As part of the scheme, the council will lend money directly to businesses based in Lambeth using Funding Circle, the UK’s leading online marketplace where investors, big and small, can directly lend to small businesses.
The council will join the thousands of people across the UK already lending their money to small and medium sized businesses across the country. However it is only the third local authority in London to sign up to the initiative, after Camden and Kingston Upon Thames.
A potential model for the future of small business lending across the country, this pilot scheme will help realise the growth potential of Lambeth businesses that are currently being stifled by poor access to finance.
Cllr Jack Hopkins, Lambeth cabinet member for Jobs and Growth, said: “This is an innovative way to provide local businesses the support they need to grow and improve. We want Lambeth to be a borough where businesses can thrive, boosting the local economy and creating more jobs and opportunities for our residents. Funding Circle has been proven to work and I’m excited that we’re signing up to create more choice for business and deliver tangible benefits to Lambeth.”
Natasha Jones of Funding Circle said: “We’re very pleased to have a further London borough council sign up to our Local Business Lending programme. London businesses are some of the hardest working in the UK and deserve fast and fair access to finance to support their growth. Every business that takes a Funding Circle loan increases their headcount by approximately three people,* so we believe this partnership will really help to boost the Lambeth economy.”
Launched in August 2010, Funding Circle enables businesses to access finance independent of their banks, whilst at the same time investors can earn attractive returns. Businesses typically receive the funds they need within a couple of weeks, compared to up to three months for a traditional bank loan. To date, more than £750 million of loans have been lent to over 9,000 small businesses across the UK. To be eligible, businesses must have a minimum turnover of £50,000 and have been trading for at least two years.
Once businesses pass Funding Circle’s credit assessment processes, their loan is posted on the marketplace. From here, investors choose which businesses to lend to. Investors can bid small amounts, from as little as £20, on lots of different businesses to spread their risk.
