Funding Circle Review
Updated August 2019 – Funding Circle UK – ISA Review & Share Price Info.
How I Make Easy 7%+ Annual Returns From One Of The Worlds Largest Peer to Peer Lenders!
My Lending Experiences & Actual Investment Returns Published Monthly Below.
What is Funding Circle?
Funding Circle is one of the largest Peer to Peer lenders with operations in 4 countries.
Offering returns from 4% – 7% or more on their balanced investment options, from their Funding Circle UK office by providing Peer to Peer loans to property developers and small businesses throughout the UK.
Funding Circle have lent over £5 billion since they started in 2010 which makes them one of the largest P2P lenders in the world, and certainly the largest in the UK.
In 2018, Funding Circle went public with a share price offer of 440p. Since the IPO, Funding Circle’s share price has come down a bit which grabbed some media attention, however I still feel Funding Circle are one of the top players in the Peer to Peer lending market.
My Experience So Far
I like Funding Circle and consider them to be one of the better options for reasonable returns from an experienced, larger company. They are in fact my top lender for actual income, and they were my top lender for XIRR until I added Mintos into the mix.
Funding Circle returns are reliant upon sensible diversification (which is accomplished automatically for you), and Funding Circle’s due-diligence and experience with its borrowers. There is no provision fund or buyback guarantee, so target returns include expected default rates which are just part of the lending process and are factored into overall return projections.
My account dashboard says my actual returns are still above their annual target returns. XIRR is still playing catch up but I expect it to confirm targeted rates when I have more data in coming months.
Funding Circle definitely make a good addition to any diversified Peer to Peer lending portfolio for higher returns from business lending.
Read on to learn about my personal lending experiences with Funding Circle, as well as my investment strategy and long term view of the company.
My Funding Circle Returns, Account Growth & Income Charts
View Consolidated Monthly Investment Returns from All Lenders
Click Here to See Screenshots & Detailed Monthly Updates From My Personal Funding Circle Account
The Obvious Investor – Easy-Info Table© – Funding Circle Review
Overall Rating*: 
(4.2 / 5)Who can invest: 
different rules per locationLoan Currencies: £ 
(UK Office)Estimated Return: 4.3% - 6.5% depending on account (my projected 7.2%) My Actual Return
(Per Lender): 8.10% My Calculated XIRR: 7.12% Risk Rating*: 4/10 - Low-Medium 
Early Exit: Yes, no cost under normal market conditions. Min. Investment: £100 initial deposit. Deposit Funds: UK bank, or a UK debit card.
Same or next working day.Auto-Invest: Yes - 2 accounts Manual Invest: No Lending To: Borrowers Loan Types: Various Business Loans.
Mostly unsecured.Default Rates: Projected 4.4% - 6.4% Loans Amortize: Yes Loan Security: Some (not all) loans secured by property, land or
personal guarantees.Provision Fund: No Time to Invest: Usually Quick. few days depending on loan availability Time to Mange: None (auto-invest) Lender Fees: 1% fee to lenders Payments Received: Monthly - Various times throughout the month. Amount Lent: £5 Billion (UK) Number of Investors: 81,000 Loan/Dflt Stats: Yes, Click Here Regulated: Yes: FCA Location: HQ - London, UK. also have locations in USA,
Germany, and the NetherlandsLaunched: August 2010 Website: http://fundingcircle.co.uk/ Email: [email protected] Telephone: 0800 048 8747 (UK) IFISA/IRA: Yes: IFISA Cashback**: Yes! - £50 Amazon.co.uk Gift Cert.
Click here for more information!How to Sign Up**: Sign Up Here!
Overview
History
Funding Circle UK has been around since 2010, so they have a good amount of experience under their belt.
As of writing this Funding Circle Review, figures suggest they have lent almost £5 billion to UK businesses, from 81,000 investors in the 9 or so years they have been in business.
Funding Circle also has German, Netherlands and USA divisions lending to businesses in their respective locations. Funding Circle’s shares & share price are on the UK stock market.
Regulation
Funding Circle UK are regulated by the UK’s Financial Conduct Authority (FCA) with full permissions under FCA number 722513. Funding Circle are also regulated since they launched their share price offering in their IPO.
