User:Luke.omahony87/Funding circle

Funding Circle is an online portal which allows savers to lend money directly to small businesses. The portal is the first site to use the process of peer-to-peer lending for business funding in the UK.

Funding Circle is based in the UK and launched August 2010. It was launched at a time when small businesses were struggling to obtain finance from traditional channels. In its first 10 weeks savers used the platform to invest more than £1 million into small businesses.

The website provides a platform in which lenders can browse businesses that Funding Circle has underwritten and approved for lending. Lenders bid an amount and an interest rate in an auction style to become part of the loan. Every loan request is made up of hundreds of lenders each lending a fraction of the total loan. Each lender lends a small percentage of their total funds to lots of different businesses.

As with other lending sites, if a borrower fails to fully repay the loan then the lender risks losing part of his or her return. To mitigate against this, Funding Circle recommends that users lend to lots of businesses, and employs the same credit checks that banks use on businesses.

The website's concept is similar to that of peer-to-peer lending site Zopa, where people lend their money to individuals.