Funding Circle, the U.K.-based startup company that operates an online lending platform, has received an investment of £40 million from British Business Bank, the state-owned bank, but the money comes with strings. According to a report, Funding Circle has to use the funds to lend to small businesses.
“Peer-to-peer lending is becoming an increasingly important source of finance for smaller businesses, with AltFi data showing an 85 percent increase in lending via the sector from 2014 to 2015,” said Catherine Lewis La Torre, CEO of British Business Bank Investments, in an email statement to Business Insider. “A key part of our remit is to support the development and growth of such finance markets, while earning an attractive, commercial return for the taxpayer. We look forward to seeing our latest commitment to Funding Circle enabling the growth and success of many more businesses across the U.K.”
With the latest investment, Funding Circle has received £100 million from the British Business Bank. The report noted the bank invested £60 million in the platform in 2013. According to the report, the money has gone to 10,000 companies in the U.K. and has earned British Business Bank £5 million in net interest.
The new funds will go to loan money to U.K. small businesses and won’t be invested in the company. “Over the last six years, Funding Circle has proved to be a more efficient way for small businesses to access the finance they need to grow and expand, whilst providing investors with attractive, stable returns. This further lending commitment is recognition of the success of the partnership to date, and we look forward to working with the British Business Bank to help thousands more small businesses,” said James Meekings, cofounder and U.K. managing director of Funding Circle, in a statement to Business Insider.