Fintech firm Funding Circle gets further £40M UK government fund to lend small businesses

U.K.-based fintech firm Funding Circle announced that it received an extra of £40 million from the government-owned British Business Bank to lend to small businesses. The funding follows an initial £40 million investment by the bank in 2014 and a £20 million investment by the UK government in 2013 through the Business Finance Partnership.

The British Business Bank focuses on supporting economic growth by increasing the choice of finance for small and medium-sized businesses. With the £60 million in lending to date, more than 10,000 businesses have gained benefit. Also, the bank is lending alongside 55,000 people, local councils, financial institutions and the European Investment Bank, the release stated.

"Peer-to-peer lending is becoming an increasingly important source of finance for smaller businesses, with AltFi data showing an 85% increase in lending via the sector from 2014 to 2015,” Catherine Lewis La Torre, CEO of British Business Bank Investments, stated, as reported by 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 UK."

The new commitment of the bank with Funding Circle recognizes the success of the program till date and the role investors lending through Funding Circle are playing in supporting the backbone of the British economy.

Fintech platform Funding Circle will loan the money it has secured to small British businesses and the money will not be invested in Funding Circle itself, but on its platform, which matches investors with businesses looking to borrow.

"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,” James Meekings, co-founder, and the UK managing director of Funding Circle, said in a statement to Business Insider.

The British Business Bank will be continuing to lend directly through the partial loan marketplace to UK businesses that meet their lending criteria. It will lend on the same terms as other investors in the loan.