Funding Circle Securities facilitates investments in small business loans
Investment Profile 2Q 2015
Funding Circle Securities facilitates investments in small business loans Loans originated by Funding Circle USA generated an 11.2% trailing 12-month return as of April 30, 2015.1 Net returns are based on loans originated by Funding Circle USA2 between March 1, 2013 and March 31, 2015 and are not exclusively based on loans corresponding to Notes. “Notes” are issued by Funding Circle Notes Program, LLC (“Funding Circle Notes Program”) and are promissory notes that are dependent for payment on payments that Funding Circle Notes Program receives on business loans originated by an affiliate of Funding Circle Notes Program. Net returns are calculated using the formula and methodology found in footnote 1.
Many small businesses lack access to capital
Secured lending to quality borrowers
Due largely to the cost of increased capital requirements and intensified regulatory scrutiny, banks have shifted away from offering business loans under $1 million in size.3
Funding Circle USA’s marketplace provides access to secured small business credit investment opportunities. All loans are prescreened and assigned a risk rating (“FC Rating”) and coupon rate by Funding Circle USA’s underwriting team. Loans range in size from $25,000 - $500,000.
4
58.2%
Term (months)
Gross Annual Coupon Rate
12
5.99% - 14.74%
24
8.99% - 17.49%
36
9.99% - 18.49%
48
10.99% - 19.49%
60
12.99% - 20.99%
19.9%
-5.6%
The FC Ratings do not constitute a recommendation by Funding Circle USA or Funding Circle Securities, LLC and do not constitute a representation as to the amount of payment an investor will actually receive, or the likelihood of payment defaults occurring on any particular Note or loan. There can be no assurance as to the adequacy of the guarantees and/or collateral provided for any loan corresponding to a series of Notes. For a complete summary of risks associated with investing in Notes, please refer to the Offering Materials.
Portfolio composition
Key business metrics
Ranges listed below represent the 20th-80th percentile values of each loan metric across the entire marketplace portfolio:5
Ranges listed below represent the 20th-80th percentile values of each business metric per corresponding FC rating:6
Size of loan (20-80%) : $50,000 - $175,000 Age of business (20-80%) : 4 -14 years Geographic location : 49 states Term (months)
FC Rating 12 (1.5%)
A+ (1.2%)
24 (12.3%)
A (23.4%)
36 (51.0%)
B (43.9%)
48 (19.8%)
C (31.5%)
60 (15.4%)
W : fundingcircle.com/us/invest
A+
A
B
C
2013 Gross Revenue
$0.91-3.82M
$0.44-2.92M
$0.45-2.51M
$0.34-2.13M
2013 EBITDA
$0.11-0.71M
$0.05-0.31M
$0.04-0.21M
$0.04-0.17M
DSCR7
1.8x-6.4x
1.6x-3.5x
1.2x-2.3x
1.1x-1.7x
FICO8
710-792
693-757
668-733
645-713
Credit information of a borrower may be inaccurate or may not accurately reflect the borrower’s creditworthiness. Any such inaccuracies may be manifested in payment defaults on the borrower loans. Credit and FICO scores may be based on outdated, incomplete or inaccurate credit reporting data.
E : [email protected]
T : (855) 849-1940
Investment Profile 2Q 2015
Ways to invest The Funding Circle Marketplace
1) Browse & select investments Investors who wish to actively select individual portfolio investments can participate via our online marketplace. Here, investors browse and purchase Notes issued by Funding Circle Notes Program.
Minimum investment
$50,000
Available assets
Notes of all FC Ratings and maturities
Minimum Note size
$1,000
Servicing fee charged to investor on Notes
0.083% per month9
2) Enroll in automated investing
Supported account types
Institutional, individual accounts and IRAs
Investors can set their desired investment criteria for notes and automatically build their portfolios. To learn more, contact the Funding Circle Securities team.
Investments via traditional or Roth IRAs are welcome Funding Circle USA welcomes investments via traditional or Roth IRAs. To learn more about how to invest with a tax-advantaged account, please contact the Funding Circle Securities team.
