Funding Circle has tightened its lending and adjusted its pricing to mitigate the current economic uncertainty caused by the Covid-19 pandemic.
In the first half of 2019, the peer-to-peer business lender tightened its lending in response to changes in the macroeconomic environment. It said that it has now extended this tightening, strengthening its criteria for businesses from vulnerable areas of the economy.
The ‘big three’ platform has also adjusted its pricing, taking into account how the economy may perform, to maintain projected returns for new loans at current levels.
Funding Circle also revealed that it has “heightened” its risk monitoring and allocated extra resources to its collections and recoveries team to support the businesses investors are already lending to.
“Funding Circle has the right tools to navigate the coming months,” said chief risk officer Jerome Le Luel in a blog post on the firm’s website.
“Operationally, our staff are already equipped to operate remotely, they are working from home and continuing to serve our customers efficiently.
“We are also the best-capitalised lending platform in Europe. When we became a public company in 2018, we raised a significant amount of capital and at the end of last year we had around £320m in equity capital.
“This means that Funding Circle has sufficient cash to weather uncertain periods. Importantly, we are also able to make decisions that prioritise protecting investor returns over short-term commercial interests.”
Le Luel added that Funding Circle’s loanbook has been built to remain resilient and is well-positioned to withstand an economic downturn.
“For example, our loans have been priced so that if bad debt were to increase multiple times over, our loanbook would still be likely to deliver positive returns overall, once loans have been repaid and recoveries received,” he said.
Funding Circle will continue to monitor the environment closely and will regularly refresh its loan projections through its loan statistics page using the latest available data, Le Luel said.
Last week Funding Circle revealed it had seen a significant rise in searches for business loans as small- and medium-sized enterprises look for financial support to get through the uncertainty caused by Covid-19.