What future for Funding Circle?
Funding Circle sent shockwaves through the industry when the platform announced its exit from the peer-to-peer lending space earlier this month.
It was one of the oldest platforms, open to retail P2P investors for almost 12 years, and followed other recent P2P releases such as Zopa, Lending Works and Connective Lending.
Funding Circle has now reached a tipping point – the brand has been synonymous with P2P lending for so long that shareholders and investors will be keen to know how the company intends to shape itself in the future.
Read more: Exit from the Funding Circle: Was the writing on the wall?
Since the company announced its exit from P2P, its share price has approached an all-time low as shareholders fret over the future of the platform.
For the past two years, the platform has focused on providing institutional funding through state-backed Covid loan programs, the coronavirus business interruption loan program, the rebound and, more recently, the Recovery Loan Program (RLS).
The RLS ends at the end of June, so the platform cannot rely on government loan programs any longer. So what does the future hold for the former P2P lender?
While it’s disappointing to see Funding Circle exit the industry, the former P2P giant is on an upward trajectory after beating its profit forecast to reach a £64m operating profit for 2021.
Read more: Funding Circle P2P Release: The Industry Responds
Unlike Zopa, Funding Circle has no plans to become a bank, stressing that it has proven its platform model works.
Loans on the platform, such as term loans to small and medium-sized enterprises (SMEs), will continue to be funded by a wide and diverse range of institutional investors.
And the lender will continue to make limited use of its balance sheet in certain scenarios, such as funding new products or co-investing in loans alongside investors.
In addition, it will instead continue to refer small businesses it cannot help to its panel of about 25 third-party lenders that it calls “marketplace lenders.”
Read more: Is it worth supporting Funding Circle’s actions?
Funding Circle is also working on transitioning from single products to a multi-product platform focused on integrated finance.
Lisa Jacobs, Managing Director of Funding Circle UK, said News Peer2Peer Finance that the platform plans to focus on integrated finance through its partners.
In December, Funding Circle launched its first integrated funding solution, which allows borrowers to apply for loans worth up to £500,000 through a series of partner websites, with decisions granted in seconds and money transferred within 48 hours.
Corporate finance platforms Funding Options and Capitalize were the first partners to add the API to their websites.
Funding Circle last month partnered with Chaser and in November with Tide, so credit-monitoring app and merchant banking customers can apply for a loan from the platform directly from their account.
Jacobs added that the lender plans to launch more products and is committed to rolling out its FlexiPay loan, a flexible buy now and pay later payment facility launched in September, and its API loan as a service in the United States. United.
Without retail investors and the RLS, Funding Circle has no shortage of work.
Its marketplace and API will natively integrate into partner environments, the platform will continue to offer term loans to SMEs, funded by institutional investors and will also continue to deploy its short-term FlexiPay product.
Funding Circle is always busy doing what it does best, lending to small businesses.