# Funding Circle

## Congratulations!
Your offer has been accepted and funds will be in your account shortly.

### Your loan:
| Loan amount | Loan term |
| --- | --- |
| £120,000 | 3 years |

### Loan purpose
Expansion and growth.

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## FULL YEAR 2022 RESULTS
2 March 2023

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## Where small businesses get the funding they need to win

£15bn credit extended to 135,000 small businesses since 2010.

### We’ve taken out three term loans with Funding Circle and had a fantastic experience. The funding really helped us grow the business and the application process is quick and easy.

— Nikola Southern, Founder, Grace & Thorn

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## What we do
We enable small businesses to borrow, pay and spend.

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## How we do it
- >2 bn Data points in data lake (Group)
- 3x Better risk discrimination than bureau scores
- 6 min unrivalled experience

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## Funding Circle is better positioned today than it has ever been

### Proven resilience through change
The last few years have brought significant challenges:
- Covid-19 operating impact on small businesses
- UK and US government loan schemes led to lending spike and 'bring forward' of SME borrowing
- SME confidence below trend
- US economic environment more benign

### FlexiPay: investing in exciting new growth
- Strong growth and engagement, significant market.

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## What this means for Funding Circle
### UK Loans: more muted performance in short term
- 2022 return to commercial lending as government schemes end; prudent approach in H2
- 2023 continued prudence through expected recession, pushing back medium-term plan by a year

### US Loans: continued growth trajectory
Throughout, Funding Circle has demonstrated:
- Strong credit performance with robust and attractive
- Continued investor and borrower demand

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## Funding Circle: Financial performance

### Revenue model: almost 90% of income from fees
| FY 22 Driver         | Typical yield % | % of FY 22 Total income |
|----------------------|----------------|-------------------------|
| Transaction Fees      | c.5%           | 55%                     |
| Servicing Fees       | c.1%           | 32%                     |
| FlexiPay Fees        | 1%             | £60m per annum          |
| Investment Income     | Variable%      | 12%                     |

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## Key financial metrics
|                    | H121 | H221 | H122 | H222 | FY21 | FY22 |
|--------------------|------|------|------|------|------|------|
| Originations       | 1,635| 661  | 803  | 678  | 2,296| 1,481|
| Loans Under Management | 4,933| 4,457| 4,071| 3,743| 4,457| 3,743|
| Operating income  | 94.5 | 71.0 | 66.4 | 65.0 | 165.5| 131.4|
| Investment income  | 26.1 | 15.3 | 10.9 | 6.4  | 41.4 | 17.3 |
| Total income       | 120.6| 86.3 | 77.3 | 71.4 | 206.9| 148.7|
| Fair value gains   | 8.1  | 20.5 | 1.5  | 3.3  | 28.6 | 4.8  |
| Net income         | 128.7| 106.8| 78.8 | 74.7 | 235.5| 153.5|
| Cash               | 168.1| 224.0| 200.7| 177.7| 224.0| 177.7|
| Net Assets         | 254.1| 288.0| 299.3| 284.0| 288.0| 284.0|

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## FlexiPay solves one of our customers' biggest pain points
67% of SMEs say cashflow is their biggest issue.

- **With FlexiPay, I can now buy in bulk, helping me get a discount from my supplier and increasing my margins.**  
— Vik Gubskis, Founder, 8 Rocks Deli & Wine

### FlexiPay enables SMEs to manage their cashflow by spreading the cost of payments
1. Apply online: Instant decision.
2. Get an approved line of credit for business payments.
3. FlexiPay: Pay supplier now and repay over 3 months with 0% interest and a flat fee.

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## SME B2B payments represents a major new market opportunity and our capabilities enable us to win in this space
- Cashflow is a significant SME pain point.
- SME B2B payments is a huge market opportunity.

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## Conclusion
- Funding Circle is better positioned today than it has ever been.
- Technology and data-driven competitive advantage continues to deliver superior borrower experience.
- Attractive and proven business model with robust loan returns.
- Executing on attractive growth opportunities over the medium term to help more small businesses.