Funding Circle Review – Small Biz Loans for Established Businesses

Who hasn’t thought of starting a business? If you’re a business owner or considering becoming one, you may be curious about getting funding for your business. Funding Circle is a peer-to-peer lending platform that connects small businesses with partner lenders who are willing to invest in them. The easy application process and quick funding options make this an attractive option for many businesses. However, there are some drawbacks that you need to be aware of as well.

What is Funding Circle?

Funding Circle is a loan platform for small businesses that is available to businesses in the U.K., U.S., Germany, and the Netherlands. The platform connects small businesses who are looking for loans with investors who are looking to invest in small businesses.
The idea for Funding Circle was born after the financial crisis in 2008. In 2010, Funding Circle launched as the first peer-to-peer lending platform for businesses in the U.K. The success of this initial launch led Funding Circle to expand to the U.S. just three years later, and to Germany and the Netherlands just two years after the U.S. launch.
While Funding Circle is not a bank and does not loan businesses money, it does serve many important functions in the small business loan process. After connecting a small business with an investor, Funding Circle underwrites your loan application and manages the loan disbursement and repayment process.

How does Funding Circle work?

As a small business, the first step to getting a small business loan through the Funding Circle platform is to apply. You can find the application on its website, either by clicking the blue “apply now” button that sits at the top of every page, or by clicking on the blue “get started” button on the home page.
Both buttons will take you to the application page. According to Funding Circle, the application can be completed in less than 6 minutes. Before you get started, Funding Circle is upfront and answers questions that you’re bound to have. It states that there is no cost to apply for a small business loan through Funding Circle and that applying will not affect your credit score. There are also no prepayment penalties, which is good to know, should you be approved for a loan.
If you’ve already started an application and need to come back to continue and submit it, this is also where you’ll want to go.
Next, you’ll fill in basic information about the business that you want to get a loan for. This includes the business’s legal name, the business owner’s name, and contact information.
You’ll also need to provide information about the loan that you’re seeking, including a loan amount and your preferred loan term.
Before continuing, you’ll need to check the box to agree to use this information to complete an application with Funding Circle or one of its partners.
After completing this information, you’ll be taken to the next step, which is determining your business’s eligibility for a Funding Circle loan.
If you received a Funding Code from Funding Circle, you’ll enter it on this page.
Based on your answers, you’ll be told whether or not you’re eligible for a loan through Funding Circle. To be eligible, you must have been in business for at least 2 years. The owner’s credit score has to be 660 or higher. There cannot have been a bankruptcy in the past 7 years. And, finally, if your business is located in Nevada, you’re out of luck because Funding Circle can’t provide loans in Nevada due to state commercial lending regulations.
If you’re eligible, you’ll move on to the next step where you’ll provide more information about your business.
This includes the purpose of the loan, so if you’re not sure yet how you would spend your loan money, now is a good time to think about it! You can select more than one option.
The application then asks for your business address.
Note: If your business’s physical address is different from the legal business address, you’ll need to provide both addresses.
If your business has more than one owner, you’ll also need to supply the additional owner’s information. (And yes, I did provide the name “a a” as the owner of my pretend business. I’m surprised that it let me do so.)
Now it’s time to get personal. As the business owner, you’ll need to provide personal information, including your social security number, birth date, and homeownership status.
After you’ve submitted this information, you’ll move onto the document portion of the application. You’ll need to submit certain documentation — including your last 12 months of business bank account statements — before you can receive a decision on your loan.
Once you’ve uploaded the required documents, you can submit your application. Funding Circle appears to make decisions relatively quickly after you’ve submitted a complete application and claims that you can hear back with a decision in as little as 24 hours.
If you need time to gather documentation, you can also save your application and continue it later. In the meantime, you can expect to receive a call from a personal account manager to go over your next steps. This is when you’ll discuss your business’s needs and which funding option will work best.

How much does Funding Circle cost?