Contact us to get started Please call us between 8:00am and 6:00pm PT at (855) 849-1940 or email [email protected] to get started.
“
Sign up online Funding Circle gave me the spark I needed to hire top-notch staff and more than double our revenue last year. Dorika Beckett, Harvard MBA Founder/CEO, LiveWell Home Care Funding Circle USA 2014 borrower10
”
To begin our onboarding and accreditation process, visit Funding Circle Securities’ website today: www.fundingcircle.com/us/invest
Risks & Disclosures : Funding Circle Securities, LLC (“Funding Circle Securities”), member FINRA/SIPC, is owned and operated by Funding Circle USA, Inc. All securities related activities are conducted through Funding Circle Securities. Funding Circle Securities only offers investment products and securities of its affiliates, and such products and securities are not publicly traded and may be subject to holding period requirements. Securities offered through Funding Circle Securities are only suitable for Accredited Investors, as defined by Rule 501 of the Securities Act of 1933, who are familiar with and willing to accept the high risk associated with private investments. Investing in private placements requires high-risk tolerance, low liquidity concerns and long-term commitments. Investors must be able to afford to lose their entire investment. Carefully consider the investment objectives, risk, charges and expenses of any investment product prior to investing. Investing in Notes involves a high degree of risk. In deciding whether to purchase Notes, you should carefully consider risks inherent in investing in the Notes and risks related to borrower defaults. Such risks related to borrower defaults include, but are not limited to, payment on the Notes depending entirely on payments Funding Circle Notes Program receives on the corresponding business loan, limited historical data on borrower loan performance and loss rates, loan collections and servicing risks, and inaccurate information supplied by borrower. This list of risks is incomplete and not comprehensive. For a complete summary of associated risks with Notes, please refer to the confidential offering materials and related documents of Funding Circle Notes Program (the “Offering Materials”). Any of these risks could have a material adverse effect on the value of the Notes you purchase and could cause you to lose all or part of your initial purchase price or could adversely affect future payments you expect to receive on the Notes. No communication contained herein should be construed as a recommendation for any security offering. This website provides general and preliminary information about securities offered through Funding Circle Securities and is intended for initial reference purposes only. It is not a summary or compilation of all applicable information and is not complete. This website does not constitute an offer to sell or buy any securities by Funding Circle Securities. There shall be no offer or sale of any securities without the delivery of the “Offering Materials. This information contained herein is qualified by and subject to more detailed information in the Offering Materials.
W : fundingcircle.com/us/invest
E : [email protected]
T : (855) 849-1940
Investment Profile 2Q 2015
Footnotes 1
Methodology: Each month’s Net Return is calculated using the following formula:
Net Return =
∑ Interest Payments - ∑ Defaults +∑ Recoveries -0.01/12 ∑(Prior Month Closing Principal Balance)
Cash accounting is used to calculate net returns. While cash accounting leads to some volatility, particularly in early months with a smaller overall portfolio, cash accounting is not reliant on forecasts of roll rates or expected recovery. Net return calculations exclude loans repurchased from investors by Funding Circle USA, Inc. or its US based affiliates (individually and collectively “Funding Circle USA”). Net returns are based on loans originated by Funding Circle USA between March 1, 2013 and March 31, 2015 and are not exclusively based on loans corresponding to Notes. Net returns are calculated by subtracting a 1% annualized servicing fee from each month’s return. Such servicing fee is subject to change and is not a commitment by Funding Circle USA to a specific servicing fee charged or to be charged to an investor. Net return calculations also exclude any ancillary fees and expenses that may be charged to investors in connection with the servicing of a loan. Net returns do not take into account the effect of partial prepayments on the amortization schedules of individual loans. Partial prepayments were received for less than 1% of subject loans. Defaults include loans that have been charged off by Funding Circle USA and any loans 91+ days past due. The time of default is the earlier of 91 days past due and the date of charge-off by Funding Circle USA. The performance data given represents past performance and should not be considered indicative of future results. Investor may have negative returns. No assurances or guarantees can be given or implied concerning future results. The actual net returns for each investor may differ from the net returns presented herein due to, among other things, the diversity of the investor’s portfolio, exposure to any single loan or group of loans and macroeconomic conditions. 2
“Funding Circle USA” as used herein shall individually and collectively refer to Funding Circle USA, Inc. and its US-based affiliates.
