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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.

In this article
What is Funding Circle? How does Funding Circle work? How quickly can I get my money out of Funding Circle? Borrowing terms (businesses only)
What do Funding Circle's customers say about them? Alternatives to peer-to-peer websites Get top money-saving tips from Which?

What is Funding Circle?

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.

Is peer-to-peer investing right for you?

Peer-to-peer lending involves considerable risks, and several platforms have collapsed in recent years. Be aware:

  • Peer-to-peer platforms are not protected by the Financial Services Compensation Scheme
  • Returns are not guaranteed, and past performance does not serve as a reliable guide
  • Contingency funds can't be relied upon
  • You could face long waits to withdraw your money 

If you don't want to take risks with your money, opt for a savings account.

If you're happy to take risks whilst investing, make sure you have a balanced portfolio.

How does Funding Circle work?

You have a choice between two investment options:

  • Balanced - projected return of 3.5 - 6.5%. 
  • Conservative - projected return of 4.3 - 4.7%

The difference between the returns reflects the businesses that are lent to - a higher return brings with it a higher chance of bad debt, and potentially not getting any of your money back.

The projected return includes Funding Circle's 1% servicing fee.

You can invest from six months up to five years.

Funding Circle recommends investing at least £2,000, which is automatically lent to hundreds of businesses.

How quickly can I get my money out of Funding Circle?

Instant access to your money is not guaranteed - you'll need an investor to buy your loans from you.

This involves a 1.25% fee, if investors are willing to buy.

Funding Circle does not have a contingency fund, unlike some other platforms.

Borrowing terms (businesses only)

  • Minimum amount you can borrow: £10,000
  • 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

What do Funding Circle's customers say about them?

"Good rate of interest and predictable default rate so far."

"Although I've lost money, the average interest rate has been good. The trick is to lend the smallest amount you can to the most borrowers, so when investing, take your time allocating funds."

"Overall very satisfied with the process, returns, and interaction, but a little unhappy at the defaults and the time to recover the monies involved."

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.

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