Funding Circle swings into red as government Covid schemes end
Funding Circle posted a pre-tax loss of £12.9m in 2022 and pushed back its UK targets for 2025, blaming the end of state-backed lending schemes and challenging economic conditions.
The London-listed small business lender, which operates in the UK and the US, had posted a profit of £64.1m in 2021.
Total loans under management fell to £3.74bn from £4.46bn in 2021.
Originations fell by 35 per cent year-on-year to £1.5bn, which it said was in line with expectations following the peak of the government-guaranteed loan schemes in the first half of 2021.
The firm had participated in both the coronavirus business interruption loan scheme (CBILS) and the bounce back loan scheme in the UK, and the Paycheck Protection Program (PPP) in the US.
Funding Circle also announced it has pushed back its 2025 income target for the UK by one year due to “the challenging economic environment in 2023”.
It is now targeting at least £175m in total income by 2025, revised down from its previous target of £220m.
In contrast, its guidance for the US market – which it said shows “strong momentum” – remains unchanged.
For this year, the group is targeting total income in the UK and US markets of between £150m and £160m.
The company has high hopes for its new Flexipay product – a buy-now-pay-later offering for businesses – which it expects to bring in at least £50m in income and be profitable in the medium-term.
Read more: Funding Circle cuts rates for best-quality borrowers
“We’ve made good progress against our medium-term strategy, expanding our reach in distribution and depth in products,” said Funding Circle chief executive Lisa Jacobs.
“We introduced lending as a service in the US, and expanded our product set through the launch of super prime loans in the US and near prime loans in the UK. We have continued to see strong engagement with FlexiPay — so our customers can now not only borrow, but pay and spend with Funding Circle for the first time.
“I’m really pleased with how the business reacted to the evolution of the economic environment and transitioned back to commercial lending, with government schemes phasing out in 2022.”
Read more: Funding Circle sees profits fall to £1.6m after Covid loan schemes end
Funding Circle officially exited the peer-to-peer lending space last year and said that retail investors now make up just two per cent of loans under management.
The firm’s shares were down by more than two per cent by late morning trading.
