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RNS Number : 3195S
Funding Circle Holdings PLC
08 July 2020
Funding Circle Holdings plc
UPDATE ON GOVERNMENT SCHEMES
Embargoed until 7.00am, 08 July 2020
THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION AS DEFINED IN
ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014
Funding Circle Holdings plc ("Funding Circle"), the leading
small and medium enterprise ("SME") loans platform, today provides
an update following accreditation to the British Business Bank's
(BBB) Coronavirus Business Interruption Loans Scheme (CBILS) and
the U.S. Small Business Administration (SBA) Paycheck Protection
Program (PPP).
Samir Desai CBE, CEO and Founder said : "Our advanced
technology, data analytics and originations platform is playing its
part in helping thousands of small businesses to access important
funds during this time of crisis.
Following our accreditation to CBILS, our UK business has
reached its highest ever levels of origination and has represented
16% of approved CBILS loans since we joined the programme.
Similarly, in the US we have helped protect thousands of jobs at
small businesses through PPP loans.
Our focus as a group remains on delivering our long-term
priority of profitable growth. Our U.K. business was operating
profitably in H2 2019 and continues to make good progress. Given
the impact of COVID, we are introducing changes in the US to
accelerate the US business's path to profitability."
UK update
-- Funding Circle was accredited to CBILS at the end of April
and began participating in the programme in early May following the
completion of legal and operational approvals.
-- Since becoming accredited we have helped thousands of small
businesses access much needed funds. We have approved c.GBP460m of
applications through the CBILS programme and originated c.GBP300m
as at 30 June. June was a record month for originations, up
approximately 30% year-on-year.
-- Funding Circle has represented approximately 16% share of the
number of loans approved since we began participating in CBILS.
-- Approximately 40% of loan applications have been serviced by
our new instant decision lending technology. We are ahead of the
expectations we had when we set out our end of year target at our
results in March.
-- We received an initial allocation of GBP750m for CBILS from
the BBB and have completed, or are close to completing, funding
agreements with multiple institutional investors, including banks,
asset managers and insurance companies, to meet this, and any
future, capacity.
-- Additionally, we have recently received initial accreditation
to start offering Bounce Back Loans to existing customers subject
to final legal and operational approvals.
-- Although the short term level of demand for CBILS and Bounce
Back Loans is difficult to forecast, the company believes that
COVID has led to an acceleration in the adoption of online
borrowing by small businesses. As the largest online small business
loan provider in the UK, this puts Funding Circle in a strong
position to benefit from this trend.
-- As mentioned in the trading update in April, we proactively
brought down origination volumes during the second half of March
and April whilst we waited to become accredited to join CBILS.
During this time, we furloughed a small number of employees. Nearly
all have since returned and we will not claim any money for this
period from the Government under the furlough job retention
scheme.
US update
-- Funding Circle was accredited to offer PPP loans on 15 April.
Since launching, we have approved c.$800m and originated c.$300m of
PPP loans, as at 30 June, with loans funded by both institutional
investors on the platform and referrals to partner banks. On
average we have earned a transaction fee of c.2.5% on originations,
and the scheme is currently scheduled to end on 8 August. PPP
provides 100% guaranteed forgivable loans to small businesses. We
are currently providing access to the SBA's longer term loan
guarantee product via a referral model and it is our intention to
continue this in H2 2020, as well as reintroducing our core SME
borrowing product.
-- In order to accelerate the business's path to profitability,
we are introducing changes in H2 2020. This includes centralising
our US technology team in the UK, moving our sales and marketing
teams to our Denver office and workforce reductions in aggregate
resulting in a net reduction of c.85 roles.
Group updates
-- Since the start of lockdown, we have increased resources on
our front line teams and provided some borrowers with short term
payment holidays where they have needed them. We continue to work
closely with all existing borrowers to help them during these
uncertain times and the actions we have taken so far show we are
making progress.
-- As mentioned in the April trading update, we launched new
funding products in 2019 whereby we aggregate loans in warehouses
before selling them as bonds to investors. We carry these
associated short and long term investments at fair value for loans
and bonds that have not yet been sold. As a result of the impact of
COVID, we continue to expect the value of these investments will be
impacted however at this stage it is too early to quantify the
total impact.
ENDS
Media Enquiries:
Funding Circle
David de Koning - Director of Investor Relations and
Communications (0203 927 3893)
Headland Consultancy
Mike Smith / Stephen Malthouse (020 3805 4822)
About Funding Circle:
Funding Circle (LSE: FCH) is a global SME loans platform,
connecting SMEs who want to borrow with investors and lenders in
the UK, US, Germany and the Netherlands. Since launching in 2010,
investors and lenders across Funding Circle's geographies -
including retail investors, banks, specialty finance companies,
asset management companies, insurance companies, government-backed
entities and funds - have lent more than GBP8.5 billion to 80,000
businesses globally.
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END
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