Funding Circle facilitates investments in small ... AWS
Investment Profile
Funding Circle facilitates investments in small business loans Access a new asset class
Solid target returns
Build a diversified portfolio
Monthly cash flow
Access a new asset class
Debt obligations issued by Funding Circle1 provide qualified investors with the opportunity to invest in small business loans ($25k - $500k loans made to highly qualified borrowers); an attractive but traditionally hard-to-access asset class. Small Business Bank Lending Growth vs. U.S. GDP and Total Business Lending [2007-2012]2 20% 15% 10%
Solid target returns3
Funding Circle targets a net annualized return of 10 – 14% for investors, after fees and expected losses. Annualized Net Returns After Fees
16% 14% 12% 10% 8% 6% 4% 2% 0%
3 Year 5 Year
5yr N/A
Funding 4 Circle USA
5% 0%
Dow Jones Corporate Bond Index
Vanguard Total Bond Market ETF
-5%
Vanguard Corporate Short Term Bond ETF
Vanguard Short Term Bond ETF
Monthly cash flow
-10% -15% -20% 2007
2008
SMB loans below $1m
2009 U.S. GDP
2010
2011
2012
Debt obligations issued by Funding Circle are 3, 4, or 5 year fully amortizing loans that provide monthly cash flow to investors.
Total Business Lending (C&I)
1
Build a diversified portfolio
Funding Circle’s whole loan marketplace, fractional loan marketplace, and the FC Partners Fund I Limited Partnership enable investors to build, or gain exposure to, a diversified portfolio of small business loans underwritten by Funding Circle. This includes exposure to loans with different maturities and credit risk bands, as well as multiple geographies and industries of operations.
Origination
Funding Circle makes loans to high-quality small business borrowers
2
Investment Options
The debt obligations are made available to investors through the marketplace or limited partnership investment fund
Option to reinvest cash flow at any time
4
Monthly Cash Flow
Investors receive the monthly payments (cash flow) allocable to their owned whole loan, fractional loan or fund interests
3
Monthly Payments
Borrowers make monthly payments (principal and interest) on their outstanding loan
1) Debt obligations issued by Funding Circle include, but are not limited to, whole loans and borrower-dependent-notes (BDNs). 2) SMB loan data source [Small Business Loan Association]; U.S. GDP data source [U.S. Bureau of Economic Analysis]; Total business lending data source [St. Louis Federal Reserve]. 3) Representative alternative investment rates (as of March 2014) shown here are illustrative, and many of these investments are more diversified and less risky than investments in the Fund. Many of the investments are also publicly offered and traded and more liquid than investments in the Fund. 4) A weighted average of projected rates of return for U.S. loans that Funding Circle expects to originate, net of servicing fees.
Secured Lending; Quality Borrowers Secured lending to quality borrowers
The loans underwritten by Funding Circle are made to highly qualified borrowers and are supported by both the business and personal assets of the loan applicant(s). Business Metric
Median1
Primary Applicant FICO Score
716
Annual Revenue
$758,000
Debt Service Coverage Ratio
2.05x
Asset Coverage Ratio
5.70x
Why borrowers choose Funding Circle
High-quality small businesses have few available options for debt financing. The bank loan process for a small business is onerous, and if successful, frequently takes 6+ weeks to complete. Funding Circle is a breath of fresh air for these frustrated borrowers, offering a great customer experience, competitive rates, and a speedy 1-2 week process.
Note: C-Corps, S-Corps, and LLCs only; no sole proprietorships
Rigorous loan underwriting process
Every loan underwritten by Funding Circle must pass a rigorous, multi-stage review, analysis, and human verification process conducted by seasoned underwriters. Online Application
Initial Contact
Less Than 10 Minutes
Same Day
An automated proprietary boundary model and simple application target high-quality applicants from the outset.
An FC account specialist contacts the loan applicant within 24 hours of application submission.
Conditional Approval
Verification & Final Approval
2-3 Days
4-7 Days
A proprietary scoring model and human expertise narrow the pool to only the best borrowers.
Human verification and final review ensure adherence to Funding Circle’s high-quality lending standards.
Rates and fees
Borrower Rates. A borrower’s interest rate is determined by Funding Circle’s credit team, and is based on an analysis of a number of factors. Interest rates are fixed for the life of the loan. All loans are fully amortizing, with a tenor of 3, 4, or 5 years. Origination and Servicing Fees. Borrowers are charged a 2.99% loan origination fee, and investors are charged a 1% annual servicing fee. The servicing fee is assessed monthly (i.e. 0.083% per month) and is based on the unpaid loan principal balance.
1) Data is for all U.S. loans underwritten by Funding Circle through June 10, 2014. 2) Data as of June 10, 2014.
Key statistics
Funding Circle estimates that it will lend around $100 million to U.S. small businesses in 2014, and to-date2, Funding Circle has underwritten loans to small businesses in more than 35 U.S. states.
Ways to Invest How to invest in Funding Circle small business loans: 1. FC Partners Fund I
FC Partners Fund I
FC Partners Fund I is a Limited Partnership investment fund, managed by Funding Circle, that purchases debt obligations underwritten by Funding Circle on behalf of its investors. The FC Partners Fund I is still accepting new limited partners.
