Funding Circle UK has entered a strategic partnership with Waterfall Asset Management to support the growth of UK small businesses. Waterfall will invest in £1bn of loans originated through Funding Circle's UK platform over a two-year period.
The investment will support the growth of approximately 14,000 small businesses, creating and sustaining thousands of new jobs. Waterfall joins a group of investors lending to small businesses through Funding Circle, including 85,000 individuals, the British Business Bank, the European Investment Bank and other financial institutions, including pension funds and insurance companies.
Waterfall's investment will be partially financed by Deutsche Bank.
The announcement follows a record quarter for group originations, with Funding Circle Holdings facilitating £564m to small businesses in the third quarter of the year across its four markets, including £377m in the UK.
Samir Desai, Funding Circle co-founder and chief executive, said: "We are increasingly seeing substantial commitments from investors looking to purchase loans in each of our geographies. Our business model has opened up small business lending as an asset class for the first time, allowing investors such as individuals, asset managers, insurers, and government entities to earn attractive, risk-adjusted returns by lending directly to businesses.
"We look forward to working closely with Waterfall and Deutsche Bank to support the growth of even more small businesses across the UK."
Henrik Malmer, managing director at Waterfall, said: "We are excited that our partnership with Funding Circle will enable us to continue investing in SME loans in the UK. This segment has been underserved by traditional lenders, and Funding Circle's platform and technology provides borrowers access to credit whilst allowing investors such as Waterfall to diversify their portfolios into an interesting and exciting asset class."