Mills, Karen G., and McCarthy, Brayden. “The State of Small Business Lending: Credit Access During the Recovery and How Technology May Change the Game.” Harvard Business School Working Paper, No. 15-004, July 2014.
3
[Lending data source]FDIC: Loans to Small Businesses and Farms, FDIC-Insured Institutions, 1995 - 2014. https://www2.fdic.gov/qbp/timeseries/ SmallBusiness&FarmLoans.xls; [GDP data source] Department of Commerce. Bureau of Economic Analysis. GDP Press Release. Table 3.
4
Marketplace portfolio includes all loans originated by Funding Circle USA, Inc. and/or its U.S. based affiliates (individually and collectively, “Funding Circle USA”) from 3/11/2014 to 5/7/2015 except for loans made to new franchise borrowers (those borrowers with less than 2 years of operational history) unless such borrower has provided a corporate franchisor guarantee. Funding Circle USA no longer offers loans to a business with less than two years of operational history unless the business is a franchisee and provides a corporate franchisor guarantee.
5
6
20th-80th percentile ranges are listed for each value to exclude outliers on the high and low ends of the spectrum.
7
Debt service coverage ratio (DSCR) is a ratio that describes the amount of cash flow available to meet annual interest and principal payments on debt.
FICO score represents the FICO score of one guarantor per each loan originated by Funding Circle USA as of the date the guarantor applied for a Funding Circle USA loan on behalf of the business; loans may have more than one guarantor.
8
The servicing fee is calculated as a percentage of the outstanding principal amount of the loan prior to applying the current payment. For additional information, please refer to the Offering Materials of Funding Circle Notes Program.
9
10
Testimonials contained herein may not be representative of the experience of other borrowers.
W : fundingcircle.com/us/invest
E : [email protected]
T : (855) 849-1940
Funding Circle Securities facilitates investments in small business loans Loans originated by Funding Circle USA generated an 11.2% trailing 12-month return as of April 30, 2015.1 Net returns are based on loans originated by Funding Circle USA2 between March 1, 2013 and March 31, 2015 and are not exclusively based on loans corresponding to Notes. “Notes” are issued by Funding Circle Notes Program, LLC (“Funding Circle Notes Program”) and are promissory notes that are dependent for payment on payments that Funding Circle Notes Program receives on business loans originated by an affiliate of Funding Circle Notes Program. Net returns are calculated using the formula and methodology found in footnote 1.
Many small businesses lack access to capital
Secured lending to quality borrowers
Due largely to the cost of increased capital requirements and intensified regulatory scrutiny, banks have shifted away from offering business loans under $1 million in size.3
Funding Circle USA’s marketplace provides access to secured small business credit investment opportunities. All loans are prescreened and assigned a risk rating (“FC Rating”) and coupon rate by Funding Circle USA’s underwriting team. Loans range in size from $25,000 - $500,000.
4
58.2%
Term (months)
Gross Annual Coupon Rate
12
5.99% - 14.74%
24
8.99% - 17.49%
36
9.99% - 18.49%
48
10.99% - 19.49%
60
12.99% - 20.99%
19.9%
-5.6%
The FC Ratings do not constitute a recommendation by Funding Circle USA or Funding Circle Securities, LLC and do not constitute a representation as to the amount of payment an investor will actually receive, or the likelihood of payment defaults occurring on any particular Note or loan. There can be no assurance as to the adequacy of the guarantees and/or collateral provided for any loan corresponding to a series of Notes. For a complete summary of risks associated with investing in Notes, please refer to the Offering Materials.
