It is not easy to get a loan, especially if you are a small business owner. Most of the times, small businesses are ignored and sidelined by major banks, lenders and other financial institutions as they consider them to be too risky. Majority of the times, the small business owners do not even have access to the hard core paper work and documentation that is required by the traditional banks and neither do they have a good enough collateral to offer. Moreover, many small business owners are sometimes intimidated by banks and financial institutes and are not comfortable going to them. This leads us to the emergence of Funding Circle which aims to provide a platform for meeting the demand by proving supply – by proving loans to the business owners and by providing fixed income equity investment for the investors.
About Funding Circle
Funding Circle was founded solely in order to cater to the small businesses which were always ignored or sidelined by the mainstream banks or financial institutions and lenders. On the other hand, there were so many investors in the market, looking for some long term gains and profits and there were these businesses looking for some capital. This was the turning point for Funding Circle, it decided to act as a middle man between the two – have the investors invest in the small businesses. This way, the investors get a fair share of returns while the business owners get their loans to run their business smoothly. Funding Circle believed that this was the best way for everybody, the investors finally got to diversify their fixed income portfolios and investments while the businesses got easy access to finances and overall, this helps to create jobs, provide support to the local community and in general, helps the economy to progress.
Provides Easy Access to Loans
Funding Circle is not just a basic bridge between the borrower and the lender but also provides loans to small business owners on easy terms and installments. They are able to cut costs so that the clients can get access to affordable loans and access to them within 10 days of applying.
Funding Circle realizes that the small businesses have been marginalized and they do not just need finance but on easy and affordable terms as well.
Funding Circle has been quite successful in their venture so far and has been able to provide loans to over 15,000 small business and have given around $2 billion in loans since the year 2010. They not only have new businesses coming to them for new loans every other day but have also been able to retain their old and loyal customers as well.
Who Do They Lend To?
Funding Circle takes pride in lending to all types of small businesses and they claim that they borrowers are a diverse range of people. They lend to almost all industries such as: medical care, food and restaurants, construction, IT and professional services, e-commerce and retail, logistics, agriculture, beauty salons and more.
What They Look For
Funding Circle does not just look at the conventional factors that a bank may look for when granting a loan. Funding Circle is more interested in the overall credit worthiness of the client rather than just their FICO score. They look for the clients, personal assets and also their overall business profile and then ascertain whether the customer would be requiring the financial products that are available at Funding Circle.
About Their Loans
Funding Circle offer small business loans and they look at the client’s overall creditworthiness when decided what rate of interest to charge. The rate of interest remains as a fixed percentage over the entire duration of the loan and the rates can be as low as just 5.49%. The factors which determine the rate of interest that will be charged to the client depends upon:
- The cash flows of the business
- The credit score
- Online reviews of customer for the business
Terms and the Application Process
Funding Circle offers loan amounts that are up to $500,000 for one year up to 5 years along with a monthly yet easy payment method of debiting directly from the customer’s business bank account. Funding Circle is able to offer the customers simple and easy ways of application process and is able to make quick and fast decisions as long as the client is able to meet the eligibility. The decision on whether or not the loan would be given is also decided within 2-3 days, as opposed to the traditional banking system which would take weeks to make a decision. Moreover, if the decision is to award the loan then the loan amount is disbursed within 10 days of the loan application being approved.
Funding Circle is also known for their exceptional services, especially when it comes to creating a personalized interaction. The expert loan advisors at Funding Circle always make sure to get to know the business as well as the business owner in order to help them and guide them regarding their finances and help them to make informed financial decisions. They make sure they speak to them over the phone as well and create a bond of mutual trust and understanding before starting a business deal.
Funding Circle at a glance:
- Around 4 billion has been invested in businesses globally
- They have helped 32,000 small businesses all over the world
- They cater to almost all industries
- They have 71,000 investors in the Funding Circle community
- Able to raise around $373 million in equity capital since the year 2010
- Current equity investors are Baillie Glifford, Accel Partners, DST Global to name a few.
Small Business Loans
Funding circle specializes in providing financial products to customers. Their main customers are small businesses and companies to whom they provide easy credit solutions with simple terms and conditions. The features of their products are:
- Customer may borrow an amount between $25,000 to $500,000.
- The rates of interest are competitive starting from around 4.99% per annum.
- The customer can get to know of the decision whether they qualify for the loan or not in as little as 24 hours
- The repayment tenure is between 6 months to 5 years
- There are no penalties in case a customer wants to repay earlier than his stipulated time
There are many reasons a business may borrow funds from them. The most popular reasons for borrowing are:
- To boost their cash flows
- To renovate their premises
- To purchase new equipment
- To expand their business
- To grow the business
- To meet some onetime cost
- To hire additional employees
- To meet sudden cash shortfalls
- To invest in marketing and advertising
- To cater to new markets
Funding Circle has catered to thousands of new and old businesses alike and are continuing to do so with their loyal customers who have developed a relationship with Funding Circle for all their financial needs. The best part about Funding Circle is that their processes are extremely simple and easy, just like their loan applying process.
