Raising money on Funding Circle: A small business guide

Here, we look at Funding Circle, the largest peer to peer platform, and discuss how it can benefit small businesses.

Funding Circle connects businesses with investors looking to lend to British companies, enabling a business loan potentially in a matter of days.

The platform only does business lending, and offers a quick application process, dedicated account manager and a fast decision at the end of the process.

Companies can apply any time online, and Funding Circle says you’ll get a decision typically in 24 hours. Once accepted, the money will be in your account in a few days.

Through the platform, you can borrow up to £350,000 unsecured with a personal guarantee. Rates start at 4.9 per cent and there are no early repayment fees.

Businesses get a dedicated account manager to guide you on every step, so you can stay focused on your business.

Funding Circle says it has helped over 24,000 UK businesses borrow over £2.4 billion, and that 94 per cent of customers would come back to them first in the future.

Who can apply for a business loan?

Limited companies, limited liability partnerships (LLPs) and non-limited companies that have at least two years of filed or formally prepared accounts can apply. For non-limited companies Funding Circle would typically need to see a minimum annual turnover of £45,000 in a company’s latest accounts. The site allows visitors to check if they’re eligible for a business loan online in just 30 seconds.

Types of business loans

Unsecured loans up to £350,000: These are highly flexible loans that can be used for a wide range of purposes, including working capital, expansion capital, asset purchase and more.

Secured loans up to £1 million: These loans can be used for a wide range of purposes and will allow you to borrow more for your business.

A personal guarantee from the majority shareholder(s) is required for all of the above.

What Funding Circle looks for

The credit assessment team use the information you provide, as well as information from credit bureaus and other third parties.

Once you’ve checked your business is eligible, you’ll need to complete the short online application and provide the following supporting documents:

  • Most recent filed/formally prepared accounts
  • Last three months of business bank statements

These can be uploaded online or emailed across. The platform may also request management accounts, depending on the age of your most recently filed/formally prepared accounts, and other supporting documents if necessary.

How long does the process take?

The application form only takes 5-10 minutes to complete. Then, the Funding Circle credit assessment team will assess your application, making a decision typically within 24 hours. Once you’re accepted, the funds will be in your account in a few days.

What interest rate will your business pay back?

When Funding Circle makes you an offer, you’ll be given an interest rate based on its assessment and the amount of time you want to borrow for. They start at 4.9 per cent per year and are fixed for the duration of your loan, so you know exactly what you’ll be paying each month.

What fees are charged?

With Funding Circle there is only one fee, which is paid when you take out your loan. There are also no early repayment fees, so you can settle your loan early with no extra cost. You’ll only pay interest on the time you borrowed the money, so if you pay back early, you pay less.

The fee varies from between 1.5 and 6 per cent. The fee amount will depend on the credit assessment and the loan term you have requested.

How are the repayments structured?

You’ll need to pay your loan back in equal monthly instalments over your chosen time period.

Make sure you get your ID documents to us to set up a direct debit as soon as you can, as your first repayment is due one calendar month after your loan request closes. This is to ensure payments are on time for the investors who have lent to you.

Who’s lending to me?

With more than 60,000 investors, including thousands of people, local councils, universities and the government-backed British Business Bank, the platform gives all types of investors, big and small, the chance to lend to British businesses.

Your loan may be funded by lots of investors lending small amounts, or by one large investor.

Can I apply for a second loan?

Many find it’s easy to apply for another loan, as you’ve been through the process once before. You’ll typically need to have made at least three to six months of repayments on your existing loan before applying. Businesses with great repayment records can apply for further finance earlier.

You can check if you qualify for a business loan online in just 30 seconds or call 0800 848 8747.

Further reading on peer to peer lending

Looking for finance? SmallBusiness.co.uk is working in partnership with trusted lenders to help you find the best business funding deals. Find out more here.

Ben Lobel

Ben Lobel

Ben Lobel was the editor of SmallBusiness.co.uk from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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