Funding Circle may adjust transfer payments for investors selling loans

Funding Circle could increase the selling fee it charges investors to offload loans, as part of efforts to protect returns on the platform.

Investors on the peer-to-peer business lending platform are currently charged a transfer payment fee of 1.25 per cent when they want to sell loan parts.

This money is passed on to other investors who purchase the loans through their portfolios but Funding Circle has suggested it may be increased, to ensure the buyers are getting a price that reflects current market conditions.

Read more: P2P fights back as coronavirus chaos threatens UK economy

“As the transfer payment goes to the buyer of the loan – rather than Funding Circle – this will help to ensure investors continue building resilient portfolios that are well-positioned to withstand changes in the economy,” Funding Circle said in a blog post on its website.

“We closely monitor both our loanbook and the external environment, and will review the transfer payment on an ongoing basis.

“If we adjust this, we will update investors listing their loans for sale at that time.

“Otherwise, we will keep you updated through the access money tab on your account, where you will be able to see the current transfer payment being applied.”

Funding Circle warned that over the next few months investors are likely to see an increase in the number of late loans in their accounts.

This is because some businesses will inevitably experience an impact as a result of Covid-19 and may find it difficult to make their full monthly repayments, with government support likely to take time to reach them.

The platform has deployed additional resources to its collections and recoveries team who are working closely to support these businesses through this period and may offer those in difficulty payment holidays.

“Providing flexibility in the short-term – for example through payment plans which allow businesses to reduce or have a temporary break from their repayments – will help many of these businesses to get through the next few months, and allow them to maintain their monthly repayments over the term of the loan,” Funding Circle said.

“This will minimise avoidable credit losses in the long run, protecting your returns in the process.”

Last week Funding Circle tightened its lending and adjusted its pricing to mitigate the economic uncertainty caused by the coronavirus.

The platform has also recently revealed it will review all of its retail and hospitality offers and all of its offers are now only valid for 14 days.

“As this fast-moving situation develops, we will continue to ensure your portfolio is well-positioned to deliver resilient returns,” Funding Circle said.

“The ability of businesses to access finance is more vital than ever, and your lending will form an integral part of this support.”