How to compare UK business loan providers
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Funding Circle business loans and the alternatives to compare
How Funding Circle business loans work now it no longer runs peer-to-peer investing, what it assesses, and other options worth weighing before you apply.
In this guide
Funding Circle is a UK online lender that provides business loans and other finance to small and medium-sized businesses. It began in London as a peer-to-peer platform connecting businesses with individual investors, but it no longer offers peer-to-peer investing to the public and now lends directly, funded by institutional investors. Funding Circle is one of the lenders Smart Funding Solutions works with, so we can include it when comparing options for your business alongside the rest of our panel. This guide explains how it works, what it looks for and what else to compare before you borrow.
How Funding Circle business loans work
- Online application: businesses apply through a digital process, usually sharing bank statements or connecting accounts through open banking.
- Term loans: fixed-term business loans repaid in regular instalments, typically for growth, equipment, stock or working capital.
- Other products: the lender has also offered ways to spread the cost of individual business purchases; check which are available now.
- Personal guarantees: as with most lenders to limited companies, directors are usually asked to guarantee the borrowing.
Loan sizes, terms, eligibility and pricing change over time, so check Funding Circle's own website for its current products and criteria.
What online lenders like Funding Circle look for
- how long the business has been trading and its turnover
- recent bank statements and the pattern of income and outgoings
- filed accounts and profitability, particularly for larger amounts
- business and director credit history
- existing debt and whether new repayments are affordable
Our guide to how lenders assess business loan applications covers each of these in more detail.
Pros and cons of applying to a single online lender
| Advantages | Limitations |
|---|---|
| A straightforward digital application | You only see one lender's criteria and pricing |
| Decisions are often faster than a traditional bank | A decline may leave a credit search on your file without an alternative offer |
| Clear, fixed repayment schedules on term loans | A term loan may not be the best product if your cash is tied up in invoices or you need equipment |
Alternatives to compare
Depending on what you need the money for, you might compare:
- unsecured business loans from other banks and specialist lenders
- invoice finance, if you are waiting for customers to pay
- asset finance, if you are buying equipment or vehicles
- a revolving credit facility for ongoing, fluctuating cash flow needs
- a merchant cash advance, if most of your income comes through card payments
- government-backed lending through the Growth Guarantee Scheme, delivered by accredited lenders; check the British Business Bank for current availability
Going direct or using a broker
This guide is general information, not financial advice. Lenders set their own criteria, rates and terms, and all finance is subject to status.
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FAQs
Common questions
Is Funding Circle a bank?
No. Funding Circle is a non-bank online lender. It does not offer business current accounts or take deposits in the way a high street bank does, and it focuses on lending to small and medium-sized businesses. You can check the status of any finance provider on the Financial Conduct Authority register before you apply.
What can I do if Funding Circle declines my application?
A decline from one lender does not mean others will say no, because lenders have different criteria for trading history, credit and sector. Ask for the main reason if you can, check your credit reports, and avoid making many applications at once. A broker can identify lenders more likely to consider your profile before any further credit searches are made.
Can a sole trader get a Funding Circle business loan?
Funding Circle sets its own eligibility rules and they change over time, so sole traders should check its current criteria on its own website before applying. If it does not suit, other lenders do consider sole traders, usually looking at tax returns, bank statements and personal credit. Borrowing of £25,000 or less by a sole trader can be regulated consumer credit. Our page on sole trader loans explains what lenders look for.
Does a Funding Circle application affect my credit file?
Applying for any business loan, including with Funding Circle, can leave a search on your business and personal credit files. Some lenders may use a soft search at the early stage, but a full search usually happens when you make a formal application. Several full searches close together can make other lenders cautious, so it is worth understanding which lenders suit your business before you apply anywhere.
How do Funding Circle business loans compare with a bank loan?
Funding Circle business loans typically offer a faster, fully online process than a traditional bank, while a bank may offer lower pricing to strong, long-established customers. Banks may also ask for more paperwork and take longer to decide. Both usually ask directors for a personal guarantee. Compare the total cost, term, fees and early repayment terms, and see our guide to banks vs other lenders.
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