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 nation’s 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.”
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