- 03 Jul
Alternatives To Funding Circle Business Loans
Advertising from Funding Circle is hard to miss. We have received numerous emails and letters from Funding Circle (FC) offering business loans. Not to mention the adverts on television, which clearly must be costing a small fortune. Not every business qualifies for a FC loan, so if you have been rejected, we may have an alternative option for your company to consider.
BBC Report On Funding Circle Growth Warning
A report (02/07/19) from the BBC suggests that shares in FC have seen their value dive due to a recent growth warning.
The BBC report "uncertain economic environment" has damaged demand for loans such that the company expects revenue growth of 20% over the next year, rather than the 40% that was previously expected. This resulted in a significant reduction in the value of the shares.
Funding Circle Financial Accounts
Having a quick look at the filed accounts for Funding Circle Holdings PLC, to the end of December 2018, shows That revenue had increased up to £141.9M from £94.5M in the previous year. However, significant costs resulted in an operating loss of £51.6 million.
Even with 20% revenue growth, which on the 2018 figures, would equate to +£28.38M of income, with no movement in costs there would still be a significant loss made. The BBC report goes on to mention that FC are still expecting to make a loss in 2019, but that it will be less than for 2018.
Having a look at the notes behind the profit and loss account in the 2018 accounts, reveals that employment costs have increased significantly up to £79.2M, with marketing costs rising to £57.8M - that blanket advertising is a significant expenditure. The balance sheet shows equity (without including liabilities) of £402.4M.
Tightening Lending Criteria
The BBC report says that whilst this type of lending was expected to be disruptive to the UK market, "a downturn has led to the company to tighten its lending criteria". This led me to wonder about companies that may have been turned down by Funding Circle, that might still be able to benefit from the types of alternative business funding that we deal with.
Turned Down By Funding Circle?
The part about tightening criteria stood out to me, as there may be parties that have failed to qualify for Funding Circle business loans and been turned down. Even if you have been rejected by lenders, we may be able to help find you business funding by using your outstanding sales invoices as security. This is because the security for this type of business finance is based on the strength of your debtor book, rather than the financial strength of your company.
If you have been turned down by Funding Circle, there may be alternative forms of business finance available through our search service. Our extensive network of funding partners are still keen to fund.