Funding Circle Announce A 30% Increase In Loans Under Management After A Turbulent Year
23 Oct 2019
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Peer-to-peer lender Funding Circle has indicated that loans under management had hit £3.7 billion and that it is on track of its 2019 guidance. The company has had a turbulent 12 months with its shares dropping more than 75% from a year ago.
Funding Circle’s loans under management increase to £3.7 billion
Funding Circle which offers loans to SMEs stated that the loans under management had reached £3.7 billion in the past three months. This is almost one third up relative to the same period a year ago. However, the company indicated that the value of loans it processed in the last three months dropped by almost 0.5% to approximately £561 million.
According to Samir Desai the CEO of Funding Circle, in Q3 loans under management hit a record £3.7 billion. He added that 2019 estimated returns have continued to demonstrate improvement in recent times. The CEO indicated that they continue to manage business operations prudently. This is the right path towards long-term growth and development of the company’s business.
Investors to wait at least three months to withdraw funds
The company connects retail and institutional investors with SMEs in need of loans. The investors can then withdraw funds before the maturity of the loans. They can achieve this through the sale of loan parts. At the beginning of this year, investors had to wait for a few days to cash out but this increased to three months in September.
Since its establishment in 2010, Funding Circle has linked several institutional and retail investors to small loan takers. So far it has arranged £8 billion worth of loans to over 77,000 small companies and around 80,000 retail investors.
The company has cited economic uncertainties for its woes for the past year. The CEO indicated that the environmental uncertainties were the reason behind widening losses. In July after the company halved its revenue guidance because of “uncertain economic outlook” its share plummeted 20%. The company indicated that the economic uncertainties were affecting the demand for loans.
Funding Circle secures more investors in the UK and the US
The company indicated that loan originations grew to £1.8 billion this year relative to £1.6 billion reported last year. In July the firm reported that it had finalized an asset-backed securitization deal of £232 million in the UK. This added nine new institutional investors to their platform in the UK.
Equally in the US Funding Circle entered a £152.5 million securitization transaction. This was the company's first asset-backed transaction in the US for small business loans. It added around 18 institutional investors to the platform.
In August the company which had reported an uninspiring float last year indicated that they had a pre-tax loss of around £31 million in the last six months. This was wider relative to the £27 million loss reported last year. Despite the company's revenue growing by 29% to around £81.4 million it still was in the red. This was mainly due to increasing costs resulting from the hiring of new staff.