The European Investment Bank has agreed to inject £100m into UK small businesses through loans provided by peer-to-peer lending platform Funding Circle.
This is the first time EIB has provided funding through a direct lending company to support small businesses, as it looks to stimulate the “real” economy.
The £100m investment, alongside £25m from the Funding Circle SME Income fund, aims to give SMEs greater access to finance to help grow their business.
Jonathan Taylor, vice president of the European Investment Bank, said the £100m investment backing will “unlock” £200m of new investment over seven years, as loans which are repaid and reused a number of times.
“This investment will ensure more businesses access the finance they need to grow and will help support economic growth and job creation across the UK,” he added.
Over the past 10 years, the EIB, which offers long-term loans to businesses, has given £3bn to small businesses across the UK.
Since Funding Circle launched in 2010, it has provided more than £1.25bn of loans from peer-to-peer lenders to 16,000 businesses in the UK.
Chief executive Samir Desai said the new partnership will help “creditworthy businesses” borrow from a diverse range of investors.
Tony Catt, compliance officer and IFA at Anthony Catt Limited, said the agreement provides a good source of funds for small businesses.
“The Funding Circle needs the funding and the EIB is willing and able to make it available,” he said, adding the money should be quicker to arrange and more readily available than traditional borrowing from banks.
“Since small businesses rely on funding, this should have a positive effect on the economy.”
katherine.denham@ft.com
