Only a week removed from announcing its landmark union with high-street bank Santander, Funding Circle has engaged in yet another trailblazing partnership.
The world’s leading peer-to-business lender has now joined forces with Glasgow City Council. Glasgow thus becomes the first UK Chamber of Commerce to partner up with an online platform. The move is in keeping with Funding Circle’s strategy of aligning itself with local authorities. The initiative has led 8 UK city councils so far to lend money via the Funding Circle platform in efforts to boost SME lending within their respective areas.
“Since launch, Funding Circle investors have lent £14.8 million to small businesses in Scotland. This partnership with Glasgow Chamber of Commerce will allow us to help even more of the region's businesses and raise the profile of alternative sources of finance.
"We’re beginning to see more and more interest from councils and organisations looking to use the Funding Circle marketplace as a way of boosting lending to businesses in their local regions. About £7 million of lending has been facilitated by five councils so far and a further three have recently started to lend. We strongly believe this network will evolve over the next period to create a blueprint for an equivalent 21st century regional banking network.”
The Glasgow partnership will aim to raise awareness of alternative funding routes. The Chamber will also invest through the Funding Circle platform – money which will be available to businesses within the Glasgow Metropolitan Area. The initiative will be key to improving understanding of the alternative finance opportunity in Scotland – where the sector holds a relatively low profile at present. As Mr. Desai explained, £14.8 million has been lent to Scottish businesses through Funding Circle to date, compared with over £300 million nationwide.
Last year, Glasgow Chamber of Commerce published research demonstrating an ongoing demand for finance amongst Scottish businesses. Recommendation 17 of the Glasgow Economic Commission (GEC) duly advised the city’s economic development partner to “utilize a range of innovative funding and other mechanisms” to promote growth.
Alison McRae, Projects Director of Glasgow Chamber of Commerce, commented:
“Funding Circle is an extremely novel approach to business finance, effectively creating a marketplace for borrowing.
“As a Chamber of Commerce one of our main goals is to encourage business growth and this is only achievable if funding is available. Through our partnership with Glasgow City Council we are directly assisting established businesses working in the target sectors identified by the Glasgow Economic Commission so our motivation is very focused.
“We have already identified that many Scottish firms are missing out on the opportunities presented by crowd-funding and we hope our involvement can stimulate the market. Uptake across the country is currently extremely low so our ambition is to reverse this trend.”
The Chamber’s lending will be split across roughly 10-20 businesses over the next 6-12 months – forming a portion of every loan, with the remainder made up by private co-investment.
We’ve gushed before about the potential of Funding Circle’s regional and nationwide backing – via city councils and government entities. With major banks and Chambers of Commerce now joining the fray, lending via the platform seems poised to skyrocket.