UK government to lend further £40m through Funding Circle
THE GOVERNMENT-BACKED British Business Bank has pledged a further £40m for lending through Funding Circle.
The investment takes the total amount lent by the UK government through the platform to £100m.
The government’s Business Finance Partnership was an early backer of Funding Circle, making a £20m investment in 2013 and the British Business Bank lent a £40m sum in 2014 through its commercial arm British Business Bank Investments.
Funding Circle says British Business Bank Investments has earned a 6.2 per cent annual return by lending to more than 10,000 small businesses through the platform, totalling £5m in cumulative net interest on behalf of the taxpayer and creating 30,000 new jobs.
James Meekings, co-founder and UK managing director of Funding Circle said: “Over the past six years, Funding Circle has proved to be a more efficient way for small businesses to access the finance they need to grow and expand, whilst providing investors with attractive, stable returns.
“This further lending commitment is recognition of the success of the partnership to date and we look forward to working with the British Business Bank to help thousands more small businesses.”
Catherine Lewis La Torre, chief executive of British Business Bank Investments, said: “A key part of our remit is to support the development and growth of such finance markets, while earning an attractive, commercial return for the taxpayer.
“We look forward to seeing our latest commitment to Funding Circle enabling the growth and success of many more businesses across the UK.”
Meanwhile, another early partner, Herefordshire Council, has ended its partnership with Funding Circle, stating that it would withdraw its liquid funds as “the council’s intervention on the Funding Circle platform has now served its purpose.”
The local authority announced in January 2015 that it would lend £50,000 directly to businesses in Herefordshire using the platform.
A statement from the council said: “Funding Circle has sufficient liquidity to guarantee that all business loans placed on the market will be funded. Consequently, the liquidity that the council provides serves no purpose, as Herefordshire businesses, eligible for a Funding Circle loan would be funded by private investors. If the council sells its loan parts (in loans to Herefordshire businesses), it will have no impact on the businesses and it reduces potential risk to council funds.”