Funding Circle, as an online business loan company, is dedicated to providing small businesses with the funding they need to grow, especially for solid, established businesses who need the money more quickly than a bank can provide it, or who don’t qualify for a bank loan. Funding Circle uses a peer-to-peer (P2P) lending platform to achieve these goals, and it gives successful business owners with significant capital an opportunity to invest and see returns. The requirements for securing a loan are a little strict and the whole application process is pretty thorough, but Funding Circle rewards their customers with an individual loan specialist, as well as honest and transparent loan terms and business practices. This approach seems to be working, too, as very few complaints have surfaced—for example, the Better Business Bureau (BBB) has received only five complaints in the last three years at the time of this writing. For those who meet the investing criteria, the strict borrowing requirements are an added bit of security and confidence on seeing positive returns. Overall, if you are an established business looking to grow through either a loan or by investing some of your income, Funding Circle is reliable lender with a great track record; read on to find out more.
Funding Circle for Borrowers
Funding circle borrower Review
- Transparency – 5/5
- Availability – 5/5
- Customer Service/Reputation – 5/5
- Fees/Rates – 4.5/5
- Application Turnaround Time – 4/5
Nothing to hide
One of Funding Circle’s greatest strengths is transparency about their loan terms. They provide a chart online with the interest rate ranges for each loan term amount from one year to five years. They are also just as upfront about their origination fee, late payment fees, and non-sufficient funds fees, which says a lot about their dedication to being honest with their customers. Funding Circle also has an online loan calculator that allows applicants to get an idea of what their loan terms will look like before they apply.
Funding Circle’s transparency is part of their commitment to the Small Business Borrowers’ Bill of Rights, which essentially states that borrowers have the right to fair borrowing terms. Though Funding Circle is not the only lending company to have signed the Borrowers’ Bill of Rights, it says a lot about their company policies that the Bill of Rights information can be easily found on their website in several places. To learn more, watch the video below.
Borrowing with funding circle: How it works
Funding Circle aims to have loans approved and distributed in 10 days, which is much quicker than what you’d expect from a traditional bank loan, but a little longer than the three to seven days advertised by many of their competitors. However, there are a few extra steps involved in the process; here’s an overview of the application process:
- Fill out the online application. If you don’t meet the basic criteria for a Funding Circle loan, they’ll let you know right away before you finish filling out the application.
- A loan specialist will call you within two hours of submitting your application to review your information and get to know your business.
- Submit verification documents.
- Once the loan terms are accepted and signed, the loan will be funded within a few days.
Using your funding circle loan
Unlike some of their competitors, Funding Circle does not offer loans for new businesses or startup costs. Almost anything business-related beyond that, though, is acceptable. Costs associated with moving or expanding a business space, buying inventory or equipment, hiring new employees, or refinancing business debt are all approved.
Eligible applicants must have been in business for at least two years and be making at least $150,000 in yearly revenue. A minimum credit score of 620 is also required. Additionally, all of the loans are secured, meaning you have to provide collateral on each one. Funding Circle doesn’t have rigid guidelines on the types of collateral required; home equity, vehicles, equipment, and cash savings or deposits can all be used.
The Bottom Line for borrowing from funding circle
Funding Circle’s main customer base is made up of small business owners who have solid businesses but need an alternative to a traditional bank loan. If your business falls into this category, Funding Circle can provide good interest rates and loan terms, as well as a loan specialist to see you through the application process. However, they do require quite a bit of information from applicants and there’s no getting around their strict basic requirements. Funding Circle is committed to practicing transparent loan practices and giving their borrowers fair terms, and it seems as though they can be trusted to do that, making them a great borrowing option for small business owners.
Funding Circle for Investors
Funding circle investor review
- Investment Restrictions/Flexibility- 3/5
- Investment Options – 5/5
- Availability – 5/5
- Screening Process – 5/5
- Customer Service/Transparency – 4.5/5
For accredited, not casual, investors
Funding Circle Securities is the investment part of the P2P company. However, only accredited investors are able to participate and invest in Funding Circle loans. To qualify as an accredited investor, you have to be able to show an income of more than $200,000 in the last two years, or be able to show more than $1 million in assets (other than your house). Funding Circle Securities supports all kinds of accounts, including individual, joint, entity, and IRAs, giving investors some different options there. However, investors have to be ready to invest a minimum of $50,000 with a per loan minimum investment (or “note”) of $500. Given these numbers, becoming an investor with Funding Circle Securities is not for the casual investor, and there are notices on the website that warn that investors have to be prepared for risks and losses.
