Funding for local businesses to grow will be made easier thanks to access to loans from a new partnership between Herefordshire Council and Funding Circle.
From January this year, we will part finance eligible loans to drive significant growth and additional employment to the county, which are two of our key objectives as a council.
Funding Circle is the leading marketplace for business loans, where people and organisations can directly lend to small businesses looking to expand and grow.
We are amongst the first councils across the UK to pioneer this partnership.
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.
Councillor Tony Johnson, leader of Herefordshire council, said: “This scheme will help local business grow as money can be obtained quicker and also at competitive rates. We are showing a commitment to support local businesses to make growing jobs and wages in the county a priority. This is a prudent investment which will deliver a high impact to local businesses.”
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. To date, more than £480 million of loans have been lent to over 7,000 small businesses across the UK. To be eligible, businesses must have a minimum turnover of £50,000 and have been trading for at least two years.
Natasha Jones of Funding Circle said: “Funding Circle investors have lent over £73 million to small businesses in the Midlands in the last four years alone. This partnership with Herefordshire Council will allow us to help even more of the businesses across the county. Herefordshire is the eleventh council to use the Funding Circle marketplace to boost lending. We strongly believe this network will evolve to create a blueprint for an equivalent 21st century regional banking network.”
Once businesses pass Funding Circle’s credit assessment processes, the loan is posted on the marketplace. From here, investors choose which type of businesses to lend to, and bid the amount of money they wish to lend, and the interest rate they want to earn. Investors can bid small amounts, from as little as £20, on lots of different businesses to spread their risk.