Small business bank account savers deposit more than £1m

Thanks to a new social lending website, small business bank account savers have deposited over £1m in just ten short weeks since the site’s launch.  Moreover the average rate of return has been a staggering 8.2 per cent.

The lending site, FundingCircle.com, was recently launched in August of this year.  Savers can earn interest rates on their deposits from 6 per cent to as much as 9 per cent if they lend their cash to small and medium sized UK businesses.

The cash is directly given to  SMEs that have been given the cold shoulders by more traditional business loan sources such as the UK banking industry.

Funding Circle and other social lending sites have been growing steadily in popularity.  This may be attributed to the vast differences with rates of return, as the average rate attached to a savings account in the UK currently stands at a paltry 0.78 per cent.

Funding Circle has managed to attract approximately 1,600 members ranging in age from 18 to 80.  The average commitment made has been a deposit of £2,000, which has led to £1 million in funds being put into the hands of businesses in need.

Those who participate in the lending scheme can enjoy an average rate of return of 8.2 per cent yearly, though after the deduction of the basic tax rate, that number falls to a still-impressive 6.56 per cent, which blows even the top picks from the traditional best-buy tables out of the water.

Funding Circle Co-founder James Meekings stated he has been truly astounded by the level of commitment UK savers have been making to the website.

Mr Meekings did concede that many lenders may have initially been attracted by the industry-leading rates, but also stated that a £1 million investment after just 10 weeks only showcases how much support the public has to offer for small businesses in the UK.

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