LONDON — Dutch insurance firm Aegon will lend £160 million to UK small businesses using peer-to-peer lender Funding Circle’s online platform.
Aegon will invest in loans to UK small businesses originated through Funding Circle over the next year and the plan is to extend the deal for a further three years.
Funding Circle estimates that the £160 million committed could help fund loans to 2,600 businesses.
Stephen Barclay MP, the Economic Secretary to the Treasury, said in a statement on Thursday: “This partnership with one of the UK’s largest FinTech firms is further proof that the UK remains the global leader in FinTech.
“Aegon’s venture also shows that there is significant appetite for inward investment into the UK and we hope to see more deals of this scale in the future.”
Funding Circle, founded in 2010, has made over £3 billion of small business loans to more than 34,000 businesses since its launch. The company’s platform lets both retail and institutional investors lend money directly to small businesses at attractive rates of return averaging 6.6% a year, Funding Circle said.
Aegon joins the government-backed British Business Bank, the European Investment Bank, and 65,000 individuals in lending over Funding Circle.
Aegon Bank’s CFO Mark de Boer said: “The strategic partnership we have signed with Funding Circle is another important step in the strategy of Aegon to cooperate with Fintech partners in the direct lending landscape.
“This partnership gives Aegon access to attractive small business loans over the next four years, which helps to further diversify our investment portfolio. High savings inflow of our successful Fintech Knab banking operation is used to invest in the Funding Circle loans.”
De Boer said the deal follows “extensive due diligence” and Funding Circle CEO Samir Desai called the partnership a “validation” of his company’s business.
Desai said in a statement: “Now investors of all shapes and sizes can benefit from the stability of the asset class whilst also providing much-needed job creation and economic growth. We hope our joint programme with Aegon will develop to deliver increased lending to UK small businesses over the coming years.”
Separately on Thursday, MarketInvoice, another UK lending fintech business, announced a partnership with credit management business Veritas that will allow the invoice financing business to lend to businesses with a turnover of just £300,000, down from its current £1 million threshold.
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