It was announced yesterday that the British Business Bank will lend a further £40million across peer-to-business lending platform, Funding Circle.
British Business Bank Investment Ltd, the commercial arm of the government-owned British Business Bank, has already successfully lent across Funding Circle. The previous programme resulted in £60m being lent to more than 10,000 businesses, creating an estimated 30,000 jobs.
British Business Bank Investments Ltd invests in challenger banks, non-bank providers of finance as well as debt and venture capital funds to increase the choice of finance for small and mid-sized businesses.
Catherine Lewis La Torre, CEO of British Business Bank Investments Ltd, said:
Peer-to-peer lending is becoming an increasingly important source of finance for smaller businesses, with AltFi data showing an 85% increase in lending via the sector from 2014 to 2015. A key part of our remit is to support the development and growth of such finance markets, while earning an attractive, commercial return for the taxpayer. We look forward to seeing our latest commitment to Funding Circle enabling the growth and success of many more businesses across the UK.
Funding Circle figures show that over the course of the past four years, British Business Bank Investments Ltd has earned a 6.2% annual return. This amounts to £5m of net returns to UK retail investors.
The international peer-to-peer lender was at the forefront of P2P lending news in 2016, having partnered with the European Investment Bank (EIB) in summer 2016 providing the Funding Circle SME Income Fund with £25m investment and a further £100m capital injection. The giant P2P platform also smashed the UK record for monthly P2P loan volume, previously held by Funding Circle itself – £95m lent in November.
The continued partnership between Funding Circle and British Business Bank Investment Ltd will likely only strengthen the proposition that peer-to-peer lending is a viable investment solution. The 18,000 British businesses that have received funding and the 55,000 investors (comprised of individuals, local authorities, financial institutions, pension funds) that have earned nearly £100m net interest will likely echo James Meekings sentiments below.
James Meekings, co-founder and UK Managing Director of Funding Circle said:
Over the last six years, Funding Circle has proved to be a more efficient way for small businesses to access the finance they need to grow and expand, whilst providing investors with attractive, stable returns. This further lending commitment is recognition of the success of the partnership to date and we look forward to working with the British Business Bank to help thousands more small businesses.