London council becomes the latest to sign up to Funding Circle website to support local economy
London Borough of Lambeth has agreed on a partnership with Funding Circle to use the online marketplace in providing loans to local businesses.
They have formed a Local Business Lending Partnership, making Lambeth the third council in London and the 16th in the country to use the platform.
It enables small businesses to make a loan application to their local authority. Councils can decide which to fund and how much to invest.
The remainder of the loan is then offered to a range of co-investors including over 40,000 individuals, the UK government and a number of financial organisations.
Applicants can obtain loans of between £5,000 and £1 million, and the platform is claimed to give small businesses a more direct route to obtaining finance than going to a high street bank.
Councillor Jack Hopkins, Lambeth cabinet member for jobs and growth, said: “This is an innovative way to provide local businesses the support they need to grow and improve. We want Lambeth to be a borough where businesses can thrive, boosting the local economy and creating more jobs and opportunities for our residents.
“Funding Circle has been proven to work and I’m excited that we’re signing up to create more choice for business and deliver tangible benefits to Lambeth.”
The council is making £100,000 available from its Treasury Management fund over two years, and is promoting the initiative through its seven business improvement districts, along with local press, blogs, the website and its publications.
Funding Circle is also supported by £20 million from the government’s Business Finance Partnership, and says investors can earn an average of 6.6% after fees and bad debt. To date it has provided a channel for about £5.8 million of council loans to local businesses.
It encourages councils to provide only a portion of the finance required by a business and to spread their loans among a number of applicants.
Natasha Jones, communications manager at Funding Circle, said that businesses that have taken a loan through the platform have been increasing their headcounts by an average of three people.
Picture: Lambeth and beyond from the London Eye, by Graham Burnett CC BY-SA 2.0 via Wikimedia Commons