Applying for a Funding Circle loan is free. However, there are still the costs that are associated with the loan itself to consider.
The good news is that Funding Circle doesn’t charge many fees. For example, there are no servicing fees or account managing fees if you receive a loan. There are also no monthly processing fees, monthly maintenance fees, or transaction fees. This helps you keep the total cost of your loan low. Then, if you want to and can pay off your loan early, you won’t be charged any prepayment penalties.
Of course, you’ll also have to consider the interest rate of your loan, as this will impact your monthly payments. Funding Circle offers interest rates that start at 4.99%. Your interest rate will depend on your creditworthiness and the term length of your loan. As far as creditworthiness goes, Funding Circle considers factors other than your credit score, including your business’s real-time cash flow and your online customer reviews.
The fees that you can expect with a Funding Circle loan are:
  • Origination fee. This is a one-time fee that is meant to pay for the time that Funding Circle spends evaluating and originating your loan. The origination fee is based on your credit history and typically comes out of your total loan amount. You’ll only be charged an origination fee if you receive a loan from Funding Circle. The origination fee can range anywhere from 3.49% to 6.99% of your loan.
  • Late payment fee. If you receive a loan, you will have a monthly payment amount to repay your loan. If you’re late making a payment, a fee will be added to your monthly payment amount. The late fee is 5% of the amount of the missed payment.

Funding Circle features

Funding Circle offers many kinds of business loans. If you’re not sure which one is right for you, you can talk to someone at Funding Circle for guidance on choosing the right loan type. If you apply for a loan, you can simply speak to the person who reaches out to you to discuss your application.
To give you an idea of what you may be able to get from Funding Circle, let’s go over the loan options.

SBA 7(a) loans

This is the U.S. Small Business Administration’s (SBA) primary program, one of the most common loan types for small business owners. If you get this type of loan, the majority of your loan amount will be guaranteed by the SBA. This means that if you default on your loan, the SBA will assume responsibility for it, up to a certain percentage of the total loan amount. The SBA guarantees a maximum of 85% of loans up to $150,000 and up to 75% of loans over $150,000.
You may want to consider this loan type if you’re looking to fund inventory, working capital, equipment, or debt consolidation. Loan amounts range from $25,000 to $500,000 and come with a 10-year loan term. The downside of this loan type, however, is that it can take 30-60 days to receive the funds.

Term loan

Term loans offer a more flexible solution for some business owners. Funding Circle helps business owners by providing the funds in as few as three days after approving an application. You can get a term loan with lengths that range from 3 months to 10 years. Term loan amounts vary widely as well and can be anywhere from $5,000 to $500,000.

Merchant cash advance

If you have “bad credit” but need funding for your business while you work on building up your credit, a merchant cash advance may be a good option to consider. This alternative to a traditional loan has a unique repayment plan and allows you to make payments that are equal to a percentage of your future sales. This type of repayment method ensures that your payment amounts are not higher than what your business is making.
A merchant cash advance can be appealing, especially for businesses that are seasonal or have fluctuating revenue for other reasons. However, you also need to consider the fact that it will impact your business’s cash flow. The fees for a merchant cash advance may also be higher than other options, such as SBA and term loans.
Merchant cash advances are available in amounts of $5,000 up to $400,000. Instead of interest rates, you’ll repay based on a factor rate. Funding Circle offers factor rates as low as 1.15. At this factor rate, for every $100 you borrow, you’ll need to repay $115.

Working capital

Working capital loans allow small businesses to increase cash flow without taking on long-term debt. Ideally, this loan type is used for short-term expenses, such as the upfront costs of a new project or expansion.
Repayment terms for this type of loan from Funding Circle range from 6 to 18 months and payments can be made automatically daily or weekly. Similar to the merchant cash advance, a working capital loan uses a factor rate instead of an interest rate. Factor rates for working capital loans start at 1.15 and the loan amount can range from $25,100 to $400,000.

Line of credit

A business line of credit allows businesses to have quick and easy access to money when they need it. Instead of a lump-sum payment, a line of credit is a credit account. Like a credit card, borrowers have a credit limit and can withdraw money against your line of credit when it’s needed. Withdrawals are sent to your bank account, and you’ll repay the amount that you borrowed over a specific repayment term.
With a business line of credit from Funding Circle, you’ll only pay interest on the funds that you’ve withdrawn. Interest rates can be as low as 10.99% and credit lines are available in amounts from $6,000 to $100,000.

Invoice factoring

Invoice factoring allows you to get paid right away when invoicing a client. When you participate in this, you sell your invoices to the factoring company in exchange for receiving a percentage of the invoice amount upfront. When the client pays the invoice, it goes to the factoring company instead of directly to you. The factoring company then pays you the remaining percentage of the invoice.
Funding Circle allows you to choose when to factor in invoices and when to handle them on your own. You can receive up to a 90% advance on factored invoices when working with Funding Circle’s lending partners. A weekly factor fee is taken out of the remaining percentage of the unpaid invoice.

Who is Funding Circle best for?

