The European Investment Bank (EIB) is pumping £100mn into peer-to-peer business lender Funding Circle for on-lending to UK small and medium enterprises (SMEs).
This investment, alongside £25mn from the Funding Circle SME Income Fund, is expected to enable over £200mn of new loans over seven years. It is EIB’s first investment into peer-to-peer lending in the UK, and is evidence of the recognition of the sector as an efficient way for SMEs to access credit.
Jonathan Taylor, EIB vice-president, says: “Investment by small businesses drives economic growth, and simple, efficient access to finance is essential to help small companies to expand, create jobs and harness new opportunities. This new and exciting partnership with Funding Circle demonstrates the EIB’s firm commitment to seeking out new ways to stimulate business investment across Europe. The £100mn backing will not only unlock over £200mn of new investment by small businesses across the UK, but also provides an innovative model for supporting SMEs that could be used elsewhere in Europe.”
Since its launch in 2010, Funding Circle has facilitated more than £1.25bn of loans to 16,000 businesses in the UK. Investors on the platform include national and local governments in the UK, as well as international organisations such as the EIB and KfW, the German development bank. Through the platform, businesses usually access the capital they need in seven days, compared to 15 to20 weeks when working with a bank.
Samir Desai, CEO and co-founder of Funding Circle explains: “Our partnership with the EIB is the first of its kind and represents another important step on our journey to creating a global marketplace where creditworthy businesses borrow from a diverse range of investors. This significant investment will ensure more businesses access the finance they need to grow and will help support economic growth and job creation across the UK.”