Getting
started
as an
investor.
Welcome to
Funding Circle
You’ve just joined thousands of other people who are
earning a great return by lending to British businesses. Your new
account is now set up and we’re here to help you get started.
If you’re the type of investor who loves to have full control, then
we’re sure you’re going to love Funding Circle. Equally, if you don’t
have a lot of time to spend on your investment, we have some
tools that will help you run things in a quick and hassle-free way.
Use this guide to learn how to lend, find your way around your
account and more. Or, we can talk you through any area you’re
interested in – simply call us on:
020 7401 9111 (Monday – Friday, 9am – 5pm).
In this guide,
learn all about:
• 3 key facts to know before you get started
3
• Your new investor account
4
• How to lend:
6
- Hand-pick businesses to lend to
7
- Lend automatically with Autobid
10
• Rates, fees and interest
12
• Accessing your money:
13
- Sell your loan parts
13
- Withdrawing your money
13
Section 1 - 3 key facts
3 key facts to know
before you get started.
In this guide we’ll take you through every
aspect of lending, but before we get started,
here are 3 essential facts for you to know:
1. Every
new loan is funded through an auction process
Every business loan request is run as a live auction, so that all
investors can participate.
As an investor, you participate by placing a ‘bid’. The bid is simply
the amount of money you want to offer the business and the
interest rate you set for them to pay you back. Just as with any
auction, the bid is final and can’t be withdrawn – but it can be
knocked out by other investors offering lower rates. If this happens,
you can bid again at a lower rate.
2. Investors
hold loan parts
At the end of the auction, if the business accepts the loan, all
successful bids become ‘loan parts’. Each of the investors will
hold ‘loan parts’; a loan part is simply your share in the overall loan.
For example, in a £50,000 loan which has been funded by
hundreds of investors, one investor may hold 1 x loan part of
£100 at a rate of 8.5%.
Your loan parts are repaid in monthly instalments by the business,
so you can continue re-investing these repayments to maximise
your return.
3. Loan
parts can be bought and sold
As an investor you can also buy and sell loan parts if you want to.
This happens under the ‘loan parts’ (buy) or ‘sell’ tab in your
account. So, you are able to access your money when you
need to, even before the loan is fully repaid. On average, it takes
just 30 minutes to sell a loan part at par value.
Equally, if you want to build up your portfolio of loan parts quickly,
you can side-step the auction process and buy existing loan parts
from other investors.
3
Section 2 - Your new account
Your new investor account
Account summary
You can keep track of where your money is, interest earned to date,
see which businesses you’re lending to and much more in your account
summary. Here is a full glossary of all the sections and what you can
use them for:
Your account
Summary
How It Works
Transfer Money
Autobid
Loan Requests
Loan Parts
Sell
Statistics
You have £590.11 of available funds, bid now.
Fund summary
Current Gross Yield
9.6%
?
All time earnings summary
Earnings
£40.81
Fund summary
●
Lent
£1,135.18
●
Available funds
£590.11
●
Bid
£120.00
●
Accrued interest
£3.39
£5.27
Fees
Losses
Net earnings
?
Funding Circle total: £1848.68
£0.00
£35.54
?
See the real-time update
on your money, including
amount in bids or lent out,
and what’s still available to
lend. Any interest that is
due to be paid in the next
repayments is shown as
accrued interest.
All time earnings
summary
See total earnings
(including interest, sale
of loan parts to other
investors, promotions)
and any losses (due to
business defaults).
My Loan Parts
You are currently lending on 30 loans (43 loan parts) totalling £1,135.18
More details
Click on the + icon
in each row to see a
full breakdown
My Bids
You are currently bidding on 5 business loan requests (5 bids) totalling £120.00
More details
My Loan Parts
My Statements
See all the businesses
you’re lending to listed
by business or individual
loan part.
View transaction statement
View tax statement
Recent Loan Comments
My Bids
There are comments for 1 loan you are currently exposed to.
See the summary of
all your current bids on
loan requests.
More details
Recent Loan Comments
My Statements
If a business you’re lending to is late with its repayments,
or has defaulted on their loan, we’ll keep you updated here.
Download your transaction
history and tax statements here.
