First marketplace lending SME investment in the UK by the European Investment Bank
This is a big move for small businesses in the UK, seeing the European Investment Bank today agreed a £100 million investment in loans to UK originated through Funding Circle, the world’s leading marketplace for business loans. This investment, alongside £25 million from the Funding Circle SME Income Fund, will enable over £200 million of new loans over 7 years, and provides a further injection of much-needed funding into the UK small business sector.
This new partnership with Funding Circle represents the first deployment of EIB funding through a direct lending marketplace to support small businesses. Improving access to finance for small and medium sized businesses is a key priority for the European Investment Bank. This new engagement is recognition of the role of marketplace lending as an efficient way for small business to access finance, and an important new channel to stimulate the real economy.
To date, Funding Circle has facilitated more than £1.25 billion of loans to 16,000 businesses in the UK. Since launching in 2010, lending to small businesses through Funding Circle has evolved to include a diverse range of investors. This includes national and local government backing in the UK and support from international organisations such as the European Investment Bank and European Investment Fund, and KfW, the German development bank.
By linking supply directly with demand through Funding Circle’s marketplace, the European Investment Bank will provide much-needed funding to UK small businesses. Currently, there are more than 5.4 million small businesses in the UK.
Through Funding Circle, businesses typically access the capital they need in 7 days compared to 15-20 weeks with a bank. Independent research** has found that three in four businesses would come to Funding Circle first in future, ahead of a bank.
Over the last decade the European Investment Bank, Europe’s long-term lending institution, has provided more than £3 billion for investment by small businesses across the UK.
This could mean more small businesses will be able to stay open and scale up much easier, but there is also an element of worry as it will be another debt small business owners have to undertake in order to run their business. It's an opportunity and it's one most will be very excited about. Click here for other methods of funding to consider.