Funding Circle Review
Return Rate 4
Overall Safety 4
Asset Security 3
Time in Business 5
Lazy Investor Rating 5

100% unbiased. Based on my own experience investing with this large, well established peer to peer lender offering returns of up to 7%

Summary 4.2 great

Funding Circle Review

Updated May 2019 – Funding Circle Review

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.

 

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 InvestorEasy-Info Table – Funding Circle Review

Overall Rating*:4.2 out of 5 stars (4.2 / 5)
Who can invest:         different rules per location
Loan Currencies:£    (UK Office)
Estimated Return:4.3% - 6.5% depending on account (my projected 7.2%)
My Actual Return
(Per Lender):
7.90%
My Calculated XIRR:6.89%
Risk Rating*:4/10 - Low-Medium    4 out of 10 stars
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 Netherlands
Launched: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!

 

Funding Circle – 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.

 

 

Regulation

Funding Circle UK are regulated by the UK’s Financial Conduct Authority (FCA) with full permissions under FCA number 722513. 

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.

 

Funding Circle FCA Screenshot

 

 

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 Funding Circle 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.

Funding Circle Transfers Screenshot

 

Time to Become Invested – Funding Circle Review

It can take a few days to get invested into Funding Circle loans when in any of the accounts.

I’ve found it varies based on the amount of capital I am investing, as well as Funding Circle’s loan book.

All of the accounts are auto-invest accounts, so we are reliant on Funding Circle’s systems as to how long it takes to distribute capital.

You can always see from Funding Circle’s website dashboard how much is invested (Lent). And how much is waiting to be invested (Available funds).

Funding Circle Balance Screenshot

 

 

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 of Funding Circles loans are unsecured apart from director personal guarantees. There are a few loans, mostly property development loans, which are secured by property.

On the Funding Circle 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.

Funding Circle Loan Detail Screenshot

 

 

Amortization

Most of Funding Circles’ 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 Funding Circles’ website when loan payments have been made.  And when payments are scheduled by drilling down in any loan listing.

Funding Circle Repayments Screenshot

 

 

Selling Loans and Withdrawing Capital

There is no exit fee for selling Funding Circle 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:

Funding Circle Sell Loans Screenshot

 

 

Diversification

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.

Funding Diversification Screenshot

 

 

Comments

Another thing you can see on the Funding Circle 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.

Funding Circle Loan Comments Screenshot

 

 

Provision Fund

There is no provision fund from Funding Circle. 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.

Funding Circle Expected Yield Screenshot

 

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.

 

Funding Circle Defaulted Loan Screenshot

 

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 Funding Circles’ 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%.

Funding Circle Lending Options Screenshot for Review Update May 2019

 

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.

Funding Circle 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

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.

Loan Detail Screen Shot

 

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 Funding Circle continues to be one of my favorite UK Peer to Peer lenders.

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

thumbs up

  • 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 Circles 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%

  • Financial Conduct Authority (FCA) Regulated.

  • Funding Circle ISA – retirement account available for UK investors

 

 

Thumbs Down Points for Funding Circle

Thumbs down

  • 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. 

  • 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

4 out of 10 stars

                TrustPilot Review

How safe is Funding Circle? I consider Funding Circle to be at the lower to medium end of the risk scale. Taking in to consideration that many Funding Circle 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 Funding Circle 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 with the Funding Circle 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 Funding Circle £50 gift certificate offer >>

Signup for a Funding Circle Standard Account >>

Signup for Funding Circle ISA >>

 

 

Similar Lenders to Funding Circle

Assetz Capital,  Ablrate,  Lending Crowd

 

 

 

Who Are The Top Peer to Peer Lenders?

Click here to get my complementary Top 4 Lenders List

 

 

Would you like a copy of the Excel Spreadsheet I use for tracking my P2P investments?

Click here to receive a free copy of my Excel Spreadsheet

 

 

New to Peer to Peer Lending?

Learn About Peer to Peer Lending

 

Ready to Get Started Lending?

See My Where to Start Guide.

 

 

Disclaimers:

* My opinions on ratings and risk rating factors refer to my personal experiences with a company or account. Including factual data such as interest rates, loan types, security, platform history, default numbers etc.

** I’m not paid by any company to review them, nor am I employed by any of the companies I review. In most cases, I am actively investing my own personal capital through these companies which you can see with full transparency on my Lending Returns page. Some of the sign-up links on this website are referral links. When you click on these links, I may receive a small commission, at absolutely no cost to you. Your support helps me to run this website and continue to offer new reviews and portfolio updates.

Please read my full website Disclaimer before making investment decisions.

 

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