Funding Circle amateur lenders facing longer waits to cash out

Amateur lenders on peer-to-peer lending platform Funding Circle are facing waits of 100 days to cash out of their loans, it has emerged.

Investors, who provide funding for small businesses through the platform, can list old loans for resale to other investors if they wish to withdraw all their money.

But the PA news agency understands that the amount of time taken to resell the loan parts has risen from just a few days in January to up to three months in recent transactions.

The latest revelation comes a month after Funding Circle revealed it had been hit by the “uncertain economic environment”, as pre-tax losses for the first half of the year widened to £31 million.

According to an FAQ page on Funding Circle’s website, a loan which sold between 21 and 27 August this year took an average of 93 days to shift.

Archived earlier versions of the same web page shows that loan parts sold between 3 and 9 July had been waiting for 66 days.

For sales completed between 24 and 30 July, the waiting time had increased to 77 days, and by 31 July to 6 August loan parts had taken 82 days to sell.

Further information provided by customers shows that resale times were between one and eight days in early January, but have steadily increased in the following months.

It is understood that the growing resale times are down to higher numbers of sellers, making the queue to cash out longer and outstripping the demand from buyers.

Although supply and demand can change in line with financial cycles, waiting times have been consistently rising since January.

Demand from buyers might usually be expected to rise during the run-up to the close of the tax year at the end of March.

A representative for Funding Circle said: “The businesses that investors lend to through Funding Circle pay back part of their loan plus interest each month, so investors are able to regularly withdraw part of their portfolio as standard.

“While we also provide the additional option to access funds more quickly by selling loans to other investors at no extra cost, it is not guaranteed that loans will sell in a certain timeframe as this depends on supply and demand on the platform.”

The process is also likely to have been slowed down by Funding Circle’s system for investor portfolios, which ensures old loans are evenly balanced with new ones.

Investors are also facing the possibility of being unable to exit at all, due to Funding Circle conditions which state that any loans which do not sell on the secondary market after 120 days will be removed from resale.

Funding Circle declined to comment on whether terms and conditions would change.