U.K.-based alternative lender Funding Circle is readying to set a new precedent in the industry, reports made Thursday (July 30) said. According to reports in the Financial Times, the peer-to-peer small business funder is planning to float the Funding Circle SME Income fund with the goal of raising more than £150 million — the first time a P2P lender would do so.
Unnamed sources told the publication that the fund will provide financing to small businesses across the U.S., U.K. and wherever else Funding Circle will enter. The unleveraged loans will originate on the Funding Circle platform, reports said.
The sources added that the fund will not charge fund management or performance fees, instead competing on price. FT noted that this contrasts with other rivals in the industry, like P2P Global Investments, which charges management fees.
Funding Circle has strengthened its market position this year through a series of partnerships and fundraising. In February the company announced a $420 million, three-year deal with Chicago-based Victory Park Capital. At the time, reports said it was about a 50 percent increase over the volume of small business loans Lending Circle had issued to date.
And in April, the company announced a new $150 million fund, financed by DST Global and other backers. Earlier this month the company partnered with software firm Sage to strengthen funding to its small business partners.
Funding Circle’s growth is indicative of the success of the global P2P lending space, especially in the U.K. Researchers found this month that industry players lent more than $792 million in P2P financial products in the first quarter of 2015 alone, a figure analysts said was a new record.
According to Peer-to-Peer Finance Association Chair Christine Farnish, at the current rate, the U.K. may see $6.24 billion in P2P loans issued by the end of the year.