FUNDING Circle has altered its projected returns, meaning that investors lending across the platform’s full risk spectrum are expected to earn less money and those opting for lower-risk loans could earn more.
The peer-to-peer business lender said on Friday that that its projected returns for its Balanced account – which invests in the full range of businesses across all risk bands – will now be six to seven per cent.
The target rate on the Balanced account had previously been 7.2 per cent.
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Meanwhile, Funding Circle’s Conservative account – which only invests in businesses assessed as lower risk – is now offering a projected return ranging between five and 5.5 per cent.
This is an increase from the previous target rate of 4.8 per cent.
Funding Circle reviews its assessment process and interest rates on a regular basis. It said that following its most recent review, it had introduced ranges for the projected returns to reflect “an expected level of uncertainty when making predictions about loan performance”.
These project returns only affect new loans made through the platform and will not affect existing investments, Funding Circle said.
It will review the projected returns every three months.
Last December, Funding Circle changed the way its projected returns were calculated. It previously provided an estimate based on the minimum annual returns that 50 per cent of investors could achieve, after fees and bad debts but before tax.
Its projections now show the minimum rate that 65 per cent of investors could achieve.