Funding Circle Property loans

Last post: Mar 19, 2013

Since their launch in August 2010, Funding Circle have become hugely popular as a viable means for British SMEs to raise up to £100,000 unsecured finance.

Since their launch in August 2010, Funding Circle have become hugely popular as a viable means for British SMEs to raise up to £100,000 unsecured finance. Late last year they also began to push their Large Secured loan and Asset finance offering too and now in 2013 they have expanded their range of products by offering a Property loan. However, the Funding Circle Property Loan is not perhaps exactly as the name suggests. For one thing, it can't actually be used for property development in most cases so it's worth noting the main criteria:

  • Loans from £100,000 to £1,000,000 are available (Loans below £100,000 will be considered on an Unsecured basis with a PG)
  • The only terms available are 3 or 5 years (though you can repay early without penalty)
  • All Funding Circle Property loans are available only to companies with a 5 year trading history
  • Currently the loans are only available in England and Wales. Scotland and Northern Ireland are not yet an option due to their different property laws.
  • The Funding Circle Property Loan is only available as a second charge. No first charges at the moment as they prefer to keep costs low by effectively relying on the due diligence and valuations done by the first charge lender to a certain degree
  • However, as a second charge they will go as far as 85% LTV

The most surprising feature perhaps is that these loans are not available for pure property development or to property development companies. The one exception here is where a property development company already has a stock of developed housing that is producing an income and in this case it may be possible to put a second charge on these properties to raise the loan. In terms of the application process it works in exactly the same way as regular Funding Circle loans with an application requiring full accounts to the most recent year end, management accounts since then and the usual other information about the company applying for the loan. No bank statements or business plans are required and they are also not concerned with the GDV of a project as they only secure on existing developed properties. The fees too are the same (3% for 3 year deals, 4% for 5 year deals) but the applicant company will also be required to pay an additional fee for registering the charge on the property. Somewhat surprisingly, not many Funding Circle property loans have been done so far. Given the generous LTV provision and the competitive rates achievable from their online auction platform we can only surmise this lack of take-up is more down to a lack of awareness of the product rather than anything else. Here at Choice Loans we have worked on many Funding Circle deals and can help you with your Funding Circle Property loan at no extra cost to you than if you were to go direct to them. To speak with an advisor today please either call 0845 1260350 or complete our Commercial loan enquiry form and we will call you.