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Peer to peer lending » Funding Circle

Funding Circle

Funding Circle

Funding Circle is one of the first P2P lenders (est. 2009) for business loans. They have helped 54,000 small businesses across the world, and 83,000 investors have lent £5.8 billion through Funding Circle.

Investment products

They offer two investment products; Balanced where the lender can earn a projected return of 4.5 – 6.5% p.a before tax and Conservative where the lender can earn a projected 4.3 – 4.7% p.a. before tax. With either lending option Funding Circle automatically lends funds to relevant businesses with the use of their lending tool, which automatically lends small amounts over hundreds of different businesses. If the lender chooses to keep their auto tool on then earned funds can be reinvested to maximise earnings. There is no manual investing with this platform.

Projected returns shown are after their fee of 1%

The lender's funds will be lent to businesses looking to borrow from 6 months to 5 years.

There are two ways to withdraw your funds:-

Withdraw as you go – If you turn off reinvesting essentially pausing your account, you can withdraw your repayments as they come in from each loan part.

Withdraw in a lump sum – Select the amount you would like to withdraw, and sell your active loans to other investors using the auto selling tool in their secondary market. A fee is involved when selling a loan part of 1.25%, which is paid to the buyer by the seller. There is no guarantee as to how long it will take to sell a loan part, as this is dependent on the demand looking to buy at that time. The seller can only sell loans that are not in default and not in the last month of their term.

Funding Circle manages risk by only lending to businesses that have passed their rigorous credit assessment process. Although, as with all P2P lending, not all companies will be able to repay their loans, Funding circle takes this into account when creating their projected return. They also undertake regular stress tests to monitor the market in the event of an economic downturn.

What happens if they become insolvent?

The FSCS does not cover Funding Circle. They do have a back-up servicer in place, which means if the platform fails or becomes insolvent, they will transfer their obligations to a third party which is currently Target Servicing Limited.
Funding Circle may also charge an addition Special Situation Fee if a back-up servicer is appointed. This is calculated as a percentage of the outstanding principal and will be included in the interest rate of the loan. The back-up servicer will deduct the Special Situation Fee (if applicable) from monthly payments made by the Borrower under the Loan Contract and retained by it for its account.


Funding Circle Products and Investment

    The lender can choose to lend Balanced via their Classic Account.  This option has a higher projected return, with a higher estimated bad debt rate. There is an initial minimum investment amount of £1,000. 

    With Classic accounts, tax is not deducted from your earnings, Funding Circle provides a tax statement which can be downloaded for tax return purposes.

    term: 6 - 60 months min. investment: £1,000 return: up to 6.50%*
    * provided on 16/01/2020

    The lender can choose to lend conservatively via their Classic Account.  This option has a lower projected return, with a lower estimated bad debt rate. There is an initial minimum investment amount of £1,000. 

    With Classic accounts, tax is not deducted from your earnings, Funding Circle provides a tax statement which can be downloaded for tax return purposes.

    term: 6 - 60 months min. investment: £1,000 return: up to 4.70%*
    * provided on 16/01/2020

Investor Overview

  • Choose between two accounts; IFISA and Classic.
  • Tax is not deducted from a Classic account but a tax statement can be provided via a download if needed.
  • Choose lending options; Conservatively (Projected return 4.3 - 4.7%) or Balanced (Projected return 4.5 - 6.5%)
  • Fee 1.25% when selling a loan which is paid to the seller
  • No fees to access funds.
  • Minimum investments from £1,000.
  • Funds are not covered by the Financial Services Compensation Scheme (FSCS) but do have a backup servicer if the platform fails or becomes insolvent.
  • Interested earned is after fees and debts, but before tax
  • A 1% servicing fee is included in the interest rate charged for each loan and is taken into account when publishing their projected returns for investors
  • * correct as of 07/01/2019
Invest

06968588
company number

21/07/2009
incorporated 11 years ago




  • Internet Business Awards Category Award Winner 2015
  • Hertfordshire Business Awards Finalist 2014

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