European Investment Bank and Funding Circle announce £100m investment into UK small businesses
The European Investment Bank has today agreed a £100m investment in loans to UK small businesses originated through Funding Circle. This investment, alongside £25m from the Funding Circle SME Income Fund, will enable over £200m of new loans over seven years, and provides a further injection of funding into the UK small business sector.
This new partnership with Funding Circle represents the first deployment of EIB funding through a direct lending marketplace to support small businesses. Improving access to finance for small and medium sized businesses is a key priority for the European Investment Bank. It says this new engagement is recognition of the role of marketplace lending as an efficient way for small business to access finance, and an important new channel to stimulate the real economy.
To date, Funding Circle has facilitated more than £1.25 billion of loans to 16,000 businesses in the UK. Since launching in 2010, lending to small businesses through Funding Circle has evolved to include a diverse range of investors. This includes national and local government backing in the UK and support from international organisations such as the European Investment Bank and European Investment Fund, and KfW, the German development bank.
Jonathan Taylor, European Investment Bank vice president, said, “Investment by small businesses drives economic growth, and simple, efficient access to finance is essential to help small companies to expand, create jobs and harness new opportunities. This new and exciting partnership with Funding Circle demonstrates the European Investment Bank’s firm commitment to seeking out new ways to stimulate business investment across Europe. The £100 million backing will not only unlock over £200 million of new investment by small businesses across the UK, but also provides an innovative model for supporting SMEs that could be used elsewhere in Europe.”
Samir Desai, CEO and co-founder of Funding Circle, commented, “Our partnership with the European Investment Bank is the first of its kind and represents another important step on our journey to creating a global marketplace where creditworthy businesses borrow from a diverse range of investors. This significant investment will ensure more businesses access the finance they need to grow and will help support economic growth and job creation across the UK.”
By linking supply directly with demand through Funding Circle’s marketplace, the European Investment Bank will provide much-needed funding to UK small businesses. Currently, there are more than 5.4m small businesses in the UK accounting for 99.3% of all private sector business. Collectively small businesses make up 50% of GDP and 60% of employment.
Through Funding Circle, businesses typically access the capital they need in seven days compared to 15-20 weeks with a bank. Independent research has found that three in four businesses would come to Funding Circle first in future, ahead of a bank.
Over the last decade the European Investment Bank, Europe’s long-term lending institution, has provided more than £3 billion for investment by small businesses across the UK.