For any small firm that has been turned down by a high street bank, the size of the pot a lender can draw on matters more than the marketing. That is why the latest deal for Funding Circle, the peer-to-peer platform that specialises in Funding Circle SME loans, is worth a look for owners weighing up where to borrow next.
Funding Circle has secured £500m from the investment firm Castlelake to fund more lending to UK small and medium businesses, according to Wire: UK SME funding rounds. The money is wholesale funding, meaning Castlelake is buying into the loans Funding Circle originates rather than lending to your business directly, and it gives the platform more capacity to approve applications.
Why this matters to small businesses
When a lender secures a large funding line, it usually means more loans can be written and, often, that decisions come a little more freely. For an owner who has watched banks tighten up, an alternative platform with fresh capital behind it is one more door to try. It does not change the rate you personally pay, but it can change whether you get a yes.
Funding Circle is best known for unsecured term loans and business lines of credit aimed at established firms with trading history. It is not the only route, and it will not suit everyone. If you are financing a van, a digger or machinery, asset finance tied to the equipment itself is often cheaper than a general loan.
Where Funding Circle sits in your shortlist
It helps to compare like with like. On the challenger and alternative side, iwoca offers flexible credit lines aimed at smaller firms, while Tide and Starling Bank bundle borrowing into business current accounts many owners already use. Among the banks, Metro Bank has been growing its small business lending, so it is worth a call alongside the platforms.
The gap between who could borrow and who actually asks remains the real problem. As we covered in our look at why weak lending confidence stops firms applying, plenty of viable businesses talk themselves out of a decent loan before they fill in a single form. A well funded platform is only useful if you approach it.
What it costs and what to check
Alternative lenders like Funding Circle typically price on risk, so your rate depends on turnover, trading history and credit profile rather than a headline figure. Read the total cost, any arrangement fee and whether there are early repayment charges before you commit. Have your last two years of accounts and up to date management figures ready, because clean numbers speed up any decision.
The practical takeaway
Do not treat one lender as the whole market. Get quotes from at least two alternative platforms and one bank, match the product to the purpose (a term loan for growth, asset finance for kit, a credit line for cash flow), and compare the total repayable rather than the monthly figure. More capital in the system helps, but the yes still starts with you asking.
