July 25, 2014

Funding Circle USA supplies small business with innovative lending solutions

Sam Hodges, the CEO of innovative P2P lender Funding Circle USA, recently sat down for an interview with writer David Gustin of Spend Matters Network.

Lending challenges origin of company
Hodges founded the company with business partner Alex Tonelli after the two repeatedly failed to obtain small business financing. Upon receiving 96 separate rejection letters, they decided the current process for bank loans was not working, and therefore opted to create a new solution for small business loan origination. 

During the interview, Hodges pointed out that many enterprises run into trouble getting financing over and above what they can get on a credit card - or roughly $25,000 - and less than the amount needed for a traditional bank loan, which is $500,000. Amid this situation, Funding Circle USA has risen to the occasion and is now doing business in 36 U.S. states and the U.K.

Funding Circle focuses on specific market segment
The company has generated robust growth by focusing on short-term lending arrangements with prime and super-prime borrowers. The small businesses that borrow through the innovative P2P lender are generally profitable, have been around for four to 15 years and have between $1.5 and $2 million in annual revenues.

By leveraging this approach, the company has lent out $500 million to small businesses all over the world, according to figures from the company website. In addition, Funding Circle USA contends that it has filled a key need by working with companies that were unable to obtain financing from traditional banks.

In addition, the innovative P2P lender's idiosyncrasies might allow it to provide strong opportunities for both investors and banks. Hodges noted that accredited investors can buy both portions of loans and whole loans through the platform. If they want an easy way to diversify, they can purchase pieces of funds that provide exposure to many different loans.

Banks might find new opportunities opening up as a result of Funding Circle, as Hodges predicted these financial institutions may partner with the innovative P2P lender to serve a market they can't cater to now.