A company that once let strangers bid £20 apiece on your business loan now has Barclays and Deutsche Bank writing the cheques instead. So how does Funding Circle make money today? Primarily through transaction and servicing fees on the small business loans it originates for institutional investors, alongside interest and fee income from products such as FlexiPay.
That one sentence hides more than fifteen years of reinvention - a company that started life auctioning loans to strangers over spreadsheets, and now runs on hundreds of millions of pounds in institutional funding commitments from partners including Barclays, TPG Angelo Gordon and Deutsche Bank.
It started in a London pub in 2008 with Samir Desai, James Meekings and Andrew Mullinged were Oxford friends watching British banks retrench during the financial crisis, cutting off small businesses just when they needed capital most. The three quit their jobs, put in £60,000 of their own savings, raised £700,000 from a dozen early backers, and launched Funding Circle in August 2010 - cutting the bank out entirely and letting ordinary savers lend directly to SMEs.
The Original P2P Model: Origination and Servicing Fees
Funding Circle originally made money by charging borrowers an origination fee on every loan it funded, and investors an annual servicing fee on their outstanding balance. In its earliest form, reported by TechCrunch in 2011, that meant a 1% cut from lenders and a 2% cut from borrowers modestly, but enough to prove the Funding Circle business model could work as a marketplace rather than a bank.
The mechanics evolved fast.
In the UK, businesses could borrow up to £1 million, with repayment terms extending to five years. Loan pricing started as a genuine investor auction, lenders bidding rates against each other, before Funding Circle began setting rates itself from September 2015, based on risk band and term, a subtle but telling shift from matchmaker to underwriter.
By the time Funding Circle prepared to go public in 2018, the scale was hard to ignore: over £5 billion in loans facilitated to more than 50,000 SMEs, funded by 80,000 investors across four countries. The two-sided fee model borrower pays to borrow, lender pays to lend was, for a decade, simply how Funding Circle made money.
Why Funding Circle Exited Retail Peer-to-Peer Lending
Funding Circle permanently closed its peer-to-peer platform to retail investors on 10 March 2022, after new retail lending had been paused since April 2020 and retail loans had shrunk to just 5% of its total book. The pause began as pandemic caution: Funding Circle became the first P2P platform accredited for the Coronavirus Business Interruption Loan Scheme, but retail investors weren't allowed to fund those loans. So the retail tap stayed off while the rest of the business kept moving.
Two years later, the company confirmed what the pause had quietly signalled: Funding Circle peer-to-peer lending for retail customers wasn't coming back. CEO Lisa Jacobs pointed to a shrinking pool of retail capital, regulatory change, and an industry in retreat Zopa had left P2P for a banking licence, RateSetter had been absorbed by Metro Bank. Since 2010, retail lenders using Funding Circle peer-to-peer lending had earned average net returns of around 5% annually, and would keep receiving repayments on existing loans. But no new money would come in that way again.
Funding Circle announced the closure after a dramatic financial turnaround: pre-tax profit reached £64.1 million in 2021, compared with a £108.1 million loss in 2020. Killing off the founding product at the exact moment the business turned a corner wasn't a retreat; it was a bet that retail P2P had become the smaller, costlier way to fund the same loans.
The Institutional Shift: Forward Flow Agreements and Balance-Sheet Lending
Funding Circle's core Term Loans business is now funded primarily through forward flow agreements with institutional investors committing capital in advance to buy loans as Funding Circle originates them while newer products such as FlexiPay and the Cashback card are funded partly from Funding Circle's own balance sheet. Retail investors once bid £20 at a time on individual loans; institutions now commit hundreds of millions before a single loan is written.
These figures mark different types of milestones - reported forward-flow capacity at a point in time versus individual new agreements - rather than a single, directly comparable running total.
Recent partners read like a City address book: a renewed £300m facility with TPG Angelo Gordon and Barclays, a £200m renewal with Deutsche Bank, and a £750m commitment from Waterfall Asset Management and BNP Paribas that pushed total lending through Waterfall past £3 billion. Funding Circle has used its balance sheet to test newer products, such as its shorter-term loan offering, before moving them toward institutional funding a far more deliberate, capital-markets-style version of the Funding Circle business model than the 2010 retail marketplace ever was.