2. Fractional Loan Marketplace
$250,000
Asset purchases
All risk bands and maturities
Management and performance fees
None
Servicing fee charged on loans
0.083% per month2
Custodian
Millennium Trust Company
Auditor
Burr Pilger Mayer, Inc.
Supported account types
Institutional, individual & individual IRA accounts
Funding Circle Fractional Loan Marketplace
Funding Circle expects to launch its Fractional Loan Marketplace at the beginning of September 2014. When launched, the Marketplace will allow investors to browse and purchase fractional portions of specific corresponding borrowers loans1 (borrower-dependentnote, or BDNs) underwritten by Funding Circle.
3. Whole Loan Marketplace
Recommended minimum investment
Recommended minimum investment
$50,000
Expected launch date
September 2014
Available assets
All risk bands and maturities
Minimum investment per BPN
$1,000
Servicing fee charged on loans
0.083% per month2
Supported account types
Institutional, individual & individual IRA accounts
Funding Circle Whole Loan Marketplace
The Funding Circle whole loan marketplace is a platform for institutional investors to browse and purchase whole loans underwritten by Funding Circle. The marketplace is currently live and is open to new investors.
Recommended minimum investment
$5,000,000
Available assets
All risk bands and maturities
Minimum investment per note
Whole loan; size varies
Servicing fee charged on loans
0.083% per month2
Supported account types
Institutional accounts
Contact our team to invest Kris Barney, CFA Manager, Strategic Finance [email protected] 415.463.1377 (o)
Albert Periu Director, Capital Markets [email protected] 415.481.0951 (o)
Chris Selden Director, Finance [email protected] 415.660.9811 (o)
IMPORTANT LEGAL NOTICES This document provides general and preliminary information about Funding Circle’s commercial lending platform and is intended for initial reference purposes only. It is not a summary or a compilation of all applicable information and is not complete. This document does not constitute an offer to sell or the solicitation of an offer to buy any securities. There shall be no offer or sale of any securities without the delivery of confidential offering materials (the “Offering Materials”) and related documents. The information contained herein is qualified by and subject to more detailed information in the Offering Materials, including the risk factors applicable to an investment in the Fund. The materials and information contained and described herein are proprietary and may not be reproduced or distributed in any fashion without Funding Circle’s consent. 1) BDNs are limited recourse obligations and Funding Circle will make payment on BDNs only from payments actually received by Funding Circle on or in respect of the corresponding specific loan. 2) A servicing fee of 0.083% is applied each month to the unpaid principal balance of outstanding loans.
Funding Circle facilitates investments in small business loans Access a new asset class
Solid target returns
Build a diversified portfolio
Monthly cash flow
Access a new asset class
Debt obligations issued by Funding Circle1 provide qualified investors with the opportunity to invest in small business loans ($25k - $500k loans made to highly qualified borrowers); an attractive but traditionally hard-to-access asset class. Small Business Bank Lending Growth vs. U.S. GDP and Total Business Lending [2007-2012]2 20% 15% 10%
Solid target returns3
Funding Circle targets a net annualized return of 10 – 14% for investors, after fees and expected losses. Annualized Net Returns After Fees
16% 14% 12% 10% 8% 6% 4% 2% 0%
3 Year 5 Year
5yr N/A
Funding 4 Circle USA
5% 0%
Dow Jones Corporate Bond Index
Vanguard Total Bond Market ETF
-5%
Vanguard Corporate Short Term Bond ETF
Vanguard Short Term Bond ETF
Monthly cash flow
-10% -15% -20% 2007
2008
SMB loans below $1m
2009 U.S. GDP
2010
2011
2012
Debt obligations issued by Funding Circle are 3, 4, or 5 year fully amortizing loans that provide monthly cash flow to investors.
Total Business Lending (C&I)
1
Build a diversified portfolio
Funding Circle’s whole loan marketplace, fractional loan marketplace, and the FC Partners Fund I Limited Partnership enable investors to build, or gain exposure to, a diversified portfolio of small business loans underwritten by Funding Circle. This includes exposure to loans with different maturities and credit risk bands, as well as multiple geographies and industries of operations.
Origination
Funding Circle makes loans to high-quality small business borrowers
2
Investment Options
The debt obligations are made available to investors through the marketplace or limited partnership investment fund
Option to reinvest cash flow at any time
4
Monthly Cash Flow
Investors receive the monthly payments (cash flow) allocable to their owned whole loan, fractional loan or fund interests
3
Monthly Payments
Borrowers make monthly payments (principal and interest) on their outstanding loan
1) Debt obligations issued by Funding Circle include, but are not limited to, whole loans and borrower-dependent-notes (BDNs). 2) SMB loan data source [Small Business Loan Association]; U.S. GDP data source [U.S. Bureau of Economic Analysis]; Total business lending data source [St. Louis Federal Reserve]. 3) Representative alternative investment rates (as of March 2014) shown here are illustrative, and many of these investments are more diversified and less risky than investments in the Fund. Many of the investments are also publicly offered and traded and more liquid than investments in the Fund. 4) A weighted average of projected rates of return for U.S. loans that Funding Circle expects to originate, net of servicing fees.
