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Funding Circle raise minimum lending rates
Funding Circle have raised the minimum lending rate from 4% to between 6% and 10.5% depending on the market. Funding Circle state this change will "promote a sustainable marketplace for both investors and businesses". This suggests that the lending rates had dropped to a point where Funding Circle were concerned that lenders were not taking into account the impact of bad debt, which would otherwise have accounted for a significant portion of the interest a lender would recieve.
Here is the statement in full:
Introducing new minimum bid rates
We want lending at Funding Circle to be as rewarding as possible for our investor community. Which is why from 08:00 today (Monday 24th June) we are trialling a different minimum bid rate for each risk band, applicable to all new loan requests.
The previous minimum bid rate for new loans was 4% across each risk band (A+ to C) and these have now been adjusted to the following:
We believe that introducing these minimum bid rates will promote a sustainable marketplace for both investors and businesses.
What does it mean if I place bids manually?
All you need to remember is that there is a new minimum rate you can bid at, which depends on the risk band of a business. This will be the minimum rate you can select on the loan auction page, where 4% was the previous minimum.
What does it mean if I use Autobid?
Autobid will only ever bid on loan auctions at or above your Autobid rate. If your Autobid settings are below the minimum bid rate, Autobid will automatically bid on the marketplace at the minimum rate.
The minimum bid rate only applies to new loan auctions, so if you're buying loan parts from other people, Autobid will buy loan parts at or above your Autobid rate.
You can read more about why we have introduced minimum bid rates and how it will work on our blog.
These changes have been reflected in our updated investor T&Cs (and by continuing to lend through Funding Circle you are bound by these).
The Funding Circle Team