Funding Circle’s US branch will now offer individual investors the chance to invest in small business loans, with the launch of its Fractional Loan Marketplace. It is the first major platform in the US to do this.
Through its affiliated broker-dealer, Funding Circle Securities, investors can now buy fractional pieces of secured small business loans ranging in size from $25,000 to $500,000 and with terms from one to five years, with coupon rates of 5.99-20.99%. Investors can access the marketplace with a minimum opening balance of $50,000, and a minimum investment per borrower-payment dependent note of $1000.
The marketplace opens up a traditionally exclusive asset class to individual investors, who can now build a more diversified portfolio by investing in portions of loans instead of whole loans.
"We're excited to be the first major P2P lender in the U.S. to offer qualified individual investors unique access to a curated selection of true small business term loans underwritten by our seasoned credit professionals using robust data analytics. Our borrowers are high-quality businesses left behind by banks due to industry inefficiencies, tighter lending regulations and archaic underwriting models. These are established businesses that have assets and cash flow to secure loans, plus a legitimate plan for growth."
Funding Circle was founded in 2010 and since then 35,000 investors have lent more than $800 million to 7,000 small businesses globally.
"There is tremendous demand in the market for fast and affordable small business loans; we're about to cross $1 billion in originations globally. With the launch of our Fractional Loan Marketplace, we expect it will be another good year to tap into investors seeking yield in a low rate environment and bring more capital into this attractive asset class."
Funding Circle has now lent over half a billion pounds to small businesses in the UK and its US equivalent now looks to be gaining significant momentum.