In a first-of-its-kind deal, businesses will be referred via the Santander website and Funding Circle will refer businesses looking for everyday bank services to Santander.
The announcement comes at a time when the Government is considering new rules to force all banks to lend to alternative funding providers. It is non-exclusive, allowing Funding Circle to pursue similar deals with other banks.
Ana Botin, CEO of Santander UK, said: SMEs need access to multiple sources of finance, and Santander’s partnership with Funding Circle is a good example of how traditional and alternative finance can work together to help the nations SMEs prosper.
Peer-to-peer financing is also a useful way to introduce people to the concept of investing in entrepreneurs; an important element in a healthy enterprise economy.
Alternative funders will look on this as a positive sign that new finance methods are being accepted in the mainstream. Nesta research shows the industry raised 1bn in 2013, a figure expected to grow to 1.6bn in 2014.
Funding Circle allows businesses to borrow from multiple lenders. To date Funding Circle has helped more than 5,000 businesses borrow 290m through its marketplace. The method is aimed at established businesses with two years trading history and a turnover of 100k+.
Samir Desai, co-founder and CEO of Funding Circle, said: This partnership recognises our role as the only marketplace that caters for, and is dedicated to, small businesses.
In Santander we have found a fellow challenger brand that shares our commitment to putting small business customers needs first. They have created a blueprint for other banks to follow.