Small business lender Funding Circle beat expectations today as it surged back to profitability following a hit through the pandemic in 2020.
Pre-tax profits jumped to £64.1m for the firm, up from £108.1m loss in 2020 when the lender dished out loans to small businesses weathering the impact of covid lockdowns.
Loans under management at the firm grew 5.8 per cent from 2020 to hit £4.457bn, up from £4.2bn in 2020, while total income for the lender fell seven per cent to £206.9m.
Boss Lisa Jacobs said it had been a successful year for the firm.
“We continued to deliver a superior customer experience through our world-class technology, with over 70 per cent of UK applications now receiving an instant decision,” she said.
“Our focus for the last two years has been on profitable growth and today’s results highlight the excellent progress we have made. I am particularly proud to announce AEBITDA of £92 million and £64 million of operating profit, exceeding our previous guidance.”
Cost management initiatives paid off as the firm cut out 12 per cent of 2020 levels and reduced overall expenses to £167.4m.
Jacobs said that small businesses had pivoted to digital lending en masse through the pandemic and the trend was expected to lift the firm in the period ahead.
Three quarters of its business are expecting to top up borrowing, the firm said, and 40 per cent said they will require finance in the next year.
But bosses urged caution as uncertainty continues to cloud the economic outlook.
“The economic environment is uncertain and, as previously highlighted, the market continues to be distorted as a result of Covid Government loan schemes,” Funding Circle said in a statement.
“However, as demand returns to pre-Covid levels through 2022, we are well placed to capture the opportunity going forward.”