FUNDING Circle has revised down its annual return projections in the face of a weaker credit environment.
The peer-to-peer business lender now predicts investors in its Balanced portfolio will achieve a return of 4.5 to 6.5 per cent a year.
Investors in its Conservative portfolio, meanwhile, could achieve 4.3 to 4.7 per cent a year.
Funding Circle’s Balanced account invests in the full range of businesses on the platform, while the Conservative account only lends to businesses which have been assessed as lower risk.
The projected return is an estimate of the annual return that a diversified investor could earn, after fees and bad debt but before tax, by lending to businesses through each of Funding Circle’s lending options.
Read more: Funding Circle changes projected returns
They are forward-looking estimates for new loans, and will not change returns on existing loans investors already hold, the platform said.
“At Funding Circle we regularly review and update the projected returns that investors can earn when lending to businesses through the platform. A number of factors are involved when reviewing returns: including our assessment process, the interest rates businesses pay, the performance of loans and wider market conditions,” the platform commented.
“The projected rates enable investors to continue earning attractive returns while supporting the growth of British businesses and the economy.”
Funding Circle emphasises that actual returns may differ depending on the number of business to which investors lend, and whether they default on their loans, for example, if macroeconomic conditions change.
Earlier this year, Funding Circle’s chief risk officer said it was revising return projections owing to worsening credit conditions for consumers and businesses, while other P2P platforms also said they were monitoring the situation.
In February, the platform predicted Balanced would deliver 5.5 – 6.5 per cent while Conservative would return 4.9 – 5.2 per cent.
Funding Circle says it will review and, if necessary, update its latest projections in three months.