How to Apply for a Loan
The process of applying for a loan is quite simple. Funding Circle has an online form that is available which takes less than ten minutes to fill out and apply, all you need to do is simply submit the form and get your instant quote, the customer gets to go over the different repayment options which are available and decide which one suits him or her the best. There are personal loan experts who are there to guide the customers as well. Then you get a decision, which takes about 24 hours and the customer may get a call from Funding Circle so that they may get to know more about the business and its operations. Finally in the last step, the customer will be funded and all this takes roughly just about five days in total!
Fixed and Affordable Monthly Payments
The loan repayment option can be discussed with the expert loan officers at Funding Circle, who can help and guide the business owners as to what is suitable terms of repayment and answer any possible queries. The option is to choose between 6 months to 5 years and with no prepayment penalties, either so which means if you have the option to repay the loan earlier than the stipulated time then all you need to do is just pay the interest that is accumulated.
How are Loans Secured
The loans are secured through the customer’s personal assets. Funding circle requires a lien on the business assets as well as a personal guarantee from the business owners. There is no hard and fast rule regarding the collateral and even bank deposit may be used as collateral.
How is Credit Score Checked
Funding circle obviously has to do their own checks and balances as well. Before disbursing the loan amount they obviously have the check the credit worthiness of the customers and conduct a credit inquiry which tells about the business owner’s credit history.
Invest as an Individual
Funding Circle allows individuals to be able to diversify their portfolios with fixed income and secured business term loans. Funding Circle Securities is also a part of Funding Circle and acts as a broker on their behalf and provides investors the opportunity to invest in small businesses.
- The minimum investment amount is at least $250,000.
- The loans range from between $25,000 to $500,000 and have the term of 6 months to 5 years.
- The coupon rates are from 4.99% to 26.99%
Funding Circle does not guarantee risk free investments but encourages the investors to invest based on diversification and spreading their risks. The underwriting team at Funding Circle thoroughly analyses every loan application and does their home work so that they only lend to those businesses that have creditworthiness but there may still be some business which might not be able to pay back.
These securities that are offered by Funding Circle are strictly for those investors only who are familiar with the high risks that are associated with private investments. Funding Circle encourages only those investors who have a high risk tolerance as well as low requirements for liquidity.
Apart from individual investors, Funding Circle has institutional investors as well who like to invest on these small businesses. They are well known and reputed corporations. Some of them are:
- Funding Circle SME Income Fund which is a London listed investment company and provides investors who are looking for investment into equity through a diverse range of loans.
- European Investment Bank. This has been lending to Funding Circle since June 2016 with their goal of lending to the economy through means of a non banking medium.
- Small Business Origination Trust 2016-1 DAC. This was started in the year 2016 and it was the first securitization of loans in the market place in Europe.
The Rates and Fees of the Loans
Funding Circle takes pride in being extremely transparent with all the undertakings as well as their whole business model. When it comes to the rates of interest that they charge for loans or fees for giving out the loans, even then they are no different and do not charge any “hidden costs”.
The rates of interest are fixed over the entire term of the loan. This way there are no surprises and the lender and the borrower both know in advance how much to expect and how much they will have to pay. The same interest rate will be applied over the entire duration of the loan.
|6 months||4.99% to 22.74%|
|1 year||7.05% to 23.74%|
|2 years||7.35% to 24.74%|
|3 years||7.65% to 25.49%|
|4 years||7.95% to 26.24%|
|5 years||8.25% to|
As already mentioned, Funding Circle does not charge any extra fees for giving out the loans and whatever they do charge, the amount is communicated beforehand so the customer knows in advance how much they have to pay. There are very minimal fees or costs clients have to pay.
This is a onetime fee that the company charges in order to cover the costs of originating the loan and for evaluating the credit worthiness of the business. This fee is based on how strong is the profile of the business and it is deducted from the total loan.
There are no fees to pay in case the customer decides to pay before time. There are also no penalties.
Late Payment Fees
There is however, a late payment fees to be paid if the monthly payment is late. There is a charge of 10% of the missed amount that the business pays, it is directly added to the monthly payment amount and debited from the business account and passed on to the inv
Non-Sufficient Funds Fee
There is a fee if there are not enough funds in the business bank account. A small fee is charged to cover the failed transaction. The amount is about $35.
Help and Guide
Funding Circle is always there for the customers and helps them to make informed decisions regarding their decision to borrow. Most of the small business owners are not much aware of strategic business decisions and many a times the loan experts from funding circle help them out.
There is a dedicated customer support that is there for answering the questions and possible queries from the clients at all times. There are number available on the website through which a customer representative will be available.
There are plenty of resources in the form of videos, educational material, etc which is uploaded on the website of Funding Circle in order to help and educate all possible investors or borrowers.
Conclusion and Customer Reviews
Funding Circle is the answer for all those business owners who are looking for ways of financing their business.
Having a platform such as Funding Circle, small scale businesses can now also have access to the need cash flows in order to meet their day to day cash requirements and cover expenses, etc. The best part about this company is that they are able to provide the loan that is needed quickly and fast in almost no time at all.
Many customers have written great reviews about Funding Circle and have claimed that it took them almost 6 months trying to get a loan from a local bank and after 6 months all the bank had to say, was that they were not eligible for the loan. This is a norm with traditional finance providers and mainstream banks.
Funding Circle solves this major problem and acts as a bridge between the lender and the borrower. The investors also benefit by having a thoroughly analyzed equity option to invest in. Overall, the concept is great and there are so many success stories of Funding Circle from all over the world!