Funding Circle Peer to Peer Lending
Funding Circle is a brand new peer to peer lending site which lets people lend money to small businesses. Funding Circle is very similar to Zopa, which opened 5 years ago. Funding Circle opened on August 13th and it sidesteps the banks meaning businesses can get cheaper loans and investors can get a better return on their money. Funding Circle is currently offering a 2% cashback promotion on any money you lend out to businesses.
After you create a Funding Circle lending account, they will run a credit check on Experian. Whenever this has been passed you will be able to add money to your lending account. You then can choose how much you want to lend out, how long you want to lend it for (one year or three years) and what rate you wish to lend it at. Currently the average lending rate at Funding Circle is 9%. This is much higher than what you would obtain from any fixed accounts provided by banks.
Another benefit of Funding Circle is that should you need your money quickly you have the opportunity to sell your loans. This is the main difference from Zopa, who have yet to add the sell your loans feature. Funding Circle has also squashed the fees for the first year. They currently do not have a referral program.
Drawbacks of Funding Circle are the fact that your money is not backed by FSCS so if you cannot afford the risk then do not invest in peer to peer lending sites. Although the owner of Funding Circle, Meekings says that lenders will get their money back should the site cease to function.
Funding Circle is still very new so you should invest with caution. Perhaps invest 5% of your free money into Funding Circle each month and invest the rest into safer investments. I plan to invest a few hundred and see what happens.
My Funding Circle Stats
I am currently in the process of opening a Funding Circle account. I do plan to update my Funding Circle stats when I get started including total amount of money lent out and average return.