They gained FCA permissions in May, 2017. It’s important to note that the FCA is not the same as the FSCS (Financial Services Compensation Scheme), so capital is not protected as it would be in a bank.
Signup Process
Opening an account with Funding Circle is fairly easy. Just the usual ID checks.
If they can verify you though one of the UK’s credit agencies, you will be approved immediately. If not, you may need to send them a copy of your passport or driving license, and a utility bill or bank statement.
Residents of most countries can sign up with Funding Circle in the UK if they can pass the ID checks and have a UK bank account.
If you don’t have a UK bank account, see my TransferWise Borderless Account review for more information on how it may be possible to get UK banking details even if you’re not a UK resident.
Residents of countries where the company operates will need to contact their local office for requirements for your specific location. As this is beyond the scope of this Funding Circle review.
Deposits & Withdrawals
Deposits and Withdrawals are made by bank transfer from a UK bank, or a UK debit card.
From a bank account, deposits usually show up in your account the same or next working day.
Debit card deposits show up instantly. Withdrawals are only to a bank account and typically take 2 – 3- business days.
Time to Become Invested – Funding Circle Review
It can take a few days to get invested into loans when in any of the accounts.
I’ve found it varies based on the amount of capital I am investing, as well as the loan book.
All of the accounts are auto-invest accounts, so we are reliant on the platform as to how long it takes to distribute capital.
You can always see from the website dashboard how much is invested (Lent out). And how much is waiting to be invested (Available funds).
Who are we lending to?
Funding Circle is a true Peer to Peer Lending Platform. Lenders are lending directly to borrowers who are typically small to medium size British businesses.
Loan agreements are directly between the lender and the borrower. Funding Circle just acts as a middle man, managing loans, payments and debt collection etc.
Loan Security
Most loans are unsecured apart from director personal guarantees. There are a few loans, mostly property development loans, which are secured by property.
On their website you can always drill down to see information on security.
As you can see below, it clearly states if loans are secured or not.
Amortization – Funding Circle Review
Most of Funding Circles’s loans amortize, meaning you receive capital and interest payments every month.
When loans amortize, it reduces loan risk compared to a non-amortizing loan, in which nothing is received until the end of the loan period, or only interest is received monthly and then the capital repaid at the end of the loan period.
Amortization is the paying off of debt with a fixed repayment schedule in regular installments over time. It is an accounting technique used to lower the cost value of a finite life or intangible asset incrementally through scheduled charges to income.
It’s easy to see on their website when loan payments have been made. And when payments are scheduled by drilling down in any loan listing.
Selling Loans and Withdrawing Capital
There is no exit fee for selling loans. Under “normal market conditions”, loans can be sold and capital withdrawn within a few days, sometimes faster, providing there are enough other lenders to cover your loans (typically not a problem). Capital in a Funding Circle ISA are obviously subject to retirement account rules.
Here you can see the screen for selling loans and withdrawing capital:
Diversification – Funding Circle Review
Diversifying loans is something that Funding Circle does an excellent job of. One of the best of all lenders out there with auto-invest for diversification.
Their systems aim for diversification of 0.5% of your account balance per business you are lending to. Providing you have at least £2000 in your account, it will usually achieve that number or better.
This means when loans go bad, there should not be a big chunk of capital disappear and affect your account too much.
As you can see below, I am lending to hundreds of businesses with no more than 0.5% in any single business.
Comments
Another thing you can see on the website is a page where loan comments are made.
As a result you can typically see if loans are late, or other comments regarding the individual loans.
Provision Fund – Funding Circle Review
There is no provision fund. Their target rate takes into account expected default levels and loan losses under normal market conditions.
It’s always easy to see from the summary screen where your account stands with tracking those numbers.
You can see by the screenshot above that I have losses on this account. It’s not necessarily as bad as it seems yet though. Even though this loan is marked as a loss, there is still a chance that some of the capital could be recovered. See comments below from drilling down.
Defaults are an expected and accepted a part of lending.
Funding Circle’s team are very experienced at loan recoveries, so there is always a chance down the road that some of this could be returned to my account.
Retirement Account
Funding Circle offers an Innovative Finance ISA (Funding Circle ISA) which was launched in November 2017 for UK residents. Target rates are the same as their Classic Accounts.
