Business finance heading for Lancashire
Lancashire County Council and Funding Circle has announced the launch of the first Local Business Lending Partnership, a pioneering scheme to stimulate local economic growth and employment through improved access to business finance.
As part of partnership, the council will lend an initial £100,000 to Lancashire-based businesses using Funding Circle, the UK’s largest online marketplace where people directly lend to small businesses.
A blueprint for the future of small business lending across the UK, the pilot scheme will help realise the growth potential of local businesses that are currently being stifled by poor access to finance. It is anticipated that the partnership could grow to a multi-million pound commitment over the next five years.
Launched in August 2010, Funding Circle enables businesses to access finance independent of their banks and people to receive attractive, stable returns for the long-term. This process sidesteps the high street banks with businesses receiving finance in a matter of days compared to up to three months for a traditional bank loan. To date more than more than £55m of loans have been lent to small businesses across the UK.
As part of the partnership, Lancashire Council will fund approximately 20% of a loan to a local business. Funding Circle works by enabling established and creditworthy businesses to borrow money from groups of people.
Once businesses pass the credit assessments by Funding Circle’s team of underwriters, their 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 bid small amounts, from as little as £20, on lots of different businesses to spread their risk.
The partnership with Funding Circle has been arranged by the county council through its economic development department - Lancashire County Developments Limited (LCDL).
County coun. Michael Green, cabinet member with responsibility for economic development, said: “This is a ground-breaking new way to fund business growth and a first for any council in the UK. This approach to business funding has proved popular in other parts of the country and across the globe. It's directly supported growing businesses and created new jobs.”
The partnership will also provide important support for businesses in the local region to expand and employ additional members of staff.
James Meekings, co-founder of Funding Circle, said: “This revolutionary partnership will deliver much-needed finance to growing businesses in Lancashire, in turn creating jobs and boosting the local economy. Lancashire County Council is leading the way for other local authorities to follow, injecting finance right into the heart of the local business community.”