Secured Lending; Quality Borrowers Secured lending to quality borrowers
The loans underwritten by Funding Circle are made to highly qualified borrowers and are supported by both the business and personal assets of the loan applicant(s). Business Metric
Median1
Primary Applicant FICO Score
716
Annual Revenue
$758,000
Debt Service Coverage Ratio
2.05x
Asset Coverage Ratio
5.70x
Why borrowers choose Funding Circle
High-quality small businesses have few available options for debt financing. The bank loan process for a small business is onerous, and if successful, frequently takes 6+ weeks to complete. Funding Circle is a breath of fresh air for these frustrated borrowers, offering a great customer experience, competitive rates, and a speedy 1-2 week process.
Note: C-Corps, S-Corps, and LLCs only; no sole proprietorships
Rigorous loan underwriting process
Every loan underwritten by Funding Circle must pass a rigorous, multi-stage review, analysis, and human verification process conducted by seasoned underwriters. Online Application
Initial Contact
Less Than 10 Minutes
Same Day
An automated proprietary boundary model and simple application target high-quality applicants from the outset.
An FC account specialist contacts the loan applicant within 24 hours of application submission.
Conditional Approval
Verification & Final Approval
2-3 Days
4-7 Days
A proprietary scoring model and human expertise narrow the pool to only the best borrowers.
Human verification and final review ensure adherence to Funding Circle’s high-quality lending standards.
Rates and fees
Borrower Rates. A borrower’s interest rate is determined by Funding Circle’s credit team, and is based on an analysis of a number of factors. Interest rates are fixed for the life of the loan. All loans are fully amortizing, with a tenor of 3, 4, or 5 years. Origination and Servicing Fees. Borrowers are charged a 2.99% loan origination fee, and investors are charged a 1% annual servicing fee. The servicing fee is assessed monthly (i.e. 0.083% per month) and is based on the unpaid loan principal balance.
1) Data is for all U.S. loans underwritten by Funding Circle through June 10, 2014. 2) Data as of June 10, 2014.
Key statistics
Funding Circle estimates that it will lend around $100 million to U.S. small businesses in 2014, and to-date2, Funding Circle has underwritten loans to small businesses in more than 35 U.S. states.
Ways to Invest How to invest in Funding Circle small business loans: 1. FC Partners Fund I
FC Partners Fund I
FC Partners Fund I is a Limited Partnership investment fund, managed by Funding Circle, that purchases debt obligations underwritten by Funding Circle on behalf of its investors. The FC Partners Fund I is still accepting new limited partners.
2. Fractional Loan Marketplace
$250,000
Asset purchases
All risk bands and maturities
Management and performance fees
None
Servicing fee charged on loans
0.083% per month2
Custodian
Millennium Trust Company
Auditor
Burr Pilger Mayer, Inc.
Supported account types
Institutional, individual & individual IRA accounts
Funding Circle Fractional Loan Marketplace
Funding Circle expects to launch its Fractional Loan Marketplace at the beginning of September 2014. When launched, the Marketplace will allow investors to browse and purchase fractional portions of specific corresponding borrowers loans1 (borrower-dependentnote, or BDNs) underwritten by Funding Circle.
3. Whole Loan Marketplace
Recommended minimum investment
Recommended minimum investment
$50,000
Expected launch date
September 2014
Available assets
All risk bands and maturities
Minimum investment per BPN
$1,000
Servicing fee charged on loans
0.083% per month2
Supported account types
Institutional, individual & individual IRA accounts
Funding Circle Whole Loan Marketplace
The Funding Circle whole loan marketplace is a platform for institutional investors to browse and purchase whole loans underwritten by Funding Circle. The marketplace is currently live and is open to new investors.
Recommended minimum investment
$5,000,000
Available assets
All risk bands and maturities
Minimum investment per note
Whole loan; size varies
Servicing fee charged on loans
0.083% per month2
Supported account types
Institutional accounts
Contact our team to invest Kris Barney, CFA Manager, Strategic Finance [email protected] 415.463.1377 (o)
Albert Periu Director, Capital Markets [email protected] 415.481.0951 (o)
Chris Selden Director, Finance [email protected] 415.660.9811 (o)
IMPORTANT LEGAL NOTICES This document provides general and preliminary information about Funding Circle’s commercial lending platform and is intended for initial reference purposes only. It is not a summary or a compilation of all applicable information and is not complete. This document does not constitute an offer to sell or the solicitation of an offer to buy any securities. There shall be no offer or sale of any securities without the delivery of confidential offering materials (the “Offering Materials”) and related documents. The information contained herein is qualified by and subject to more detailed information in the Offering Materials, including the risk factors applicable to an investment in the Fund. The materials and information contained and described herein are proprietary and may not be reproduced or distributed in any fashion without Funding Circle’s consent. 1) BDNs are limited recourse obligations and Funding Circle will make payment on BDNs only from payments actually received by Funding Circle on or in respect of the corresponding specific loan. 2) A servicing fee of 0.083% is applied each month to the unpaid principal balance of outstanding loans.
