Funding Circle piloting referral scheme for large unsecured loans

Funding Circle is referring potential customers to traditional banks and fintech rivals.

Funding Circle is piloting a scheme that involves it referring borrowers wanting large, unsecured loans away from its peer-to-peer lending platform to rivals.

Funding Circle is referring potential new customers to fintech rivals, small business lenders Iwoca and MarketInvoice, as well as the French bank BNP Paribas.

Instead of turning down the customers, the peer-to-peer lender is advising borrowers wanting unsecured loans above £500,000 to sign up with its rivals, which it receives a referral fee for.

A source close to Funding Circle said: "By working with others across the industry, Funding Circle can ensure that SMEs who come to Funding Circle can access finance that's suitable for them."

The pilot scheme, first reported by The Times, is in its early stages and Funding Circle is not commenting on it publicly.

Funding Circle has suffered a number of setbacks since its listing at 440p a share last year.

In August this year, Funding Circle reported a pre-tax loss of £31m over the last six months, compared to a £27m loss the year previous.

But last month, its loans under management soared 31 percent to £3.7bn, sending its share price up.