Funding Circle’s losses swell during pandemic but eyes 2020 break even

By Daniel Lanyon on Thursday 24 September 2020

Alternative Lending

The SME lender saw a spike in coronavirus-related missed payments from borrowers but was also the first fintech to be approved to distribute government-backed loans via the CBILS.

Funding Circle’s losses swell during pandemic but eyes 2020 break even
Image source: Samir Desai, CEO and founder of Funding Circle

Funding Circle saw its losses in the first six months of the year rise to £113.5m, a more than 300 per cent increase on the previous year, according to a trading update from the firm.

In the first six months of the year Funding Circle says it saw total income grew by 24 per cent to £101.2m but an increase in fair value losses of assets owing to the pandemic of c.£96m and a write-down of £12m boosted its operating loss.  

Originations were down 7 per cent in the same period but loans under management grew 5 per cent to £3.7bn. It now has net assets of £217m (£319m in 2019). 

Samir Desai, CEO and founder of Funding Circle says Covid-19 has led to an acceleration in the adoption of online small business lending which could mean a break-even this year. 

“We remain focused on profitable growth and are reinstating our target of close to AEBITDA break-even for the business in the second half of 2020.”  

Funding Circle is basing this assumption, however, on ”there being no further prolonged national lockdowns across our geographies and includes the expectation of ongoing government support for SMEs in the UK.” 

The firm says it approved more than £2 billion of loans in the first six months of the year in the UK and US and is the 5th largest CBILS lender with c.20 per cent market share of loans approved. 

It approved c.£1.2bn and originated c.£815m of CBILS loans, with June to August lending volumes up more than 30 per cent year-on-year also. 

In part, this was helped by Funding Circle’s investment in automated lending which is now powering its lending decisioning.

“Our Instant Decision lending technology launched this year is already transforming the SME borrowing experience with average loan applications being completed in 6 minutes, and decisions in 9 seconds,” Desai said.  

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