Funding Circle is one of the most prominent methods of getting loans for UK small businesses. In this guide, we will focus primarily on this method of financing, explaining how it works and why it’s such a great way of financing your business that you should definitely consider.
Funding Circle is one of the biggest peer to peer lending platforms used in the UK. Founded in 2010, when small businesses really struggled to get funding for their business. Funding Circle has helped over 28,000 small businesses get funding of £2.7 billion to help them succeed. Funding Circle is the ‘middle man’ between the investor and the borrower, connecting them both for a mutually beneficial relationship. This peer to peer lending method has been planned to be a hassle free experience and you can even find out instantly if you are eligible. Typically you can get a decision about the funding within twenty four hours, which ensures that your precious time is not being wasted.
Who can borrow?
Only established small businesses in the UK can apply for the loans. Your eligibility will obviously depend on the various checks Funding Circle will complete. However, you can find out your initial eligibility by filling in a very quick online application on the website. If you are successful you will get a dedicated account manager to help you through the process of getting the funding. There are multiple reasons as to why you can take out a loan from Funding Circle, some of these include: hiring more staff to support expansion, buying new equipment, growing your business or covering one off costs.
The lenders/investors vary on the Funding Circle platform. Traditional funding institutions such as banks may be wary to loan to small businesses however there are still plenty of other funding methods. Investors on Funding Circle include the Government-owned British Business Bank who are keen to push the small business sector because it accounts for such a large proportion of the private sector. Also because the small business sector is also known to provide a high number of jobs, raising the level of employment in the UK. This is just one example, there’s actually thousands of people, local and national governments and financial institutions on Funding Circle who want to invest in small businesses while earning themselves.
You can get a large loan sums depending on what you need it for. You can get an unsecured loan ranging from £5,000 to £350,000. You can also choose the time frame in which you want to pay it back, this is from 6 months to 5 years. The interest rate starts at 4.5%.
When it comes to repaying your loan, it will be split into regular monthly payments. You will pay a certain amount back on monthly basis, the amount will be decided depending on the amount you have borrowed as well as the time frame you have chosen to pay it back. The monthly payments insure that the investors are paid back on a monthly basis, therefore it is great for both parties involved.
If peer to peer lending isn’t for you, you can read more on other types of business funding here.