Monday, 25 March 2013

Camden becomes first London council to invest in Funding Circle

Another new initiative in Camden's 2013 Budget is the start of Camden using peer-to-peer lending, via Funding Circle.  Here's the PR:

Camden Council and Funding Circle today announced the launch of the Local Business Lending Partnership, London’s first peer-to-peer business lending partnership, to stimulate local economic growth and employment through improved access to business finance.
As part of a pioneering scheme, the council will lend £100,000 to businesses based in Camden and the surrounding area using Funding Circle, the UK’s largest online marketplace where people directly lend to small businesses.
The council will join the thousands of Londoners already lending their money to small and medium sized businesses across the country.  A potential model for the future of small business lending across the capital, this pilot scheme will help realise the growth potential of Camden borough businesses that are currently being stifled by poor access to finance:
Camden Council cabinet member for finance Councillor Theo Blackwell, saidd:
“Camden is committed to finding new ways to promote business growth.  Camden businesses say that access to finance is a major issue and traditional bank lending is often slow to respond.  By lending through Funding Circle we are breaking down barriers stopping established local businesses growing and investing in the Camden and London economy." 

James Meekings, co-founder of Funding Circle said:
“This innovative partnership will see Council funds driven injected into the heart of the business community in Camden, helping to drive growth and create jobs at an important time. We hope that other London councils will be inspired to use initiatives like this and follow Camden’s example.”  
83% of Camden’s businesses have less than 10 employees, and a further 16% have between 10-249 employees. The vast majority of these businesses are in the private sector. A recent study by Funding Circle indicated the potential boost that could be provided through better access to finance, with 34% of London-based small businesses stating that they would increase staff numbers if they could obtain finance. By contrast, according to figures from the British Bankers Association, loan facilities in the capital fell by more than 20% in the last quarter of 2012, compared with the same period in 2011.
James Meekings co-founder of Funding Circle continued:  “In today’s economy, businesses need to access finance as quickly and easily as possible. This new partnership between Funding Circle and Camden Council will give businesses a faster way to access finance, freeing them to continue growing and fulfilling their potential.”
 Simon Pitkeathley, Chief Executive of Camden Town Unlimited, the organisation that represents businesses in Camden Town, said: “From our experience of supporting businesses in Camden Town and my own personal experience I know raising money through traditional routes is incredibly hard, so Camden Council’s investment is manna from heaven for Camden’s businesses.”
Launched in August 2010, Funding Circle enables businesses to access finance independent of their banks and British people to earn attractive, stable returns for the long-term. This process sidesteps the high street banks with businesses receiving finance in a matter of days compared to up to three months for a traditional bank loan. To date, more than £85 million loans have been lent to small businesses across the UK, including more than £12 million in London. To be eligible, businesses must have a minimum turnover of £100,000 and have been trading for at least two years. 
Camden is the first council in London to join Funding Circle’s Local Business Lending Partnership, and follows Lancashire County Council who launched the scheme back in November. Funding Circle expects another 10 councils to join the Local Business Lending Partnership by the end of 2013.
Funding Circle works by enabling established and creditworthy businesses to borrow money from groups of people and institutions. Once businesses pass Funding Circle’s the credit assessment processes, their loan is posted on the marketplace. From here, people choose which type of businesses to lend to, and bid the amount of money they wish to lend, and the interest rate they want to earn. Lenders can bid small amounts, from as little as £20, on lots of different businesses to spread their risk.

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