Account Options (Classic Account or Funding Circle ISA)
There are 2 automated lending options, one a “Conservative” approach targeting 4.3% – 4.7%% returns and what they call a “Balanced” approach targeting 4.5% – 6.5%.
Personally I only use the “Balanced” approach as it can take longer to get invested only investing in the two top (A & A+) risk bands, plus I really don’t consider 4.3% to be a great return considering most of their loans are unsecured.
They used to have a manual investing option. However it is no longer available so I have not covered it in this Funding Circle review.
Loan Information – Funding Circle Review
The website offers the ability to drill down and see what loans you are actually invested in, as well as information on the individual loan.
As you can see there is a wealth of information available about who you are lending your money to.
Apps
Funding Circle is one of the few Peer to Peer lenders that have produced an app for phones and tablets. Available on iOS and Android.
As a result you can do with the Funding Circle App much of what you can do with the website, including adding or withdrawing funds.
The summary screen gives you similar information to the website. Portfolio total and orders etc.
It is easy to drill down to see what actual and expected returns you are looking at.
Summary
In this Funding Circle Review, I hope I’ve shown that the platform continues to be one of my favorite UK Peer to Peer lenders.
Even though Funding Circle’s share price is down a bit, the returns they offer, coupled with their ease of use website, and the safety of one of the larger, older, more established P2P lenders makes them one of my largest Peer to Peer lender accounts.
The Funding Circle ISA makes them a good choice for potentially tax free investing in a retirement account.
Thumbs Up Points for Funding Circle
Safety – Is Funding Circle Safe? – It’s a big company, regulated by the UK Financial Conduct Authority and makes preservation of your capital one of their top objectives
Auto-Invest – means virtually no time managing investments. Just send your money over, decide which portfolio you would like to invest in.
Reasonable Rates – from one of the larger, peer to peer lenders, the ability to get as much as 6.5% (as of 05/2019) or more is not too bad at all.
Website – the Funding Circle website is very easy to use and understand. Some P2P websites leave a lot to be desired.
Large Investments – because the Funding Circle’s loan book is big, it can easily gobble up large amounts of capital, again reducing cash drag for larger investors.
£100 minimum investment – easy to get started without a huge initial commitment
Zero cost exit – Funding Circle doesn’t charge any points for exiting your investment early (providing there are buyers available to buy your loan parts).
Low Default and Bad Debt Rates – this is important because there is no protection fund. Current expected bad debt rates are between 1.4% and 3%
Public Company – Means it’s easy to see Funding Circle’s share price, as well as an audited account of how the company is doing.
Financial Conduct Authority (FCA) Regulated.
Funding Circle ISA – Funding Circle ISA retirement account available for UK investors
Thumbs Down Points for Funding Circle
Initial Investment Time – It can take a couple of weeks to get your money invested initially. .
Falling Return Rates – target returns have been falling lately.
Unsecured Loans – many of the Funding Circle loans are unsecured loans given to businesses, so if things were to go bad, you don’t have any collateral.
Funding Circle Share Price – dropped after IPO which makes people nervous. My personal opinion is that it won’t affect their business and will recover in time.
Lender Fees – Funding Circle charge their lenders a 1% fee from the loan repayments. Most P2P lenders charge their borrowers rather than investors.
Risk Factor – 4/10 – Low – Medium
How safe is Funding Circle? I consider them to be at the lower to medium end of the risk scale. Taking in to consideration that many loans are unsecured.
In most market conditions asset security is not so important providing default rates have been factored in to target returns. However in a severe recession it could come in to play if many loans defaulted.
Either way, I have no worries about investing a significant portion of my Peer to Peer lending portfolio with Funding Circle as I believe they have plenty of experience.
I like Funding Circle a lot and put a lot of trust in them. As you can see by the TrustPilot review above, so do many other people.
Who Can Invest with Funding Circle
Only UK residents with a U.K. address and bank account can invest with Funding Circle UK.
USA and European residents can invest in their individual locations. However rules differ per location. Contact Funding Circle for further information.
Offers & Signup Links**
New Customers receive a £50 Amazon.co.uk Gift Certificate when they join Funding Circle using links here on ObviousInvestor.com and invest £2000 or more!
Click here for further information on the £50 gift certificate offer >>
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Funding Circle Promo Video
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