Funding Circle (LSE:FCH) posted an update on investor returns earlier today. Currently, the online lender offers two different investment opportunities for investors: Conservative or Balanced.
The update effectively included no new news as projected rates remained the same as previously expected:
- Balanced: 4.5% to 6.5%
- Conservative: 4.3% to 4.7%
Since platform launch Funding Circle has originated over £8 billion in SME loans. A review of the Funding Circle statistics page indicates that returns for investors have been inching up the past few years while defaults (bad debt) have declined. Perhaps, the credit model is improving over time.
A blog post from earlier this month pertaining to platform performance and macroeconomic conditions discussed credit improvements:
“investors are now significantly less exposed to businesses whose directors have a low consumer score – i.e. are more susceptible to the consumer credit environment. I’m glad to say this prudent approach has yielded positive initial results. While loans taken out in 2019 are still in the early stages of their term, initial signs are showing improvement over the 2016-18 cohorts. As an example the chart below shows the percentage of loans, three months after being taken out, that were 10 or more days late.“
