Thursday 24 September 2020 8:32 am

Funding Circle losses deepen as pandemic hits peer-to-peer lending momentum

Funding Circle’s operating losses more than tripled in the first half of the year as the coronavirus pandemic hit its peer-to-peer lending business. 

The lender, which matches borrowers with retail and institutional investors, reported an operating loss of £113.5m for the six months to 30 June, more than three times the £31.3m loss it posted for the same period last year. 

Read more: Starling and Funding Circle to provide £300m in small business loans

The results equate to a loss of 33p per share for the first half of the year, compared to losses of 8.9p for the first half of 2019. Shares in the SME lender fell over four per cent in morning trading. 

Despite the widening losses, Funding Circle reinstated previous adjusted EBITDA guidance of close to break-even in the second half of the year. 

“Early Covid-19 trends suggest a permanent change in the SME borrowing market that we believe will benefit Funding Circle in the medium to long term,” the lender said.

“Government support has demonstrated the strategic importance of small businesses to economic growth. A higher proportion of SMEs are now accessing finance as a result and we believe this is likely to continue in the future.”

Funding Circle originated loans worth £1.1bn in the first half. This represents a drop of seven per cent year-on-year due to lower levels of originations in March and April as the lender waited for accreditation to join government-backed loan programmes in Britain and the US. 

Since being accredited for the scheme, Funding Circle has become the fifth largest Coronavirus Business Interruption Loan lender in Britain, with a market share of around 20 per cent of approved CBILS. 

It also has approved around $1bn (£786m) of Paycheck Protection Program loans in the United States.

Read more: Funding Circle receives accreditation for government’s CBILS coronavirus loan scheme

Funding Circle founder and chief executive Samir Desai said the company “remain[s] focused on profitable growth”.

“We believe that Covid-19 has led to an acceleration in the adoption of online small business lending and small businesses are increasingly drawn to the unique Funding Circle model, which provides access to finance in a fast and affordable way with excellent customer service,” he continued.

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