Funding Circle

Funding Circle was launched in 2010 and was the first peer-to-business provider in the UK, and a founder member of the P2P Finance Association and the Next Generation Finance Consortium.

Funding Circle uses a listing style approach pioneered by Prosper in the USA where companies can provide information on the purpose of the loan along with their financial statements.  Funding Circle will group the business by risk category from A+ through to C- and give estimates of bad debt per risk category.  In addition, certain loans are guaranteed by the directors of the business wishing to raise capital.

Funding Circle charge lenders a 1% annual fee and borrowers a one-off fee of between 2% and 5% on completion.  Lenders can also sell their loans on a secondary market for a 0.25% one-off fee.

Unique selling point

Funding Circle is the major player operating in the peer-to-business arena, and it also pioneered the ability for lenders to sell their loans other than at face value.  This effectively operates as a market within a market.

Competition

Funding Circle has 85% of the peer-to-business market.  There are a growing number of new peer-to-business providers entering the market, but the main competitor is ThinCats.  In addition Funding Circle would be competing with retail and investment banks.

Comments

The web site is professional and communication has been very good.  Funding Circle has been very popular with businesses, and virtually all borrowing requests have been met by lenders.  The lending rates are slightly higher than other P2P companies as borrower demand is quite high.  There are regularly dozens of borrowing requests running concurrently.  Funding Circle have recently raised borrower fee to 3%, but the overall rate to businesses is still competitive.

General	Communication		8/10
	Ease of Web Site		8/10
	Innovation		8/10
Lending	Lending Rates		8/10
	Access to Funds		8/10
	Fees		6/10
	Bad Debt		7/10
Borrowing	Loan Rates		7/10
	Speed of Loan		7/10
	Fees		4/10
Overall			7.1/10

For an in-depth analysis and comparable statistics please refer to the comparisons of the peer-to-peer companies.

In summary, Funding Circle is a win-win for both lenders and borrowers.  The P2P money website recommends Funding Circle as the number one provider for business loans.

Bad debt warning - bad debt can take months to years to materialise, and therefore the actual bad debt figure may not be fully representative, especially when a company's loan book is growing at a significant rate (for example for the first two years Zopa bad debt was 0.05%)

Funding Circle review written by Ian Gurney, last updated on 15^th August 2013