Winding-down Funding Circle fund reveals most borrowers are making full repayments

The majority of borrowers in the SME Credit Realisation Fund’s (SCRF) portfolio are now making full payments but the investment trust has said there is still uncertainty over future arrears.

The fund – previously set up to back loans on the Funding Circle peer-to-peer lending platform – is in the process of being closed down.

An SCRF update has shown that as of 30 September, more than 90 per cent of non-defaulted borrowers in the UK were making full payments, with an additional six per cent still on forbearance plans.

In the US, more than 82 per cent of non-defaulted borrowers were making full payments, with an additional 12 per cent still on forbearance plans, while in continental Europe, more than 96 per cent were making full payments, the update said.

However, the report adds that prepayment and settlement rates “remain elevated but are expected to normalise” once government support such as the coronavirus business interruption loan scheme ends.

Read more: Funding Circle investment trust secures backing for closure

“Recoveries in the short-term have been supported by these schemes but long-term recovery expectations have been revised downwards marginally to reflect expectations of weaker prevailing economic conditions,” the document said.

“The ability of small- and medium-sized enterprise borrowers to satisfy their loan repayment obligations, and therefore the performance of the company, will continue to be affected by, inter alia, the path of Covid-19, local and national lockdowns as well as fiscal and monetary response, about which uncertainty remains.”

SCRF posted a net asset value (NAV) return of 6.23 per cent for the third quarter of 2020.

It is currently trading at a discount to NAV of 26.5 per cent.

Read more: Funding Circle fund to return £16m to investors