UK SME funding: government invests £100 million through Funding Circle

Updated for 2018

The state-backed British Business Bank is dedicated to helping provide UK SME funding. One of the British Business Bank’s partners is Funding Circle, which is a peer-to-peer lending platform that small businesses can use to access finance.

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SME funding – the government and Funding Circle

The government has already invested £100 million in small business funding via the peer-to-peer lending platform Funding Circle.

In 2013, the government announced it was investing £20 million for SME funding via Funding Circle. When that investment was exhausted, it announced a further £40 million would be made available via the platform in 2014, and then in 2017 it invested a further £40 million for SME funding.

At the time of its last investment in January 2017, the British Business Bank said that more than 10,000 businesses in the UK had already benefited from government SME funding.

What is Funding Circle?

Funding Circle is one of the most prominent peer-to-peer (also known as crowdfunding) lending platforms in the UK. The company says 32,500 UK businesses have borrowed £3.1 billion through the platform.

How does Funding Circle work?

Funding Circle has a community of investors ready to provide SME funding. Once that money has been invested into the platform, Funding Circle connects it with creditworthy small businesses looking for finance.

Crowdfunding is becoming an increasingly popular funding method. Supporters claim that crowdfunded loans can offer better terms and lower interest rates, while some small business owners prefer not having to deal with the banks.

For their part, in recent years the banks have been trying to improve their offerings for SME funding, including NatWest with its Esme loan service and Barclays offering some customers instant approval business loans.

Funding Circle eligibility

The government says that you need to be an established business and able to prove that you are a sole trader, limited company or partnership. You need to have at least two years of trading history and need to show that ownership of the business will remain in the UK.

You can apply for up to £1 million through Funding Circle (unsecured loans from £5,000 to £500,000 and secured loans up to £1 million). The available terms vary from six months to five years and there are no early repayment charges. A decision will be made in 24 hours and your application can be completed in eight minutes.

Find out more at gov.uk.