  • Established businesses. To be an eligible borrower, your business must already be established. Funding Circle requires that businesses have been around for at least 2 years to be matched with a lending partner.
  • Seasonal businesses. Funding Circle offers products that can specifically help seasonal businesses or other businesses that have an unsteady cash flow. While there are factors such as higher fees and repayment structures to consider, options such as merchant cash advance and working capital could be just what some businesses need.

Who shouldn’t use Funding Circle?

  • Startups. Unfortunately, Funding Circle is not the place to go if you’re looking to fund a startup. While it is a peer-to-peer lending platform, the eligibility requirements rule out any opportunities for startups.
  • Businesses that need less than $25,000. Funding Circle has a minimum loan amount of $25,000, which rules out businesses that are looking for a smaller loan.

Pros & cons

  • Funding Circle assigns borrowers a dedicated loan specialist who can help you identify the right loan option.
  • There are several types of loans and loan alternatives in which to choose.
  • Generally speaking, online lenders tend to offer more affordable options with fewer fees than a traditional bank loan.
  • Funding Circle matches you with a lending partner instead of lending funds itself. If you’re someone who wants to build a personal relationship with your lender, it may not be for you.
  • Funding Circle only provides peer-to-peer lending services for business loans and can’t be used for personal loans.
  • Unfortunately, customer support seems to be a bit lacking. While you can be assigned a loan specialist to help you after you’ve filled out an application, there doesn’t seem to be much support otherwise. There is a general phone number and email address, but no live chat feature or specific contact options.

Funding Circle vs. competitors

CompanyLoan optionsType of companyLoan amounts
Funding CircleSmall business loansOnline, peer-to-peer$25,000 to $500,000
LendingClubPersonal loans, small business loans, auto refinanceOnline, peer-to-peer$5,000 to $500,000
LendioSmall business loansOnline, brick, and mortar, peer-to-peer$500 to $5 million


LendingClub is a peer-to-peer lending platform, just like Funding Circle. In addition to business loans, LendingClub offers personal loans and auto refinancing loans to qualified borrowers. When it comes to the application process, LendingClub handles things a little differently than Funding Circle. Instead of taking you directly to the application, LendingClub asks you to enter your desired loan amount, your email address, and the purpose of your loan. Then, you’ll click on a get quote button, and that’s when you start filling out the application with your personal and business information.
Unlike Funding Circle, no page shows you all of the loan and funding options for businesses. Instead, you have to fill out an application and wait to see what loans are offered to you. LendingClub’s main focus appears to be personal loans, but its lower minimum small business loan amount may make it an attractive option for businesses that want smaller loans.


Lendio is another lending platform that focuses on helping small businesses get quick and easy funding affordably. Its application process is similar to that of Funding Circle, and the funding timeline is just as quick as well. Though it only offers business funding, Lendio’s loan types expand wider than Funding Circle. Some of its products include equipment financing, business acquisition loans, startup loans, and even commercial mortgages.
Lendio stands out among its competitors for its loan amount and term options, as well. Since it offers so many loan types, it can offer as little as $500 for a startup loan or as much as $5,000,000 for a commercial mortgage. For businesses that need to purchase real estate, this makes Lendio a great option. Lendio’s term periods vary based on the type of loan you’re receiving, but in some cases, can be up to 25 years.


Is it safe to borrow from Funding Circle?
You don’t need to be afraid of peer-to-peer lending platforms. Funding Circle, in particular, has been BBB accredited since 2013 and currently holds an A+ rating. A quick look at Funding Circle’s Trustpilot reviews can also boost your confidence in using this lending platform.
Does my business have to be a certain size to get a loan?
Funding Circle does have requirements, but there aren’t many restrictions when it comes to how small or large your business can be. There is no minimum annual revenue requirement, but when in the underwriting process, Funding Circle will evaluate your business’s creditworthiness.
Are the loans secured or unsecured?
Funding Circle loans are secured, and as such, require a lien on your business assets as well as a personal guarantee from the primary business owner.

The bottom line

Funding Circle is a peer-to-peer lending service that provides an alternative to bank loans to small businesses in the U.K., U.S., Germany, and the Netherlands. It offers a range of small business loan and funding options, including an SBA loan option. The application process is straightforward and doesn’t take much time. As an online lender, the funding process seems to be quicker than what other lenders may offer.
Funding Circle is not alone in the peer-to-peer lending space. While this company only offers small business loans, some of its competitors offer personal loans and other loans or services. Startups are not eligible for Funding Circle loans, so if you’re looking for startup funding, you’ll need to go elsewhere. For qualified established businesses, Funding Circle may be just what you’re looking for.

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