Funding Circle's IPO and Life as a Public Company
Funding Circle listed on the London Stock Exchange on 28 September 2018, raising £300 million at a valuation of roughly £1.5 billion one of the first major UK marketplace lenders to list publicly. Shares priced at 440p, the bottom of a 420p–530p range, with Danish billionaire Anders Holch Povlsen's Heartland A/S taking up to 10% of the offering.
The Funding Circle IPO exposed the business to quarterly public scrutiny, and the early numbers were unglamorous: half-year 2018 revenue of £63 million against an adjusted loss of £16.3 million. Investors were buying growth, not profit, and it took years of restructuring to change that. By 2023, UK Loans alone were profitable. By 2025, the whole group saw revenue grow 28% to £204.3 million, pre-tax profit rise to £20.3 million from £3.4 million the year before, and profit after tax reach £46.0 million, up from £8.6 million.
This is where Funding Circle makes money today really shows up in numbers a public market can verify, guiding to around £235 million revenue in 2026 and £300–350 million by 2029.
Beyond Loans: FlexiPay and Product Diversification
FlexiPay is the clearest example of how Funding Circle makes money beyond loans a flexible credit line launched in 2021 with a flat 3% fee and interest-free repayment over three months. The product has since evolved: SMEs can now pay suppliers immediately and repay over one to twelve months, useful for cash-flow gaps a term loan is too slow to solve.
Growth has been steep: transactions nearly quadrupled to £234 million in FY2023, reached £492 million across 2024, and climbed further to £815 million in FY2025. In September 2024, Funding Circle added a Cashback Business Credit Card 2% cashback for the first six months, 1% thereafter another step from single-product lender to multi-product financial partner.
How the Model Looks Today vs. 2010
The Funding Circle business model today looks structurally different from 2010: Term Loans are increasingly funded by institutional capital rather than individual savers, while revenue now spans origination and servicing fees on loans plus interest and fee income from newer products like FlexiPay.
The founders who once bid on £20 loan fractions from a spreadsheet now answer to institutional shareholders and forward-flow partners committing hundreds of millions at a time. The mission hasn't moved; everything about how Funding Circle makes money to fund it has.
The bottom line
Funding Circle didn't just survive the death of retail P2P lending, it used that closure to rebuild around a funding model that's proven considerably more profitable.
The honest answer to how Funding Circle makes money today isn't "loans" so much as "trust" institutional trust, priced in hundreds of millions at a time, from lenders who don't need £20 bids to believe in an SME.
Whether that trade was worth it for the retail investors left behind is a separate question. For the business itself, the numbers say it clearly was.
FAQ
1. Is Funding Circle still peer-to-peer lending?
No, Funding Circle permanently exited peer-to-peer lending on 10 March 2022, closing its retail platform to new investment. Its core Term Loans are now funded through institutional forward-flow arrangements rather than individual lenders bidding on loan fractions, while newer products such as FlexiPay and its cards draw on Funding Circle's own balance sheet and debt facilities.
2. When did Funding Circle IPO?
Funding Circle IPO'd on the London Stock Exchange on 28 September 2018, raising £300 million and valuing the company at roughly £1.5 billion one of the first major UK marketplace lenders to list publicly.
3. Who owns Funding Circle now?
Funding Circle has been a publicly traded company since its 2018 IPO, not a privately held one. Index Ventures was its largest shareholder at listing, having backed the business since its 2011 Series A round; current shareholder structure should be checked against its live investor relations page.
Also read: How Alex Depledge Built Hassle.com Into a Sharing Economy Blueprint
Sources: Data drawn from Funding Circle's own corporate announcements, annual and half-year results releases, and London Stock Exchange Group press materials, alongside contemporaneous reporting from Reuters, TechCrunch, CNBC, Morningstar and Investing.com. Figures reflect the most recent available data at the time of writing.
The EP+ Editorial Desk covers UK startups, founder stories, and venture capital. All editorial content is independently produced and human-reviewed before publication.
