Funding Circle has announced a partnership with the European Investment Bank to provide over £100m of new funding to SMEs in the UK. The lending site will oversee the distribution of the funds to small businesses in the UK, and will take the total amount available to around £200 million of new loans over 7 years.
The partnership is the first time the EIB has deployed its funds directly to UK SMEs via an online lending platform. According the to EIB, “Improving access to finance for small and medium sized businesses is a key priority… This new engagement is recognition of the role of marketplace lending as an efficient way for small business to access finance, and an important new channel to stimulate the real economy”. The move builds on the EIB’s previous support for small businesses in the UK, where is has contributed over £3bn in the last decade.
With the news of the EIB financing, Funding Circle has now taken the total amount it has channeled to UK small businesses to more than £1.25 billion of loans since its launch in 2010, going some way to acheiving its stated goal to become the biggest lender to SMEs in the UK by 2016. The EIB is the latest in a line of large institutional investors to use the platform to funnel money to SMEs – both national and local government in the UK have done so, along with international organisations including the European Investment Fund, and KfW, the German development bank.
‘An innovative model for the rest of Europe’
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 said: “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.”