If you’re trying to fund a startup or grow your small business, you've probably already come across Funding Circle. The UK peer-to-peer (P2P) funding platform, which hit unicorn status in 2015 (that’s a business that’s reached a valuation of $1 billion), offers SME owners the opportunity to raise money from multiple investors online.
It's grown massively since it launched in 2010 to help fill the gap in SME lending left by the banks due to stricter regulation following the financial crisis.
Introducing Funding Circle
At the time of writing, Funding Circle has helped more than 15,000 businesses in the UK, USA, Germany, Spain and the Netherlands to raise a total of £1.1 billion in loans from almost 50,000 investors. The platform's mission to "build a better solution" for small businesses seems to be delivering – for SME owners, investors and Funding Circle! The P2P lender shares its goal to redefine the funding landscape with other alternative finance (altfi) providers including firms like Fleximize.
The altfi sector has grown at an astonishing rate thanks to the huge demand among SMEs for flexible business financing, and the banks slashing funding to the small and medium-sized companies. They make up 99% of UK's businesses by the way – they're essential to the country's economy.
Individuals, UK government, a university, local councils and financial institutions lend through Funding Circle in return for repayment with interest. Businesses raising money can accept loans from lots of investors or from a single major investor.
Funding for all types of SMEs
To say this is a huge success in small business financing is an understatement. The UK’s biggest peer-to-peer platform and other altfi lenders have ignited an explosion in new funding options for SMEs struggling to get cash from traditional sources.
So what sort of businesses have benefited from borrowing via Funding Circle so far? They're really diverse, and range from a trendy Shoreditch art gallery, and an adventure travel company to an IT support firm for other SMEs.
If it works for these companies, it could work for you too. But before plunging into P2P lending, let's look at a couple of important factors that could help you decide on your next steps.
Ask 2 key questions
If you’re reading this and wondering where you could find your own funding, here are 2 key elements you should first consider.
1. How soon do you want the money? Are you in urgent need of an influx of finance to ease cash flow, or do you want to take advantage of a great deal on stock? If yes, then P2P lending might not be the best option for you. Although it’s a great way to fund small businesses, the P2P lending process can take a while – around a couple of weeks for example.
However, if you go to a specialist small business lender, like Fleximize, you could get your money within 48 hours. Online applications and quick lending decisions help small enterprise owners get the essential finance they need to keep business ticking over. But if you’re in no mad rush to get financing, P2P could still work for you.
2. Are you happy for your company name to go public in relation to lending? Understandably, you might not want people to know you’ve had to rely on a business loan. Although applying for funding isn’t necessarily a bad thing (you’re doing it build your business after all), you probably prefer competitors, other potential investors and customers not to know about it.
By avoiding P2P and other crowdfunding methods, and turning instead to a private lender, your details will not be made public. Unless of course, you’re happy to feature in a customer case study like this one with a happy Fleximize borrower.
More about Atlfi business loans
Whether you opt for P2P lending or borrowing through a finance provider, your business will be assessed to make sure you can repay the money. In both cases, interest rates on repayments vary, according to lots of factors including your credit score.
To find out more about alternative sources of small business funding, check out our guide to alternative finance. For SME loans, get in touch with the Fleximize team to talk about which flexible lending product would work best for your firm. Call 0207 100 0110. Or simply click on the Apply Now button below if you're ready to get a loan.how you can get started.