< 5% Annual Returns On Small Business Loans?

If you were to invest in small business loans with 4-year terms, what kind of return would you hope to get?

Retail investors that put their money in a mix of high-risk and low-risk loans on Funding Circle’s UK platform should expect to achieve a return of 4.5% to 6.5% a year (after defaults and 1% servicing fee), the company recently announced. That’s down from their previous projections. Meanwhile, their conservative loans could achieve returns of 4.3% to 4.7% a year.

A Marcus By Goldman Sachs savings account in the UK by comparison earns 1.50%

Funding Circle explained in a blog post that the returns could actually be higher or lower than projected.

To-date, investor interest has continued to grow with peers on the platform investing £1.5 billion in 2018 and £419 million in the 1st quarter of 2019.