Not sure what an auction, bid and loan parts are? See the
3 essential facts at the start of this guide.
4
Section 2 - Your new account
Using the tabs in your account
There are 8 tabs across the top of your account which you can use to transfer money in
and out of your account, lend, sell, and see the rates other investors have bid at.
Your account
Summary
How It Works
Transfer Money
Autobid
Loan Requests
Loan Parts
Sell
Statistics
You have £590.11 of available funds, bid now.
Fund summary
Current Gross Yield
9.6%
?
?
Funding Circle total: £1848.68
Here’s a guide to what each tab does:
All time earnings summary
mmary
Earnings
How
It Works
●
Lent
£1,135.18
●
Available funds
£590.11
Further information on choosing businesses, lending, using Autobid, repayments,
● Bid
£40.81
Transfer Money
Autobid
Loan Requests
accessing your money and more
£120.00
£5.27
Fees
Losses
Net earnings
£0.00
?
●
Loan P
Accrued interest
£3.39
£35.54
Use this tab to transfer money in and out of your account. You can transfer in using:
My Loan Parts
• UK debit
card – immediate transfer
Transfer
Money
Autobid
Loan Requests
Loan Parts
You are currently lending on 30 loans
(43 loan
parts) –totalling
• Bank
transfer
up to £1,135.18
3 working days
Works
Sell
More details
My Bids
er Money
Automatically
lend
yourtotalling
money£120.00
to many
You are currently bidding on 5 business
loan requests
(5 bids)
Autobid
More details
your chosen rate with Autobid.
Loan Requests
Loandifferent
Partsbusinesses atSell
Statistics
(For more information on how Autobid works, see the Lending: getting started section)
My Statements
View transaction statement
utobid
View tax statement
Loan Requests
See all live loan requests that are currently at auction in this tab. The table lists every
business
loanParts
request and by clicking
title, you can see the full details of the
Loan
Sell into the loan Statistics
business. You can choose the businesses you want to lend to and place bids here
Recent Loan Comments
There are comments for 1 loan you are currently exposed to.
More details
Requests
Loan Parts
Sell
Loan Parts
Sell
Statistics
See all existing loans (loan parts) that investors are selling here. You can review the
list Sell
and choose loan parts
to buy in order to quickly build up your lending portfolio and
Statistics
diversify your risk
Need to sell some of your loan parts? You can do this here:
• Automatically sell a set amount (£) of your total lending
Statistics
Or, • Select and sell individual loan parts
Want to know the average rates other investors are bidding at?
Or the current bad debt rate? You can review Funding Circle’s full history of activity,
including lending rates, business defaults and more under this tab
5
Section 3 - How to lend: hand-picking businesses
Lending: getting started
As a Funding Circle investor, you can choose the method of lending that
suits you best. Choose from two options:
1. Hand-picking
Choose businesses to lend to based on
specific information about that business.
There is an extensive amount of information
available to review, for example:
• Risk band
• Region
• Sector
• The business’s financials
• Reasons for the loan
Quick fact: Only businesses that pass our credit
assessment process can borrow through Funding
Circle. Those that do pass the assessment stage
are given a credit risk band to guide you on the
relative strength of the businesses (and conversely,
the level of risk that they may not be able to fully
repay their loan). Risk bands range from A+
(strongest businesses which represent the lowest
risk) through to C.
If a business can’t fully repay its loan, it becomes a
bad debt. While this will happen with only a small
percentage of businesses, it’s important to review
the level of bad debt you should expect per risk
2. Automatic
lending
Lend to a cross section of businesses
automatically with Autobid.
Autobid is a tool that will automatically lend
your money to different businesses at the rate
you set. It’s a great time-saver for busy people.
band before you start lending. We provide these
estimates and regularly update them on our site.
It’s also important to learn about diversification and
the benefits of lending across lots of businesses to
manage risk. To understand more about
diversification and bad debts, see the investor
section and our blog on
www.fundingcircle.com/about-us/our-blog
Lending: Hand-picking businesses
This option suits investors who:
• Want to pick businesses based on a specific set of criteria
• Like to do their own independent assessment of the company’s financials
Not sure which option suits you best? Meet Rodney who hand-picks businesses
to lend to, and Rhys, who uses Autobid.
