More than £1.5 million has been injected into the local economy, as part of a pioneering partnership between Lancashire County Council and Funding Circle, to stimulate economic growth and employment.
Two years ago, Lancashire County Council became the first council to lend directly to small and medium sized businesses through Funding Circle, the UK’s leading online marketplace for business loans.
This innovative partnership has enabled the council to finance local business growth, joining thousands of people across the country and the government-backed British Business Bank who are lending through Funding Circle’s online marketplace.
Since the partnership began, over 230 companies within the Lancashire area have benefited from Funding Circle investors, borrowing £1.5 million between them to consolidate or expand their businesses.
Alongside other investors, the council’s lending has facilitated £350,000 of this total, stimulating the local economy and enabling local small businesses to flourish.
County Councillor Jennifer Mein, leader of Lancashire County Council said: “This is a ground-breaking way to fund business growth and create new jobs, which has directly led to more than £1.5 million pounds being invested in Lancashire’s businesses. We’re very pleased with its success to date. Our innovative approach has since been taken up by other councils across the country and even the government, who recognised the value of it.
“We’re keen to work in pioneering and practical ways to provide real opportunities for businesses here in Lancashire to pursue their passions and ambitions. There is a lot of potential to grow the economy here in the county and Funding Circle is just one of our many successful schemes to encourage this growth.”
Tom Williams is the managing director of Ark Consultants, which received £80,000 from Funding Circle investors through the partnership with the county council. He commented: “Funding Circle was a breath of fresh air after dealing with the banks. Everything happened quickly and efficiently and, within two weeks, we had the money we needed to take the business to the next stage. The team were helpful at every step of the way and I would urge any business owner looking at finance options to consider applying for a loan through Funding Circle.”
Natasha Jones of Funding Circle, said: “For some time now, small businesses have faced serious difficulty in accessing finance from traditional lenders. Lancashire County Council has recognised that Funding Circle can provide local businesses with a solution and help them grow, and we’re very pleased to be working in partnership with them. Online marketplaces are the future of finance, allowing local people and organisations to play a direct role in supporting local business growth. We hope to be able to work with many more councils moving forwards.”
Launched in August 2010, Funding Circle enables businesses to access finance independent of their banks, whilst at the same time British people can earn attractive* returns. The process sidesteps the high street banks with businesses receiving finance within a couple of weeks compared to up to three months for a traditional bank loan. To date, more than £570 million of loans have been lent to over 8,000 small businesses across the UK. To be eligible, businesses must typically have a minimum turnover of £50,000 and have been trading for at least two years.
Once businesses pass Funding Circle’s credit assessment processes, the loan is posted on the marketplace. From here, investors choose which businesses to lend to. Investors can bid small amounts, from as little as £20, on lots of different businesses to spread their risk.