Online SME Lender Funding Circle Comments on CBILS Deadline Extension, Explains How to Apply

Funding Circle (LSE: FCH), an SME lender that facilitates loans in both the US and parts of Europe, notes that the Coronavirus Business Interruption Loan Scheme (CBILS) was originally scheduled to end on September 30, 2020. But the UK government has confirmed that the CBILS scheme will be extended, which should be good news for SMBs that have not yet been able to benefit from the scheme.

Funding Circle stated that the UK government’s CBILS loan scheme has been extended November 30, 2020. The company clarified that what this means is that businesses have until this date to begin an application for a CBILS loan.

Funding Circle further noted:

“In addition to the deadline for applications being extended, providers of CBILS loans will have the option to extend their loan terms up to a maximum of 10 years. Otherwise, businesses that apply for the scheme will still receive all the other benefits as those that applied before.” 

For Funding Circle CBILS loans, this may include loans between £50,001 and £500,000. It also includes rates “between 1.8% -7.4% APR.” There are also no repayments required for the first year or 12 months. The UK government has agreed to cover the first year of interest payments.

The nation’s government will also be covering the upfront fee, Funding Circle confirmed. They also noted that there are “no early settlement fees,” decisions regarding whether to approve loans are usually made within 24 hours or 1 business day, and “no personal guarantee for loans up to £250,000” is needed, Funding Circle explained in their blog post.

The company clarified that the eligibility criteria hadn’t changed.

As mentioned by the SME lender, the following criteria apply for CBILS loans issued by Funding Circle:

  • UK business that’s been negatively impacted by COVID
  • Annual turnover of more than £200,000
  • At least 3 years of verifiable trading history
  • More than 50% of turnover should be from trading activity (not from investments)
  • Loan may only be used for business purposes
  • Loan is mainly for trading activities in the UK

(Note: to learn more about how to apply for CBILS loans, check here.)

As reported recently, Funding Circle founder and CEO Samir Desai has purchased 163,017 shares in his company at an average per-share price of £0.6201696 according to a filing with the London Stock Exchange (LSE).

Funding Circle went public in 2018 at a price per share of 440 pence grossing around £300 million. At that time, the initial public offering delivered a market cap of around £1.5 billion. Today, Funding Circle trades at a fraction of that amount with a market cap of around £265 million.

Last week, Funding Circle posted results as of June 30, 2020, that indicated a loss per share of 33.0 pence (H1 2019 loss: 8.9 pence).

Similar to many other Fintech lenders, COVID has impacted the performance of Funding Circle. The company said it experienced an initial increase in missed payments from its borrowers but this metric has now dropped to pre-COVID levels and 90% of UK borrowers are now making payments. Originations totaled £662 million, down 17% on H1 2019 reflecting the two month period where fewer loans were originated.

The company said that the impact of COVID suggests “a permanent change in the SME borrowing market that we believe will benefit Funding Circle.”

Long term low-interest rates are predicted to attract strong demand from institutional investors to fund SME loans.

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