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Funding Circle Review

03/11/2016

One of the biggest peer to peer funding providers in the world, Funding Circle have, to date, lent over £1bn to British business. With almost 50,000 investors across the region, Funding Circle has 12,000 UK based businesses signed up to their enormously popular lending model. Funding Circle is also government backed, with over £40m of funds made available for reinvestment in British industry.

Loan Features

Every peer to peer loan is uniquely defined between the borrower and investor so it would be wrong to make sweeping statements about a service such as Funding Circle. There are, however, some universal parameters that are set by Funding Circle that all loans must adhere to. These include:

  • Loan Values Between £5,000 and £1,000,000
  • Term Lengths Between 6 Months and 5 Years
  • Transparent Pricing
  • No Early Payment Fees
Review
Funding Circle Business LoansRating
Interest Rate
Loan Term
Loan Amount
Summary
Reviewed by & Independent Researchers:

Expert Market generates its star ratings based on external research undertaken by independent researchers, alongside our own judgement of the market

Loan Values Between £5,000 and £1,000,000

Funding Circle help provide loans to a range of businesses, across many industries and include SME, which are Small to Medium Sized Enterprises, to large ventures, by offering funds of up to £1,000,000. This enormous range of loans makes them one of the first options for many who do not want, or cannot obtain, a loan from the traditional financiers, such as the major high street banks.

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Term Lengths Between 6 Months and 5 Years

Despite the top value of the loans being high, term lengths are set within a range you would expect for SME funding. 5 years does represent a more extensive term than some, however, and does allow larger businesses to access higher value loans with repayments stretched out over an affordable time frame. At the other end of the scale, 6 months is suitable for shorter termed loans for those who are able to clear their debts quickly.

Transparent Pricing

As previously mentioned, the terms of the loan are largely set by the borrower and investor, but peer to peer financiers can contain costly hidden fees that many might be unaware of. We believe Funding Circle’s pricing system is transparent and easy to understand, meaning there are no hidden costs that often end up problematic after you have committed to the loan.

No Early Payment Fees

As the investor requires a percentage of the value of the loan set out over the course of the contract, many providers require an early payment fee in order to make sure they receive the full profits of the loan. This can be highly restrictive to businesses that may have outgrown the loan over the course of its terms and conditions. Funding Circle loans do not incur early payment fees so if you decide to, you will not be charged unnecessarily for clearing the debt.

Quick Eligibility Feedback and Fast Payments

For many businesses, quick access to funding is critical, and slow release of funds can make the entire reason for the loan obsolete. This is where alternative funding may have a major advantage over the high street banks, where funds can take many weeks to be processed and even the decision can be a frustrating and drawn out affair. Funding Circle can give feedback on your eligibility within 2 days of application.

Pricing

As with all loans, interest rates are likely to be the main consideration when taking out a loan through Funding Circle. These are set according to the value of the loan, its term lengths and the risk associated with the business accessing funds. It may also depend on early repayments and the agreement between the business and their investor.

Interest Rates

We estimate that for businesses with a good credit rating, a small loan of £5,000 will incur interest rate costs of between a few hundred and over £1,000 for the shortest term lengths to the longest term lengths. At the other end of the scale, a loan for £1,000,000 could cost between £40,000 and £250,000. It should be noted that these are approximations and not guarantees. All other loan values will fall between these two extremes and can be estimated using the sliding calculator on the company website.

Transaction Fees

We believe transaction fees are fairly low when using Funding Circle and again will depend on the value and term lengths of the loan. We believe transparency is one of the greatest advantages here, with all information on fees provided up front. For small loans these can typically be a few hundred pounds but for large value loans, those up to £1,000,000, they can incur fees of tens of thousands.

Expert Market is a trading name of Marketing VF Limited, which is an appointed representative of Resolution Compliance Limited (FRN: 574048) ) which is authorised and regulated by the Financial Conduct Authority. Marketing VF Limited is registered in England and Wales. Company number: 06951544. Registered office: Imperial Works, Block C, Perren Street, London, NW5 3ED, United Kingdom.