Fostering Financial Inclusion: Funding Circle

Fostering Financial Inclusion is Trulioo’s exclusive series covering forward-thinking companies that are pushing the envelope for financial accessibility. In this series, you can expect to get a deeper look at some of the world’s leading socially responsible technology companies and learn about their initiatives in supporting those who are financially underserved.

Lending it Forward

Small business still remains the backbone of the global economy. Yet, for a small business, securing capital can be a daunting idea. It’s not very easy to obtain business loans from banks and financial institutions; venture capital, too, may not necessarily be a natural fit – unless the small business is a technology platform that intends to scale into a large company at an accelerated pace. Where the traditional models of financing don’t work, p2p lenders can fill the void. This is where Funding Circle, one of the world’s leading p2p lending platforms, drives enormous value. A meeting ground for investors and small businesses, Funding Circle is used by small business to access business loans more easily, and by investors to make better returns.

Since it was founded in 2010, Funding Circle has enabled 85,000 investors to finance 56,000 small businesses. As a result of this, over 75,000 jobs were created, globally, in 2017, not accounting for the other tangible and intangible benefits that come from supporting small businesses.

For our third installment of Fostering Financial Inclusion, we chat with Funding Circle’s U.S. Managing Director, Bernardo Martinez, who is responsible for overseeing the overall strategic direction and day-to-day operation of Funding Circle in the United States. Bernardo has more than 20 years of experience in financial services, which includes stints at the Bank of America and Banco Dominicano del Progreso. Throughout his career, he has been zeroing in on the realms of small business, payments, consumer and business lending.

Trulioo: Financial inclusion seems ingrained into the DNA of Funding Circle. Did your team always envision financial inclusion as part of the product, or did that spin into a life of its own as the product and company grew?

Bernardo: Our company mission is to build a better financial world, and we take that commitment seriously. Our founders realized that small businesses had trouble accessing the financing they needed to grow, even when their businesses were doing well, due to inefficiencies in the banking system. They built a platform where small businesses could access this capital directly from investors. Since the service we offer is simple, transparent and affordable, it has naturally led to financial inclusion across our geographies.

Trulioo: Funding Circle is a platform that allows investors of various types to lend directly to small businesses. Can you explain why you chose this business model, rather than a traditional bank-like model where you are lending out the company’s own funds?

Marketplace Model

Bernardo: Funding Circle operates on a marketplace model, meaning our platform connects the two sides of the market: businesses seeking loans and investors seeking to lend. We believe this is the right choice for what we do, as history has shown that the banking model falls short in meeting the needs of small businesses. We remain committed to the marketplace model as it enables us to scale across different geographies and provide the best rates over time.

Trulioo: In a world where many fintech companies are trying to replace what legacy institutions are doing, what has driven Funding Circle to be different and stay so focused on helping small-businesses?

Bernardo: Everything we do is about giving small business owners an easy way to find a better deal. Whereas others may try to provide a number of different services, we are solely focused on being the best at providing one service – the small business loan – and doing it the best we can.

Trulioo: As one of UK’s unicorns, it is clear that investors are very attracted to your product and vision for the future. In terms of your financially inclusive initiatives, can you tell us if financial inclusion was a big part of your investors’ inclination? If so, why?

Bernardo: It’s great to see so many people supporting our mission and believing in what we do. Our investors understand that small businesses are a key growth engine of every economy. We are in a better position than ever to help even more small businesses realize their potential.

Real Impact

Trulioo: I have read a report that says lending through Funding Circle enabled 75,000 jobs globally in 2017. What does it feel like to make that kind of impact?

Bernardo: It is tremendously rewarding to make that kind of impact. Every day we talk to business owners who are able to open new locations, hire new employees, or expand their businesses in other ways thanks to the business loan they received through Funding Circle. This is a real impact not just on their lives, but their employees’ lives and the communities they operate in.

Trulioo: In the life of Funding Circle, what has been the biggest barrier to reaching the financial underserved for your particular customers, both investors and business owners?

Bernardo: The biggest barrier has been awareness. We are growing quickly but we still only serve a small fraction of the market.

Trulioo: I recently read an article about Funding Circle’s growth in the United States. In the article, you mention that US has a relatively underserved small-business community. What does Funding Circle’s presence in the United States mean for these businesses?

Bernardo: Yes, in the Federal Reserve’s latest Small Business Credit Survey, less than half of applicants said they received the full amount of financing they requested. For many businesses, financing is a necessary tool to manage their business. Without it, they may not be able to expand and hire new people. This has a ripple effect throughout the broader economy. We’re proud to be able to step in and fill that gap.

Trulioo: As a leader in the p2p lending industry, what trends do you expect to see over the next few years? In particular, do you expect much more to come for p2p lending in the financial inclusion space?

Bernardo: I think we are in the midst of a small business financing transformation, and that will only continue to pick up steam in the years ahead. Within the next few years the digital model of accessing financing will become the dominant model. This will expand access for all types of businesses.

Trulioo: What does 2019 hold for Funding Circle? Are there any new and exciting things in progress that you would like to share?

Bernardo: 2019 will be a big year for us and we hope to continue to grow and help more businesses access financing. In particular, we plan to invest heavily in our technology capabilities and processes to provide an even better customer experience, and work with strategic partners to reach even more business owners across the country.

To learn more about Funding Circle, you can connect with them on Twitter, LinkedIn, Instagram or visit their website.

If your company is interested in being featured in our Fostering Financial Inclusion blog series, we would love to learn about your mission and your product. Reach out to us at [email protected] for any inquiries or proposals.