Funding Circle and Santander lead charge with banking referrals

The high street banking and crowdfunding worlds are coming together to provide SMEs with a different route following a failed loan application.

Following on from the revealing of a Small Business Bill during the Queen’s Speech earlier in the month, peer-to-peer (P2P) finance platform Funding Circle has partnered with Santander.

The coming together of the two organisations marks the first time that a partnership between a UK bank and an online alternative finance provider has been inked.

Under the terms of the agreement, Santander will ‘proactively’ refer small business customers seeking a loan to Funding Circle, a fast-growing platform facilitating the lending of capital from consumers to businesses.

Since setting up in 2009 and raising nearly $60 million of venture capital investment, Funding Circle has allowed in excess of 5,000 businesses borrow £290 million from investors earning an average of 6.1 per cent.

The P2P platform has also been supported by Vince Cable’s British business bank, through allocations of £20 million in December 2012 and £40 million in February 2014.

Samir Desai, CEO and co-founder of Funding Circle, comments, ‘This partnership recognises our role as the only marketplace that caters for, and is dedicated to, small businesses.

‘In Santander we have found a fellow challenger brand that shares our commitment to putting small business customers’ needs first. They have created a blueprint for other banks to follow.’

The Small Business Bill, outlined during the outlining of the next year’s government agenda by the Queen on 4 June, included a reference with regards to looking into a requirement for banks in the UK to refer businesses rejected for credit to alternative lenders which may be a better fit.

Preceding that development was an industry move made by eight alternative finance platforms to share leads with each other. The Alternative Business Finance Portal, which includes the likes of Seedrs, MarketInvoice and Platform Black alongside Funding Circle itself, brought together some £580 million of lending to British SMEs.

Santander says that, where Funding Circle is ‘better placed to help’, it will refer businesses via its website and through letters. Conversely, Funding Circle will signpost its customers to Santander for day-to-day banking support or other services such as cash management and international expertise.

Ana Botin, CEO of Santander UK, adds, ‘SMEs need access to multiple sources of finance, and Santander’s partnership with Funding Circle is a good example of how traditional and alternative finance can work together to help the nation’s SMEs prosper.

‘Peer-to-peer financing is also a useful way to introduce people to the concept of investing in entrepreneurs; an important element in a healthy enterprise economy.’

Santander adds that the referral programme will complement its existing small business offering, which has seen lending grow over the last four years by an average of 20 per cent per annum.

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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