Funding Circle’s Originations Have Slowed Dramatically in The US

Funding Circle’s US originations fell significantly in 2021 versus the previous two years, the company’s latest year-end report revealed. US originations were only £316M in 2021, of which £224M was PPP funding. That £92M in non-PPP funding was a massive drop from the £619 in 2019, for example.

Funding Circle attributed the reduction in demand to the ending of government stimulus programs.

“The US has a fragmented SME lending market,” the company stated in its full-year report. It estimated that 89% of all SME lending was done through banks and only 10% through specialty finance providers.

Funding Circle’s loans have small margins. The company projects annualized returns of only 5-7% on its US-originated non-PPP loans. Meanwhile, annualized inflation in the US by comparison is currently trending at 7.9%.

Funding Circle also announced its exit from the peer-to-peer lending model. According to the Financial Times, Funding Circle CEO Lisa Jacobs said of it: “There’s been a big shift; the industry has shrunk severely.”