Fintech unicorn Funding Circle is getting an extra £40 million of UK government money to lend to businesses

The British Business Bank was set up by the government in 2012 with £1 billion of funding to increase funding to small and medium enterprises (SMEs). It does not finance SMEs directly but works through partners and intermediaries to extend funding.

Funding Circle will loan the money it has secured to small British businesses. The money will not be invested in Funding Circle itself but on its platform, which matches investors with businesses looking to borrow.

James Meekings, cofounder and UK managing director of Funding Circle, says in a statement: “Over the last six years, Funding Circle has proved to be a more efficient way for small businesses to access the finance they need to grow and expand, whilst providing investors with attractive, stable returns. This further lending commitment is recognition of the success of the partnership to date and we look forward to working with the British Business Bank to help thousands more small businesses.

“This further lending commitment is recognition of the success of the partnership to date and we look forward to working with the British Business Bank to help thousands more small businesses.”

Funding Circle has over 55,000 investors on its platform, including individuals, local authorities, and financial institutions. It has lent over £1.7 billion since 2010.

Funding Circle is one of three peer-to-peer lending platforms which the British Business Bank invests through. The other two are RateSetter and MarketInvoice. The CEO of the Taxpayers Alliance told Business Insider last month he thinks the practice is “extremely concerning” given the financial regulator recently flagged “concerns” around the growing industry.