CARES Act aimed at enabling Americans to get back to work during and following the Covid-19 pandemic.

The loans will be 100% guaranteed by the SBA.

In a statement, Managing Director of Funding Circle US, Bernardo Martinez, said: “We are glad to be able to offer this government-guaranteed forgivable loan that can provide critical capital to small business owners coping with this unprecedented period of economic upheaval.”

The news comes after the P2P lender recently suspended its secondary market in response to coronavirus.

Last week, Funding Circle launched a pre-application system for small businesses owners interested in receiving funds from the PPP to prepare for their application once the platform was admitted into the program.

In the UK, P2Ps are still waiting for approval

It's an entirely different picture in the UK, especially as Funding Circle was originally founded here and has been quoted as one of our unicorns. It was one of the first P2P sites to be regulated and has surpassed over £1bn in lending. It has institutional investors lend through it, including the British Business Bank. However, despite all this, it has still yet to be approved to issue CBILS, along with all other P2P platforms.

Recently, the BBB approved four new lenders to Coronavirus Business Interruption Loan Scheme. Yet not one is a peer-to-peer lender.

Fresh data from UK Finance has revealed that lenders have received 28,460 formal applications to the scheme from businesses, of which just 2,020 have been approved.

According to a spokesman from the BBB, accrediting new lenders was its immediate next priority, adding that the bank has put in place additional resources to assist with processing applications quickly.

The lending processes of leading fintech P2P platforms are seen by many to be more efficient than traditional banking legacy systems, and thus can get funds to small businesses quicker at such a crucial time. 

“P2P lenders are vital in the fight to save small businesses”, said Sacha Bright, CEO of Nextfin.

“Not only do P2P sites use the latest fintech technology, they also mobilise private investor’s cash, not government funds.”

“It's madness that the British Business Bank invests through Funding Circle and other P2P platforms, yet won’t approve them to issue loans under CBILS in this time of national crisis.”

He added: “The government needs to recognise that a good way to get money to small businesses quickly is to extend the CBILS to all regulated P2P lending sites.”


Please remember P2P lending is not guaranteed by the Financial Services Compensation Scheme (FSCS), so at the moment your money is at risk if you decide to invest in a P2P site.

Image Copyright, Funding Circle

Tagged: News P2P Funding Circle

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