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Peer-to-peer investing

Funding Circle review

By Michael Trudeau

Article 4 of 5

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Funding Circle review

If you're thinking about saving or borrowing through a peer-to-peer lending website, read our Funding Circle review.

Launched in 2010, Funding Circle aims to help businesses access alternative sources of finance, while providing individual investors with a good return on their money.

As an investor, you can pick and choose which businesses your money is lent to, or have your money allocated across 100 businesses automatically using the Autobid feature - as long as you are investing the £2,000 necessary to meet the minimum £20 investment towards any single company. There's no provision fund, so compared to RateSetter or Zopa there's a bigger risk of losing money if your borrowers fail to keep up repayments – but the potential rates of return are higher. Remember, provision funds do not guarantee the safety of your money - and Financial Conduct Authority chief executive Andrew Bailey has argued that the presence of a provision fund could actually cloud the risks of investing in P2P.

Also, Funding Circle claims that no investor who has lent to at least 100 businesses with maximum exposure of 1% has lost money. If you're happy to spend some time managing your investment or using Autobid to let it pick companies for you, Funding Circle could be a good option.

Funding Circle peer-to-peer lender details

Lending terms

  • Minimum lend: £20 to any one company
  • Lending term: Six months to five years
  • Can I withdraw funds early? Yes, you can sell your loan parts for a 0.25% fee, if investors are willing to buy
  • Average rate of return for lenders: 6.5% (A+ grade loans; after fees and predicted bad debt, but before tax. Rates checked 24 February 2017)

Borrowing terms (businesses only)

  • Minimum amount you can borrow: £5,000
  • Maximum amount you can borrow: £1,000,000
  • Borrowing term: Six months to five years
  • Can loans be paid off early? Yes, and without any penalty fees
Funding Circle peer-to-peer lending satisfaction
Feature Rating
Overall experience
Interest rates
Explanation of the risks
Default rates
Variety of products available
Ease of use of the website
Customer service
Clarity of information on the website
Online community NA
Table notes:
Star ratings out of five show levels of satisfaction for each category. "NA" indicates not enough responses to assign a star rating.

What Funding Circle's customers say about them?

‘Good customer service, but I have lost money – despite not going for the highest risk option.’

‘A clear and straightforward approach. Unlike big investment firms, it speaks in a language that’s easy to understand.’

‘It gives you fine control over who you invest with. But can be time consuming.’

Alternatives to peer-to-peer websites

If you're looking for a loan, it's worth checking out Which? Best Rate personal loans too.

And if you're looking for a safe home for your savings, consider putting your money into a savings account or cash Isa. The Which? Money Compare tables let you search hundreds of savings accounts and cash Isa deals from providers large and small so that you can find a good home for your nest egg.

If you are content to take a little more of a risk for a potentially higher return, see our guide to investments.

  • Last updated: June 2017
  • Updated by: Michael Trudeau
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