More changes in the ever-changing marketplace lending sector. A few weeks on from announcing sweeping changes to its investment process, leading business-focused platform Funding Circle is changing its approach to working with corporate finance brokers.
One such broker, who wished to remain anonymous, told AltFi that Funding Circle is cutting off 300 brokers. The platform works with approximately 1,000 active brokers at present.
The unnamed source claimed to have been redirected to a “master broker” upon attempting to submit loan proposals, after Funding Circle explained that it will no longer deal directly with “small brokers”. The “master broker” in question was said to have had no procedure for dealing with enquiries. The source described this procedure as inefficient, in that it halved broker commissions and extended lead times. The due diligence process of the master broker was described as more stringent than that of the FCA and the NACFB.
Asked about the situation, a Funding Circle representative said that a group of its brokers were contacted recently and invited to re-engage after a period of prolonged inactivity. The company appears to be refocusing its energies on establishing meaningful relationships with brokers that have expressed interest in using the platform regularly. Those that did not respond to these overtures, or that responded negatively, have had their accounts closed – with “fair warning”.
Funding Circle has informed brokers that they will need to make at least one introduction to the platform per quarter in order to continue working with the platform.
“The door is very much still open to all brokers that want to have this type of regular, productive relationship – by doing so we will be maximising the numbers of small businesses we're able to support,” said the spokesperson. “It's a positive step towards building great relationships with committed brokers for the good of business owners looking for finance.”
The decision seems to hinge partly on the amount of due diligence that Funding Circle is now putting into each and every broker relationship.
Funding Circle recently struck a deal with Dutch financial services giant Aegon. Aegon will fund £160m of loans through the platform over the next 12 months as the first stage in a four year agreement.