Rodney
“I prefer to choose the businesses myself as it
means I can look through the financials before
placing my bids. Having invested in larger
companies through stocks and shares, I like to
know as much about a business before I start
bidding. It also means I can keep an eye on what other investors are
bidding and when I have the time, I like to wait for the last few
minutes to place my bid – which often means I can get a last minute
bid away at a high rate, maximising my return.”
Rhys
“I have a wide portfolio of
investments but I don’t have a
great deal of time, so Autobid
suits me. As long as my money’s
spread out evenly across lots of
businesses and I’m earning my set 8.6%, I’m happy.
The best thing about Autobid for me is that it keeps
reinvesting the re-payments I earn, so my money is
never left dormant for a minute.”
6
Section 3 - How to lend: hand-picking businesses
3 steps to lending:
hand-picking businesses
Step 1. Set your criteria
Decide the criteria that’s important to you in a business: for example,
does it need to be in a specific risk band, from a certain region,
sector? You can also look for certain indicators of performance in the
company’s financial details, the purpose of the loan or see what other
investors are asking. All this information and more is available on
each business loan.
Step 2. Choose the businesses
Find businesses that match your criteria in the loan requests or loan
parts sections of your account.
Loan requests:
Choose from
all businesses
currently looking
for a loan.
Summary
How It Works
Transfer Money
Autobid
Loan Requests
Your account
Loan Parts
Sell
Statistics
You have £590.11 of available funds, bid now.
Fund summary
Current Gross Yield
9.6%
?
£590.11
£40.81
●
Bid
£120.00
●
Accrued interest
£3.39
£5.27
Fees
Losses
Net earnings
Loan parts:
Choose loan
parts●available
to
Lent
£1,135.18
buy from
other
● Available funds
investors.
All time earnings summary
Earnings
?
Funding Circle total: £1848.68
£0.00
?
£35.54
My Loan Parts
You are currently lending on 30 loans (43 loan parts) totalling £1,135.18
More details
My Bids
You are currently bidding on 5 business loan requests (5 bids) totalling £120.00
More details
My Statements
View transaction statement
View tax statement
Recent Loan Comments
There are comments for 1 loan you are currently exposed to.
More details
7
Section 3 - How to lend: hand-picking businesses
Step 3. Bid / Buy
Your account
Summary
How It Works
Transfer Money
Autobid
Loan Requests
Loan Parts
Refurb to Garage and Offices Expansion/growth Capital (1605)
Key information
Business profile
Credit Score
Financial Summary
Questions & Answers
Repayments
Target rate ?
7.0%
Rate: 8.4%
Risk band ?
A (Low risk)
Estimated annual bad debit rate
1.5%
Borrowers details
Loan details
Borrowers name
A British manufacturing firm
Term
36 months
Borrowers nature
Electrical components
Loan purpose
Expansion/growth
Capital
Region
South West
Type
Limited Company
Years Trading
15
Statistics
add to watch list
£95,000
100% Funded.
Sell
Director guarantee ?
Loan guaranteed
Asset security ?
No asset security
< Back to listings
Bid Summary
All bids
My bids (2)
Only 2 days 22 hours left
Rate
Amount
9.0%
£6,360
9.0%
£3,980
8.9%
£12,320
8.8%
£9,440
8.7%
£5,220
8.6%
£3,880
Status
Auction ends: 15/12/2012 14:26
My live bids: £20.00
My average rate: 8.7%
Funds available: £509.11
Amount* £20
Rate* 8.7%
bid at 8.7%
For new loan
requests, bid
on each one
individually by
placing the
amount and rate
in the bidding
box in the right
hand column.
8
Section 3 - How to lend: hand-picking businesses
For loan parts, select those you want to buy using the tick box
and click on the Buy Now button.
Your account
Summary
How It Works
Transfer Money
Autobid
Selected loan parts?
Loan Parts Sell Statistics
Click here
to buy them
Loan Requests
Loan Parts buy parts of loans from other lenders – the ‘buy it now’ option
Available funds: £590.11
Total loan parts to be purchased: £21.18
Buy Now
Available Loan Parts
Title
?
Ability Systems
9 - 133
Risk
?
Repayments
?
