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Funding Circle explained

Funding circle, small business finance, Manchester, Cheshire, UK

Funding Circle is a form of pier to pier business lending matching investors and borrowers via an online portal. The end result is that investors get a far better return than they would have done leaving their cash in the bank and business borrowers obtain funding at incredibly competitive rates. .

What are the benefits?

There are no middle men, no banks, no waiting for credit committees. By connecting individuals or businesses that want to invest money with credit approved and established businesses, the cost, and the frustration of the banking world is eliminated.

From a borrowers perspective, a business can borrow up to £100k on an unsupported business loan (personal guarantees may be required) or up to £1.0m on a supported loan by way of a charge over plant machinery or commercial property. Rates are very competitive typically well below 10% with a set fee structure whether you go direct to funding circle or via an authorised introducer. Loans can be between 12 – 60 months. The business must have filed at least 3 years accounts, have minimal adverse credit and have a positive balance sheet. Once a business is approved for borrowing the case is lodged on the funding circle portal with other potential borrower’s for investors to assess.

What is the return?

An investor will have pledged an amount to funding circle however they are free to invest in as many businesses as they wish and for any amount. One person typically lends to lots of different business therefore spreading their risk. A bidding process last for up to a week whereby over time the rate of return reduces as more investors bid to lend business money. An average net return as at June 13 is currently 5.8 %

See also;

Fast business loans


Invoice discounting

Trade Finance

Bad debt protection

Payroll finance

Small firms loan guarantee