Peer-to-peer lender Funding Circle will stop lending to property development to focus on small business loans.
The lender, one of the biggest P2P platforms in the UK, said it would scale down its property lending before stopping altogether in mid-2018.
Property loans make up about 5% of the platform’s revenue and have generated £22m of earnings since 2014. However, with a 7% return, those loans have outperformed Funding Circle’s average of 6.5%.
The lender said its decision was not a reflection on the property market. Rather, it was part of Funding Circle’s plan to free up resources to develop its products for SMEs.
It will continue to service existing property loans and meet facilities they have already committed to over the next 12 to 18 months.
James Meekings, UK managing director and co-founder of Funding Circle, said: “Since we launched property development finance in 2014, small developers have built thousands of homes across the country and investors have earned 7% per year.
“We have taken this decision because we are absolutely focused on making Funding Circle the first choice for small business loans globally.”
The platform has funded nearly £2.2bn of loans so far, about £15m less than market-leader Zopa.
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