Peer to peer lending company Funding Circle has announced a milestone of £200 million lent to help grow businesses.
Funding Circle offers an alternative financing route for entrepreneurs who cannot get or want to avoid funding from their bank. Independent investors choose which businesses to lend to and the amount they want to spend, from as little as £20. The loan plus interest is then paid back over the length of the term with monthly payments to investors. The process means entrepreneurs can receive finance in a matter of days, compared to several months for a bank loan.
Since its launch in 2010, Funding Circle has helped more than 3,000 businesses to get off the ground. The new approach to funding has gained popularity over the last 12 months – of the total £200 million lent out to businesses, £130 million was in 2013 alone.
Funding Circle joins a host of alternative lenders who are paving the way for new finance options for entrepreneurs. In a Bank of England study released today, the availability of bank funding is up but demand from small businesses is flat, suggesting entrepreneurs would now prefer to seek finance from somewhere other than their bank.
James Meekings, co-founder of Funding Circle, said “What we are seeing now is not just the emergence of a challenger model but a fundamentally better method of borrowing and lending that will continue to grow in importance over the coming years.”