That being said, all of the Funding Circle loans are secured, are for established businesses, and have already undergone an entire verification process, so you don’t have to worry about weeding out startup business loans or loans for failing businesses yourself. In fact, there are two ways to build your portfolio: through selecting individual loans, or through the automated investing system. If you select individual loans yourself, you can view all the loan information, including the risk rating assigned by Funding Circle, as well as some details about the business itself. If you use the automated investing option, you can set your investment profile criteria and the system will automatically enroll you in a diverse range of loan types to minimize your risks.
There is a monthly fee of 0.083% per loan, which is calculated on the outstanding principal amount of the loan; for example, a loan that has $100,000 left on it would have a monthly fee of $83. This is different from some other P2P investment companies that charge investors only on payments they receive or charge only a yearly fee.
The Bottom Line for Investing with funding circle
Funding Circle is focused on giving accredited investors the chance to support their fellow small business owners through funding opportunities. The accreditation requirements significantly limit who can work with Funding Circle; however, if you meet the basic criteria, Funding Circle provides investors with the reassurance of knowing that all the secured loans have been thoroughly reviewed. Additionally, whether you select loans individually or utilize the automated investing tools, Funding Circle makes it easy to create a diverse portfolio of loan types to minimize possible losses. The monthly fee per outstanding loan does need to be taken into consideration, but overall, approved investors should expect to see returns.
funding circle reviews: What Customers Think
The reviews we found online were generally positive, with the main complaints focused on being repeatedly contacted by Funding Circle after turning down a loan, and that their loans are not for startup businesses. There were also a number of complaints from investors who wished that more information about the borrowing businesses was available. However, the number of negative reviews was pretty small, especially for an established business of this size.
Funding circle have been brilliant. I applied a while ago but had to wait for my accounts to be finalised. Once they were done the process was fast and simple. I was kept up to date every step of the way. Can’t thank them enough…onwards and upwards for my little business now. I liked the fact I had a named account manager and could contact with any queries. – 272Phillips, 1/7/16, ReviewCentre.com
As a small business and only a few years old I was struggling to get the support of the business banking society to understand my business needs without complex form-filling and negotiations. Funding Circle were clear in what they offered, their simple online application was quick and easy and they fulfilled my requirements within a couple of weeks, taking huge financial worries away from me. Would highly recommend them. – LJB20, 2/11/2016, TrustPilot.com
We approached Funding Circle for finance for an idea which ultimately we decided not to pursue. Since that date we have been inundated with unwanted emails promoting their services. Each time one was received we would unsubscribe from the list but this made no difference, they just kept coming. In the end we had to call and complain – time will tell if this has done the trick. – Simon, 2/11/2016, TrustPilot.com
I phoned up for a business loan secured on our residential property as the business is run from home. I was told they only secured on office buildings! Also that commercial loan rates started from 7% (higher than the banks) and were on a repayment basis. The contact was quite rude and dismissive. I would not recommend them at all. A very bad experience. – Andrew, 1/28/16, TrustPilot.com
Final Thoughts on funding circle
Funding Circle is focused on providing loans for small business owners who can’t or don’t want to go to a bank and providing investment opportunities for accredited investors. This significantly limits who can work with Funding Circle on both sides, and there are fairly high requirements set for both groups as well. However, if you meet the basic criteria and are approved as a borrower or a lender, Funding Circle provides some solid borrowing and investing opportunities. For borrowers, the rates are good (even better than those provided by some competitors) and Funding Circle’s commitment to fair and transparent practices is a huge vote of confidence. For investors, you have the security of knowing that all the loans have been thoroughly reviewed and are secured with collateral, minimizing the overall risks that come with investing in small businesses.