There was a lot of information in Funding Circle’s 2020 results, but one element of the business was conspicuous by its absence – retail lenders.
There was scant mention of retail investors in Funding Circle’s 48-page full year report, after an overwhelmingly retail-free year for the peer-to-peer lender.
In April 2020, the platform paused retail lending in order to focus on lending through the government-backed coronavirus business interruption loan scheme (CBILS). Retail lenders are not eligible to invest in CBILS loans.
At the LendIt Fintech Europe virtual conference in November 2020, Funding Circle’s UK managing director Lisa Jacobs refused to rule out a return to retail investing in 2021, saying “we do believe in smaller investors being able to access the same attractive returns that institutions can.”
However, the company’s annual report appeared to signal a focus on partnerships and institutional investment going forward.
After CBILS ends on 31 March, Funding Circle said that it intends to operate its core loan product alongside the UK government-backed recovery loan scheme (RLS), and small business administration (SBA) loans in the US. The RLS and SBA schemes have been set up as successors to CBILS in the UK and the paycheck protection program (PPP) in the US. Like their predecessor schemes, the RLS and SBA will not be available for retail investment.
One of the company’s stated priorities for 2021 is to offer “core loans for borrowers that do not require a guarantee.” This could be taken to mean that it intends to return to its original P2P lending model at some point in the year ahead. However, the platform stopped short of confirming this.
“Funding Circle hasn’t confirmed when retail investing will resume,” a company spokesperson told Peer2Peer Finance News. “They will continue to monitor conditions closely and update in due course.”
According to a chart in the company’s full year financials, just 11 per cent of Funding Circle’s investors were retail in 2020. 36 per cent of investment came from asset managers, while 35 per cent came from banks and 12 per cent came from bond programmes. The remaining six per cent came from funds (three per cent) and national entities (three per cent).