Funding Circle keeps eye on profitability as loan originations nearly double

The SME lender claims to have originated roughly a quarter of the total 82,600 CBILS loans in 2020 as it pivoted to offering only government-backed lending during the pandemic.

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Samir Desai/Funding Circle

Listed alternative lender Funding Circle is performing better than expected, according to a trading update from the company, with the SME platform expecting to turn a profit of at least £15m in the second half of 2020.

Funding Circle predicted that it would break even back in November 2020 and, in its trading update published this morning it confirmed this. 

The fintech is still on track to reach profitability, with Funding Circle predicting its AEBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization) will be no lower than £15m for the second half of 2020.

According to the fintech, the higher-than-expected AEBITDA is as a result of strong trading, cost-cutting exercises and its market value performing as predicted.

In the UK, Funding Circle saw a 91 per cent jump in the number of loan originations in the second half of 2020 compared to the same period the year before, a jump that can be attributed to the number of CBILS applications the lender is processed.

By 13 December 2020, Funding Circle claims that its lending represented a 25 per cent share in the total number of Coronavirus Business Interruption Loan Scheme (CBILS) loans since the lender joined the government-backed programme in April 2020.

Despite the strong growth in the UK, loan originations across the pond fell off a cliff, with the lender seeing a 44 per cent drop in the number of US loans it dished out. 

As a result of the lender’s record CBILS lending, Funding Circle’s income reached £121m in the second half of 2020, an increase of just over a quarter (26 per cent) from the same period in 2019.

Samir Desai CBE, CEO and founder, said: “As a result of Covid, we are seeing an acceleration in the shift towards online in small business lending. As the largest online SME loans platform, we used our advanced technology to reach record levels of lending in 2020 and we are well placed to capture this enlarged opportunity going forward. 

In its November update, the listed fintech also expected that its income would be roughly 20 per cent higher in 2020 than it was in 2019, currently, the group’s income is 25 per cent higher than the year previous. 

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Samir Desai

CEO and Co-founder