Funding Circle is to focus on its core small business lending product in the UK, US, Germany and the Netherlands, and scale down new property development lending, expecting to stop all lending by mid-2018.
The business will continue to service existing property loans and meet facilities already committed to over the next 12 to 18 months. Property loans continue to outperform expectations from a credit risk perspective generating a return of 7% per year and £22m of earnings for investors since 2014.
Samir Desai, CEO and co-founder said: “Whilst delivering attractive returns to our investors, property development lending represents a small and diminishing share of ~5% of our global revenue, and is available to borrowers in only one of our international markets.
“This decision means we can focus resource on our core small business lending product in the four countries where we already have a leadership position. It will allow us to extend our small business lending product to more international markets in due course.”
James Meekings, UK managing director and co-founder, added: “We are proud of what we have achieved to date. Since we launched property development finance in 2014, small developers have built thousands of homes across the country and investors have earned 7% per year.
“We have taken this decision because we are absolutely focused on making Funding Circle the first choice for small business loans globally.”
Development finance provider Goldentree has stated it is prepared to refinance Funding Circle and other development lenders.
Its managing director, Steve Marsh, said: “We have been in the development finance arena since the business was formed 17 years ago. We’ve never pulled out and never had a higher level of repeat business from our clients, who rely on our consistency.”