Member Article

Aegon and Funding Circle to funnel £160m to UK SMEs

Financial services giant Aegon has announced a new strategic partnership with peer-to-peer lending platform Funding Circle to fund £160m of loans to UK small businesses.

Under a framework agreement, the two firms will look to support around 2,600 SMEs over the next year with financing which the pair have estimated has the potential to create 6,400 new jobs across the UK.

The agreement could act as a prelude to a sustained financing effort with plans to extend the programme into a four-year effort to provide a boost to the UK’s small business community.

Mike de Boer, CFO Aegon Bank NV said that the new strategic partnership would give the finance giant access to ‘attractive’ small business loans as part of its efforts to cooperate with FinTech innovators.

He commented: “Funding Circle allows small businesses to access much needed funding. 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.”

For Funding Circle the agreement marks yet another institutional lender utilising its platform to fund loans to the UK’s small businesses, following similar agreements with the likes of the British Business Bank, the European Investment Bank as well as local UK councils.

Operating on a P2P model, the online lending platform has facilitated more than £2.5bn of loans to UK small businesses in recent years, with both institutional and individual investors receiving average returns of 6.6% per year on their investments.

The FinTech firm’s co-founder and chief executive, Samir Desai, CEO and co-founder of Funding Circle said: “This partnership is validation of the attractive risk-adjusted returns that are being generated to investors by lending through Funding Circle.

“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.”