Portfolio composition
Key business metrics
Ranges listed below represent the 20th-80th percentile values of each loan metric across the entire marketplace portfolio:5
Ranges listed below represent the 20th-80th percentile values of each business metric per corresponding FC rating:6
Size of loan (20-80%) : $50,000 - $175,000 Age of business (20-80%) : 4 -14 years Geographic location : 49 states Term (months)
FC Rating 12 (1.5%)
A+ (1.2%)
24 (12.3%)
A (23.4%)
36 (51.0%)
B (43.9%)
48 (19.8%)
C (31.5%)
60 (15.4%)
W : fundingcircle.com/us/invest
A+
A
B
C
2013 Gross Revenue
$0.91-3.82M
$0.44-2.92M
$0.45-2.51M
$0.34-2.13M
2013 EBITDA
$0.11-0.71M
$0.05-0.31M
$0.04-0.21M
$0.04-0.17M
DSCR7
1.8x-6.4x
1.6x-3.5x
1.2x-2.3x
1.1x-1.7x
FICO8
710-792
693-757
668-733
645-713
Credit information of a borrower may be inaccurate or may not accurately reflect the borrower’s creditworthiness. Any such inaccuracies may be manifested in payment defaults on the borrower loans. Credit and FICO scores may be based on outdated, incomplete or inaccurate credit reporting data.
E : [email protected]
T : (855) 849-1940
Investment Profile 2Q 2015
Ways to invest The Funding Circle Marketplace
1) Browse & select investments Investors who wish to actively select individual portfolio investments can participate via our online marketplace. Here, investors browse and purchase Notes issued by Funding Circle Notes Program.
Minimum investment
$50,000
Available assets
Notes of all FC Ratings and maturities
Minimum Note size
$1,000
Servicing fee charged to investor on Notes
0.083% per month9
2) Enroll in automated investing
Supported account types
Institutional, individual accounts and IRAs
Investors can set their desired investment criteria for notes and automatically build their portfolios. To learn more, contact the Funding Circle Securities team.
Investments via traditional or Roth IRAs are welcome Funding Circle USA welcomes investments via traditional or Roth IRAs. To learn more about how to invest with a tax-advantaged account, please contact the Funding Circle Securities team.
Contact us to get started Please call us between 8:00am and 6:00pm PT at (855) 849-1940 or email [email protected] to get started.
“
Sign up online Funding Circle gave me the spark I needed to hire top-notch staff and more than double our revenue last year. Dorika Beckett, Harvard MBA Founder/CEO, LiveWell Home Care Funding Circle USA 2014 borrower10
”
To begin our onboarding and accreditation process, visit Funding Circle Securities’ website today: www.fundingcircle.com/us/invest
Risks & Disclosures : Funding Circle Securities, LLC (“Funding Circle Securities”), member FINRA/SIPC, is owned and operated by Funding Circle USA, Inc. All securities related activities are conducted through Funding Circle Securities. Funding Circle Securities only offers investment products and securities of its affiliates, and such products and securities are not publicly traded and may be subject to holding period requirements. Securities offered through Funding Circle Securities are only suitable for Accredited Investors, as defined by Rule 501 of the Securities Act of 1933, who are familiar with and willing to accept the high risk associated with private investments. Investing in private placements requires high-risk tolerance, low liquidity concerns and long-term commitments. Investors must be able to afford to lose their entire investment. Carefully consider the investment objectives, risk, charges and expenses of any investment product prior to investing. Investing in Notes involves a high degree of risk. In deciding whether to purchase Notes, you should carefully consider risks inherent in investing in the Notes and risks related to borrower defaults. Such risks related to borrower defaults include, but are not limited to, payment on the Notes depending entirely on payments Funding Circle Notes Program receives on the corresponding business loan, limited historical data on borrower loan performance and loss rates, loan collections and servicing risks, and inaccurate information supplied by borrower. This list of risks is incomplete and not comprehensive. For a complete summary of associated risks with Notes, please refer to the confidential offering materials and related documents of Funding Circle Notes Program (the “Offering Materials”). Any of these risks could have a material adverse effect on the value of the Notes you purchase and could cause you to lose all or part of your initial purchase price or could adversely affect future payments you expect to receive on the Notes. No communication contained herein should be construed as a recommendation for any security offering. This website provides general and preliminary information about securities offered through Funding Circle Securities and is intended for initial reference purposes only. It is not a summary or compilation of all applicable information and is not complete. This website does not constitute an offer to sell or buy any securities by Funding Circle Securities. There shall be no offer or sale of any securities without the delivery of the “Offering Materials. This information contained herein is qualified by and subject to more detailed information in the Offering Materials.
