Compare P2P lending accounts and IFISAs now

Funding Circle Review

Click "Learn" to get help

By on 24 April, 2019 | Read more by this author

Here's a quick expert Funding Circle review from one of 4thWay's experts. (You can see all the Quick Expert Reviews in our comparison tables.)

4thWay's Quick Expert Funding Circle Review

A very strong history, although with recent signs for caution

When did Funding Circle start?

Funding Circle has a history measured in billions of pounds of loans stretching back to 2010.

What interesting or unique points does Funding Circle have?

Funding Circle has highly experienced former bankers, underwriters and credit-risk experts, and it has demonstrated very satisfactory borrower selection processes. It is the largest P2P lending site that does smaller loans of up to five years to small- and medium-sized businesses.

How good are its loans?

Funding Circle probably has good quality loans, but it no longer provides enough information for us to assess them.

Funding Circle review: lending processes

Funding Circle has historically shown itself to be excellent at evaluating borrowers and learning from the large amount of data it has collected on tens of thousands of them. It has also previously demonstrated that it is good recovering bad debts, performing somewhat better than average for these kinds of loans.

How good are Funding Circle's interest rates, bad debts and margin of safety?

We used to praise Funding Circle for its openness in sharing details about its business, which used to include “sharing the fine detailed history of each loan over time”, which allowed us to assess its performance using both bank risk modelling and investing techniques.

However, Funding Circle withdrew this information in spring 2018, which leaves a big question mark over its future. In many ways, withdrawing data that it used to provide causes me more suspicion than if it had never allowed its users and analysts to see the data at all.

Without that data, Funding Circle is no longer able to earn 4thWay PLUS Ratings or 4thWay Risk Scores on its lending accounts.

Funding Circle has demonstrated that it understands and contains the risks when approving loans, and it has historically priced interest rates well. Since we now get less information and since expected interest rates have fallen considerably, we can now no longer be sure whether it offers a large margin of safety in the event of severe economic disasters.

Is Funding Circle profitable?

Funding Circle has been losing money, but, in a new, growing industry most businesses are loss-making, so we must distinguish between those with “healthy” and unhealthy losses. This professional, established business, backed by strong investors that put in an extra £82 million in 2017, has been growing its sales rapidly and has a strong brand, which puts it firmly on the healthy side.

What is Funding Circle's minimum lending amount and how many loans can I lend in?

If you lend at least £2,000 you will lend across at least 200 borrowers, which is appropriate for these loans. It is not uncommon in these kinds of loans for a significant minority of lenders to see their lending returns take an early hit as bad debts arise, but over time the interest you earn and the recoveries on bad debts will prove sufficient for the vast majority of lenders, so a bit of patience is required.

Does Funding Circle have an IFISA?

Funding Circle's lending accounts are available as IFISAs.

Visit  Funding Circle.

The opinions expressed are those of the author and not held by 4thWay. 4thWay is not regulated by the ESMA or the FCA, and does not provide personalised advice. The material is for general information and education purposes only and not intended to incite you to lend.

Experts, journalists and bloggers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.

Our service is free to you. We don't receive commission from the above-mentioned companies. We receive commission from some other P2P lending companies when you click through from our website and open accounts with them. This doesn't affect our editorial independence. Read How we earn money fairly with your help.

Leave a Reply

Your email address will not be published. Required fields are marked *

Today’s average interest rates

What is the “4thWay”?

There's the savings way, the property way, the stock-market way, and now there's the peer-to-peer lending way. The 4thWay® to save and invest.
Learn more.

What does 4thWay do?

We help people save and make more money, more safely when they cut out the banks and lend directly to other people and to businesses.

Why use 4thWay?

4thWay® is shaped by investors, bank risk modellers and a senior debt specialist, and we're governed by our users to ensure our comparison services and research are trustworthy and complete.

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Orchard’s interest rates different?

Orchard’s lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Orchard’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×
Back to top
[wpforms id="21393" title="false" description="false"]