Premium/Discount
?
Sale Price
?
Buyer Rate
?
Exposure
B
(Below average risk)
17
+3.0%
[£+0.30]
£10.39
4.4%
-
A+
(Very low risk)
18
+1.5%
[£+0.16]
£10.79
6.4%
-
Successful Kitchen Showroom
114
A
(Low risk)
19
+3.0%
[£+0.34]
£11.56
4.9%
-
Refurb to Offices
154
A
(Low risk)
19
+3.0%
[£+0.34]
£11.56
4.9%
-
Addition Working Capital
163
Buy
?
Select the
loan parts you
want to buy
Quick fact: the ‘Premium/Discount’ column When you buy loan parts, you’ll notice that some are available
at exactly the same rate (par value), some have been marked-up (a premium added) and some have been marked-down
(discounted). This simply means that as the buyer, you will pay a more, less, or the same for the loan part.
For example:
• If you buy a £100 loan part that has a 3% premium added, you’ll pay £103 for it (plus any accrued interest).
• Similarly, if you buy a £100 loan part that’s been discounted by 3%, you’ll pay £97 (plus any accrued interest).
Sellers often add a premium if they have secured a particularly high rate of interest on that loan part and feel confident it’s
still an attractive investment to a new buyer. Similarly, investors often sell at a discount to release their capital more quickly
so they can bid on new loan requests – particularly if they see an opportunity to earn a higher rate on a current auction.
9
Section 3 - How to lend: Autobid
Lending: the Automatic way
Lending Automatically with Autobid suits
investors who:
• Don’t have a lot of time to spend selecting individual
businesses, or are interested in selecting businesses
solely by risk band.
• Are happy to invest in both new and existing loan.
Quick fact: Autobid will only
buy loan parts when the investor
is selling them at the same interest
rate they originally secured.
Any investors selling loan parts at
a premium or discounted interest
rate will not be bought by Autobid.
For more information on selling
loan parts at a premium or
discount, see the Quick fact box
in the previous section.
3 steps to lending
automatically with
Autobid
Step 1. Set your rate using the slider bar
Step 2. Diversify by setting the maximum percentage of
your portfolio to lend to any one business. It is
important to spread your money across many
businesses to minimise the impact if any one of
them is unable to fully repay their loan.
Step 3. Click the ‘Turn Autobid On’ button and accept the
T&Cs on the following page.
Your account
Summary
How It Works
Transfer Money
Autobid
Loan Requests
Loan Parts
Sell
Statistics
Autobid Settings
Step 1
What average rate would you like of offer?
Maximum % of portfolio
lent to one business ?
Step 2
1%
(£40 - Approx.)
8.6%
Available funds
?
Lending speed
£580
Medium
Slow
Step 3
?
Fast
Turn Autobid On
Advanced setting
10
Section 3 - How to lend: Autobid
Advanced Autobid
With Advanced Autobid you can select individual risk bands you
want to lend to, for example, only lend to businesses with an A+
risk band, or lend to all risk bands except C. Risk grades range
from A+ (lowest risk) to C graded businesses. Here’s how to set
these different rates:
• Select the ‘advanced settings’ link at the bottom of the
Autobid page
Quick fact: Autobid
• If there are any risk grades you don’t want to lend to,
de-select them by removing the tick from the check-box
(left hand column)
lends to businesses
based on the credit risk
band they fall into. It does
not do any additional
• Set the rate you are willing to lend at for each risk band
assessment or remove
the risk of defaults.
• Click the ‘Turn Autobid on’ button
Summary
How It Works
Transfer Money
Your account
Autobid
Loan Requests
Loan Parts
Sell
Statistics
Autobid Settings
What average rate would you like of offer?
Maximum % of portfolio
lent to one business ?
1%
Include
Risk band
(£40 - Approx.)
?
A+ (Very low risk)
A (Low risk)
B (Below average risk)
C Band line
Available funds
Offer rate
8.1%
8.3%
8.9%
10.4%
?
£580
?
Borrower target rate
?
Est Bad Debt
6.0%
7.0%
8.0%
8.0%
?
Lending Speed
?
