Funding Circle will allow multiple loans by the same borrower and also open up to “C” rated borrowers which were so far excluded from loan funding. These changes will be enacted on Sept. 19th. In the blog Funding Circle explains the reasoning for allowing multiple loans:
Businesses typically have multiple finance needs throughout the year, for example they may need finance to purchase new assets or to fund new projects. Previously at Funding Circle, businesses were restricted to one outstanding loan. Many of our borrowers have come back to us with new finance needs and until now we have not been able to help them. In addition, a number of very creditworthy businesses have previously borrowed up to 50,000 GBP with Funding Circle when our maximum loan limits were lower, but which would have always passed our underwriting models for larger loan amounts (our current maximum is 100,000 GBP). …
and for introducing “C” band loans:
… indeed it has always been our intention to introduce this additional risk band. Since launching in August 2010 we have taken a very prudent approach to assessing businesses – the borrowers that are eventually listed represent only a small proportion of the businesses that apply to us. In particular since we have launched there have been a group of businesses which sit marginally outside our current risk criteria, but which we feel offer attractive risk-return characteristics for lenders. Some lenders have also asked us for the opportunity to lend to a wider pool of businesses at potentially higher rates. From 19th September C band borrowers will be eligible to be listed at Funding Circle.
What do you think about this change? Post your opinion on Wiseclerk’s Funding Circle forum.
So far about 9 million GBP (equals about 14.5 million US$) loan volume have been funded on Fundingcircle.com.