Samir Desai, Funding Circle co-founder & chief executive officer

Small business loans platform, Funding Circle has announced that Funding Circle UK and Waterfall Asset Management, have entered into a strategic partnership to support the growth of UK small businesses.

Waterfall Asset Management, a US-based investment advisor focused on High Yield Asset Backed Security (ABS) and loan investments will invest in £1 billion of loans originated through Funding Circle’s UK platform over the next two years.

“We are increasingly seeing substantial commitments from investors looking to purchase loans in each of our geographies,” said Samir Desai, Funding Circle co-founder & chief executive officer. “Our business model has opened up small business lending as an asset class for the first time, allowing investors such as individuals, asset managers, insurers, and government entities to earn attractive, risk-adjusted returns by lending directly to businesses.”

Waterfall’s investment, partially funded by Deutsche Bank will establish Waterfall in Funding Circle’s diverse group of investors that comprises of 85,000 individuals, the British Business Bank, the European Investment Bank, and pension funds and insurance companies.

Henrik Malmer, managing director, Waterfall, said, “We are excited that our partnership with Funding Circle will enable us to continue investing in SME loans in the UK.”

According to a research done by Oxford Economics, 75,000 jobs were created and sustained in the UK, US, Germany and the Netherlands by Funding Circle’s loan offerings. The investment from Waterfall will look to boost these figures and assist with the growth of small businesses within the UK.

Henrik Malmer, commented, “This segment has been underserved by traditional lenders, and Funding Circle’s platform and technology provides borrowers access to credit whilst allowing investors such as Waterfall to diversify their portfolios into an interesting and exciting asset class.”

Funding Circle has announced group originations of £564 million to small businesses in the third quarter of 2018 across its four markets, including £377 million in the UK.

by Sumit Vengurlekar