0.6%
Slow
Fast
Slow
Fast
Slow
Fast
Slow
Fast
1.5%
2.3%
3.3%
Turn Autobid On
Basic settings
Understanding risk
While only businesses that have passed Funding Circle’s credit assessment process
can borrow, it’s important to understand that there is an element of risk when lending to
small businesses. Read all about how to manage risk on our website to help you make
the right decisions for you.
11
Section 4 - Rates, fees and interest
Rates, fees and interest
Rates
As a Funding Circle investor, you can choose the rate you want to bid
at, from 4% (minimum) to 15% (maximum).
It’s important to factor the following in when setting your rate:
• Risk: use our risk grades and the detailed business information
and financials to make an assessment of risk
• Average rates: you can review previous rates that investors have
bid at in the statistics section to help guide the rates you offer
• Estimated bad debt: as part of lending to businesses, from time
to time there will be instances where a business cannot continue
to repay their loan (this is called a default). We provide estimated
bad debt rates for each risk band and update these regularly. You
can see these estimates on www.fundingcircle.com under the
marketplace tab. Use these estimates to help guide your
decisions and rate setting
Fees
As an investor you pay a 1% annual fee on the amount you’ve lent
to businesses (this is payable on the capital only, and only when a
business makes a repayment). There are no fees charged for placing
a bid or on amounts that aren’t lent out.
There’s a 0.25% admin charge on any loan parts you sell.
That’s it – no account fees, hidden charges or costs!
Interest
The interest you earn is paid by the businesses on a monthly basis.
During the month, you accrue interest daily, which is shown in the
summary section of your account as accrued interest.
What is negative interest?
When you buy loan parts from other investors, you will need to pay them any accrued
interest they’ve earned since the last repayment, which shows as ‘negative interest’ until
that repayment comes in.
This is because loan parts can be bought and sold at any point and to keep things fair,
if you buy a loan part mid-way between repayments, the previous owner will earn the
interest for the days before the sale, and you’ll earn the interest for the days after the sale.
It shows as negative interest because you’ve paid out for interest that is owing but hasn’t
yet been paid by the business.
12
Section 5 - Accessing your money
Selling your loan parts and
withdrawing money
You can sell loan parts at any point and there are a few reasons
you may want to do this:
1) To release funds so you can bid on other loans
2) To withdraw your money
3) To earn a profit on the loan part by selling at a premium to
the price you paid
How to sell loan parts
Your account
Use the Sell tab in your account and choose from two sale methods:
Summary
Autosale
How It Works
Sell Individually
Transfer Money
Loan Parts for Sale
Autobid
Loan Requests
Loan Parts
Sell
Statistics
Loan Parts Sold
Autosale automatically sells a portion of your existing loans.
£ amount for sale
100
Next >
1) Autosale: sell a portion of your lending here by setting the
amount you wish to sell
2) Sell individually: choose the specific loan parts you want to sell
on. You can also choose to add a premium to the cost, which
simply means the new buyer will earn a lower rate of interest
to the original rate you set at the auction stage. As the original
investor, you get to keep the difference.
Selling loans at a premium or discount – how does this work?
If you sell a loan part at a premium, you add a mark-up (of up to 3%) to the loan part. Eg, if you sell a £100 loan part with a
3% premium added, it will cost £103 (plus any accrued interest). As a result, the new buyer’s rate of return is slightly lower
than the original rate you secured on the loan part. The premium is added to the cost of the loan part (ie, the principal
outstanding and any accrued interest). As the seller, you receive one payment for this total cost (including the premium)
and this is your final payement. You’ll no longer receive interest once the loan part is sold. Similarly, if you sell at a discount,
you offer the loan part at a mark-down. As a result, the buyer will earn a higher rate than the original rate you secured on the
loan part.
Withdrawing your money
You can withdraw your money at any time. If you have available
funds that haven’t yet been lent to business, you can transfer these
to your chosen bank account using the Transfer money tab.
If you have money lent to businesses, once you’ve sold these loan
parts onto other investors you can withdraw the funds using the
same process.
The minimum you can transfer out of your account is £20.
13
We hope this guide has been useful.
If you have any questions you’d like to talk through,simply call us on:
020 7401 9111
(Monday – Friday, 9am – 5pm).
Enjoy lending!