Two years ago, Funding Circle was one of the largest peer-to-peer lending platforms in the world, one of the few alternative lenders to take companies public.
When Covid hit, Funding Circle was one of multiple lending platforms that temporarily halted retail activity. But while other platforms gradually reopened to retail investors, Funding Circle remained closed.
It started small. At the time, it made sense that the company would shift focus, at the start of the pandemic, to providing coronavirus-related business interruption loans to businesses that needed them most. Retail investors were not allowed to fund these loans.
Funding Circle became the first P2P lender in April 2020 to be accredited under the Coronavirus Business Interruption Lending Program (CBILS). In May, he accepted an offer from the British Business Bank to expand into the Bounce Back Lending Scheme (BBLS).
Since then, it has continued to participate in government-backed programs, including becoming the first P2P lending platform to be accredited with the Recovery Lending Program (RLS), which replaced CBILS and BBLS.
As the Funding Circle group moved further into the world of government-backed lending, the fate of the retail platform seemed increasingly uncertain.
After posting a loss of £84.1 million in the first half of 2020, Funding Circle has unveiled exceptional results for the first half of 2021, with a basic profit of £53.3 million.
In an update of News Peer2Peer Finance in September 2021, Samir Desai, then the company’s chief executive, said that Funding Circle would not consider reopening to retail investors while the RLS was still ongoing.
At the time, Desai said they “needed to see how things progress over the next few months… see the economy de-stress” before reviewing retail supply.
The RLS was originally scheduled to end at the end of 2021. However, in October, Chancellor Rishi Sunak announced a six-month extension of the program until June 2022. Following this announcement, Funding Circle said it would review its P2P . lending activity in June.
At the same time, the company focused on launching new products and signing partnerships. Its annual report published in March 2021 focused on partnerships and institutional investments and barely mentioned retail investors in 48 pages.
In September 2021, it launched its first payment facility. In December, it rolled out integrated financing solutions.
Read more: Funding Circle will focus on integrated finance after P2P exit
It also announced partnerships with Tide and credit-checking app Chaser, the latter last month.
And finally, on March 10, Funding Circle announced that it would permanently shut down its retail P2P lending platform. All remaining loans are in the process of being repaid or collected and investors will continue to receive interest and principal payments to their accounts until the loans are completed.
Read more: Funding Circle permanently closes its retail P2P business
Lisa Jacobs, Managing Director of Funding Circle, said at the time of the announcement: “Since new lending was suspended in April 2020, we have focused on supporting small businesses to access funding through new and existing ones, including through government programs that retail investors have not been able to. participate in.
“This period has also seen major changes within the industry, including key players shutting down their retail platforms, proposed regulatory changes and broader market dynamics.
“These factors have led us to today’s announcement as we do not believe we can continue to operate a sustainable product for retail investors.”
Read more: Funding Circle P2P Release: The Industry Responds
Looking back, the writing was on the wall once Funding Circle began to focus its attention away from its retail base. Government loan programs gave the platform an opportunity to try a new non-retail business model that did nothing to slow its earnings growth.
Two years is a long time for an ambitious fintech. As of March 2020, P2P giants such as RateSetter and Zopa have both exited the retail lending space, and Funding Circle’s exit has long been predicted by many industry insiders.
Funding Circle now plans to focus on its integrated funding offering and other upcoming products. It’s certainly not the last we hear about the pioneering P2P brand.