W : fundingcircle.com/us/invest
E : [email protected]
T : (855) 849-1940
Investment Profile 2Q 2015
Footnotes 1
Methodology: Each month’s Net Return is calculated using the following formula:
Net Return =
∑ Interest Payments - ∑ Defaults +∑ Recoveries -0.01/12 ∑(Prior Month Closing Principal Balance)
Cash accounting is used to calculate net returns. While cash accounting leads to some volatility, particularly in early months with a smaller overall portfolio, cash accounting is not reliant on forecasts of roll rates or expected recovery. Net return calculations exclude loans repurchased from investors by Funding Circle USA, Inc. or its US based affiliates (individually and collectively “Funding Circle USA”). Net returns are based on loans originated by Funding Circle USA between March 1, 2013 and March 31, 2015 and are not exclusively based on loans corresponding to Notes. Net returns are calculated by subtracting a 1% annualized servicing fee from each month’s return. Such servicing fee is subject to change and is not a commitment by Funding Circle USA to a specific servicing fee charged or to be charged to an investor. Net return calculations also exclude any ancillary fees and expenses that may be charged to investors in connection with the servicing of a loan. Net returns do not take into account the effect of partial prepayments on the amortization schedules of individual loans. Partial prepayments were received for less than 1% of subject loans. Defaults include loans that have been charged off by Funding Circle USA and any loans 91+ days past due. The time of default is the earlier of 91 days past due and the date of charge-off by Funding Circle USA. The performance data given represents past performance and should not be considered indicative of future results. Investor may have negative returns. No assurances or guarantees can be given or implied concerning future results. The actual net returns for each investor may differ from the net returns presented herein due to, among other things, the diversity of the investor’s portfolio, exposure to any single loan or group of loans and macroeconomic conditions. 2
“Funding Circle USA” as used herein shall individually and collectively refer to Funding Circle USA, Inc. and its US-based affiliates.
Mills, Karen G., and McCarthy, Brayden. “The State of Small Business Lending: Credit Access During the Recovery and How Technology May Change the Game.” Harvard Business School Working Paper, No. 15-004, July 2014.
3
[Lending data source]FDIC: Loans to Small Businesses and Farms, FDIC-Insured Institutions, 1995 - 2014. https://www2.fdic.gov/qbp/timeseries/ SmallBusiness&FarmLoans.xls; [GDP data source] Department of Commerce. Bureau of Economic Analysis. GDP Press Release. Table 3.
4
Marketplace portfolio includes all loans originated by Funding Circle USA, Inc. and/or its U.S. based affiliates (individually and collectively, “Funding Circle USA”) from 3/11/2014 to 5/7/2015 except for loans made to new franchise borrowers (those borrowers with less than 2 years of operational history) unless such borrower has provided a corporate franchisor guarantee. Funding Circle USA no longer offers loans to a business with less than two years of operational history unless the business is a franchisee and provides a corporate franchisor guarantee.
5
6
20th-80th percentile ranges are listed for each value to exclude outliers on the high and low ends of the spectrum.
7
Debt service coverage ratio (DSCR) is a ratio that describes the amount of cash flow available to meet annual interest and principal payments on debt.
FICO score represents the FICO score of one guarantor per each loan originated by Funding Circle USA as of the date the guarantor applied for a Funding Circle USA loan on behalf of the business; loans may have more than one guarantor.
8
The servicing fee is calculated as a percentage of the outstanding principal amount of the loan prior to applying the current payment. For additional information, please refer to the Offering Materials of Funding Circle Notes Program.
9
10
Testimonials contained herein may not be representative of the experience of other borrowers.
W : fundingcircle.com/us/invest
E : [email protected]
T : (855) 849-1940
