Alternative business loan provider expanding soon

One alternative small business loan provider has recently announced it will be able to expand after securing enough venture capital.

Funding Circle, which specialises in providing lending to small business bank accounts, has recently received an infusion of £2.5 million in venture capital from Index Ventures.  The alternative lending service has already made it possible for established firms to borrow £11.5 million in business loans since its inception in August of 2010.

Designed to bring investors and savers into direct contact with small businesses in need of funding, Funding Circle is an online clearinghouse for alternative sources of venture capital.  The lender says that investors earn 8.3 per cent on average on their money before bad debts, tax, and fees while allowing businesses borrowing at better rates than at traditional financial services providers.

Funding Circle turns a profit by charging borrowers a 2 per cent interest rate while charging lenders just 1 per cent.  Since the company’s launch it has not incurred any bad debt, signed up 4,000 businesses and lenders, and collected £120,000 in interest.

Funding Circle is exacting in its lending practices.  The company does not permit new businesses to receive any loans and in fact grades each business by a risk profile that is comprised of not just specific trading performance but also in which sector the business operates.

Funding Circle co-founder Samir Desai commented on the new infusion of capital, stating that it will be put towards an acceleration of the company’s marketing efforts as well as the launch of new products and continued improvements and innovations to be made to Funding Circle’s customer website.

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