Who needs banks? South West businesses utilise Funding Circle to get over £3 million in financing.
Nearly 100 businesses in the South West have sidestepped the high-street banks and borrowed through Funding Circle, an online peer-to-peer funding platform which brings together investors and businesses seeking funds. Utilising the online marketplace at fundingcircle.com, businesses can apply for business loans from £5,000 - £250,000, which are funded by over 15,000 individual investors from around the UK. These individuals get to pick and choose which businesses they lend to, and can spread their lending across a range of companies.
Funding Circle has lent more than £5m directly to businesses in the South West, with loans averaging around £40,000. Small businesses borrow from thousands of individual people who bid to lend their money, in turn for a reasonable rate of interest. The lowest interest rate offers become part of the loan offer, so the borrower can be sure of a great deal, while investors get a better rate than on the high-street. Average gross yields on the platform are currently 8.3%. Because the small businesses can borrow from people rather than banks, they sidestep any lengthy processes or delays. It takes just 12 days on average for businesses to complete the process and have their loan paid out.
It’s a novel idea, but one that has been growing in popularity over the past couple of years. Businesses in the South West and around the UK have been using Funding Circle for a wide range of purposes, to fund anything from new asset purchases, to expansion plans, to raising further working capital. There’s a lot of flexibility in how businesses can use the finance, which has proved one of the most popular features of the loans.
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It seems the concept of peer-to-peer lending is set to become mainstream in the coming years. With Government earmarking £100m in lending to UK SMEs through alternative finance channels such as Funding Circle, there will be a dramatic shift in the availability of finance to small businesses.
Bank House Investment Management Ltd, an independent wealth advice and management company, launched in 2006. Earlier this year, they completed a £50,000 loan with Funding Circle to fund the expansion of their award winning practice. With the funds in place, they were able to acquire the client base from two retiring IFAs in the area, which in turn has created employment for an additional 3 staff members.
Tristan Freer, Director at Bank House Investment Management, commented: “The wealth management marketplace has changed significantly over the past 12 months and with this, we could see significant business opportunities that would help us grow our business. Despite our bank agreeing that these were strong opportunities for growth, the restrictive lending limits and committee-based approach to approvals meant they couldn’t help us.”
“In contrast, when we spoke to Funding Circle we had 100% support and once our loan request was live on their marketplace, it was filled within 36 hours. The offering they have for small businesses is incredible. Our aspirations to become a major player in the South West wouldn’t have been possible without Funding Circle.”
James Meekings, co-founder of Funding Circle, said: “Without access to funding, SMEs with huge potential such as Bank House Investment Management Ltd simply can’t grow, which is why peer-to-peer lending platforms such as Funding Circle are so important. We are extremely pleased to have been able to provide Bank House with a loan facility and give the company the capital it needed to expand, creating more jobs in the area.”
Total lending to South West businesses
|Row Labels||Loans through Funding Circle|
|Manufacturing and Engineering||£680,000|
|Professional and Business Support||£491,000|
|Leisure & Hospitality||225,000|
|Education & Training||£135,000|
|Property & Construction||£90,000|
|Transport and Logistics||£43,000|
|I.T & Telecommunications||£10,000|
Are you interested in a loan for your business through Funding Circle? For more information, contact them on 0800 098 8380 or visit their website, fundingcircle.com, to learn more about their loan products and read case studies from businesses around the UK.