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Updates to the selling tool

What will happen on 2nd December? Do I need to do anything?

If you are already in the sale queue you will automatically be switched over to the new tool. You do not need to do anything.

Any new sale requests made from 2nd December onwards will take place under the new tool.

 

How will the new secondary market / selling tool work?

  • The new selling tool will cycle through all investors wishing to sell loan parts as many times as possible within a 120 day period.
  • In each cycle, every investor will sell a small portion of their portfolio or at least one loan part. The cycle will run continuously through all investors currently wishing to sell.
  • This means every investor selling loan parts will begin to receive some funds back faster and more regularly.
  • The time it takes to access all the funds you’ve requested will depend on the amount you receive back in repayments, the amount you’re selling, the number of loan parts you’re looking to sell, and the demand to buy loans from other investors at the time. 
  • The length of each cycle will also vary as it depends on demand from other investors at the time.
  • After 120 days if you have any loans parts that haven’t sold they will be delisted. At this point you will receive an email informing you of the amount of the total funds that have been made available through selling loans and repayments. If you'd like to access more of your funds you can log back into your account and request a new sale.
  • You can amend the amount you want to request by cancelling the sale and requesting a new amount. You will then rejoin the other investors selling straight away. 
  • The tool will work the same way for both Classic and ISA accounts. As is the case currently, you cannot transfers funds or loan parts directly between a Classic and ISA account.

 

How long will it take to sell loans?

  • The time it takes to access all the funds you’ve requested will depend on the amount you receive back in repayments, the amount you’re selling, the number of loan parts you’re looking to sell, and the demand to buy loans from other investors at the time. This means we are unable to provide any timeframes.
  • The length of each cycle will also vary as it depends on demand from other investors at the time.

 

How does the transfer payment work?

  • The 1.25% transfer payment is a fixed amount applied automatically to all loan part sales. It is calculated on the outstanding principal of the loan part at the time of sale. For example, a £20 loan part is sold for £19.75 (and, as with the current tool, the selling investor would also receive any interest owed on that loan part since the last monthly repayment up to the point of sale).
  • 100% of the transfer payment goes to the investor who is buying the loan part. 
  • The transfer payment is applied when the loan part is sold. It is not paid upfront when you make the sale request and is only applied to loans that are sold successfully. 
  • This brings us in line with other lending platforms, although in our case, Funding Circle does not receive any fees from any loan part sale.

 

Why are these changes happening?

  • As you may have experienced, selling times have increased in recent months. 
  • Shifts in liquidity (i.e. the number of sellers and buyers of loan parts on the secondary market) is a natural part of lending, and accessing funds in this way is not guaranteed as it is contingent on there being investors available to buy loan parts from you.
  • However, having conducted a review, the package of changes we are making are in the best interests of the vast majority of investors and will provide an improved overall service. The changes mean every investor selling loan parts will begin to receive some funds back faster and more regularly. 
  • Funding Circle is a robust, growing business; following last year’s Initial Public Offering we are the best-capitalised platform in the UK. We have helped more businesses this year than ever before and our large, diversified community of investors have earned over £300m in net interest, while loans taken out since 2012 are on track to deliver 4 - 7% annually (past performance is not an indication of future performance and capital is at risk).
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