Funding Circle secures agreement with EIB for £100m investment into UK small businesses

The European Investment Bank has agreed a £100m investment in loans to UK small businesses originated through London-headquartered Funding Circle.

This investment, alongside £25m from the Funding Circle SME Income Fund, will enable more than £200m of new loans over 7 years, and provides a further injection of funding into the UK small business sector.

This new partnership with Funding Circle represents the first deployment of EIB funding through a direct lending marketplace to support small businesses.

Since launching in 2010, Funding Circle has facilitated more than £1.25bn of loans to 16,000 businesses in the UK.

Lending to small businesses through Funding Circle has included a wide range of investors. This includes national and local government backing in the UK and support from international organisations such as the European Investment Bank and European Investment Fund, and KfW, the German development bank.

By linking supply directly with demand through Funding Circle’s marketplace, the European Investment Bank will provide funding to UK small businesses.

Currently, there are more than 5.4 million small businesses in the UK accounting for 99.3% of all private sector business. Collectively small businesses make up 50% of GDP and 60% of employment.

Through Funding Circle, businesses typically access the capital they need in 7 days compared to 15-20 weeks with a bank.

Jonathan Taylor, European Investment Bank vice president, said: “Investment by small businesses drives economic growth, and simple, efficient access to finance is essential to help small companies to expand, create jobs and harness new opportunities.

“This new and exciting partnership with Funding Circle demonstrates the European Investment Bank’s firm commitment to seeking out new ways to stimulate business investment across Europe.

“The £100 million backing will not only unlock over £200 million of new investment by small businesses across the UK, but also provides an innovative model for supporting SMEs that could be used elsewhere in Europe.”

Samir Desai, CEO and co-founder of Funding Circle, added: “Our partnership with the European Investment Bank is the first of its kind and represents another important step on our journey to creating a global marketplace where creditworthy businesses borrow from a diverse range of investors.

“This significant investment will ensure more businesses access the finance they need to grow and will help support economic growth and job creation across the UK.”

Over the last decade the European Investment Bank, Europe’s long-term lending institution, has provided more than £3bn for investment by small businesses across the UK.

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