Funding Circle is a peer-to-peer lending platform that connects investors and businesses in need of funding. While Funding Circle has proven to be a reliable source of funding for many entrepreneurs, there are instances where businesses may not meet their obligations to investors, leaving them out of pocket. In these scenarios, Funding Circle refunds are issued to investors. This article will provide you with an in-depth understanding of Funding Circle refunds and how they work.
What is Funding Circle?
Funding Circle is a peer-to-peer lending platform that originated in the UK. Since its establishment in 2010, Funding Circle has branched out to serve businesses in the United States, Germany, and the Netherlands. The platform provides businesses with the opportunity to access funding they might not secure through traditional lenders. Simultaneously, investors gain access to large-scale investment opportunities that yield returns higher than traditional savings accounts.
How do Funding Circle refunds work?
As an investor, you take on the risk of lending money to businesses through Funding Circle. The good news is, Funding Circle has strong credit risk assessment practices. They strive to ensure that businesses that seek funding through their platform have viable business models and a high probability of repaying their loans.
However, like any business venture, there is always the risk that businesses may not meet their obligations. When borrowers fail to fulfil their loan repayment obligations, Funding Circle issues a refund to investors.
The process of issuing Funding Circle refunds begins after the borrower’s account accumulates arrears. If the borrower is unable to resolve the matter after several weeks, Funding Circle takes over the debt. At this point, the debt collection team works tirelessly to recover the funds owed to investors.
What are the reasons for refunds?
The most common reasons for refunds are loan defaults, bankruptcies or insolvencies, and anything else that causes a loss to the investor. Loan defaults occur when a borrower misses a payment or stops paying altogether. Insolvency is a situation where a company’s debt liabilities exceed its assets, rendering it unable to pay its debts.
Funding Circle regularly updates its contingency plans to provide investors with sufficient protection. The platform works with insurance companies to protect investors from potential losses, including loan defaults. In cases where there is a loss to investors, compensation is paid from either Funding Circle’s contingency fund or insurance policy.
How to access Funding Circle refunds
As an investor, you don’t need to worry about manually claiming a refund. Once Funding Circle has identified an opportunity for a refund, they will automatically initiate the process. Once the collection team has recovered funds, they then distribute the funds back to the investors who have been affected.
To ensure that this process runs smoothly, make sure that you keep your investment information updated. Make sure that the bank details you provided to claim your interest payments are current. It’s vital to have your contact details up-to-date, including your email address and phone number. Without this information, you might miss notifications about the refund and delay the process of receiving your investment back.
How much will you get back from a refund?
The amount you will be refunded from Funding Circle will depend on the number of collections made and the size of your investment. However, investors are usually refunded for the principal amount they invested, not the interest received. You may also receive compensation for any costs incurred during the debt recovery process.
In Conclusion
Funding Circle refunds are a crucial part of the platform’s protection for investors, ensuring that you have a reliable source of investment returns. While refunds aren’t common, they are a real possibility when lending money through a peer-to-peer lending platform. By understanding how refunds work and updating your investment information, you can protect your investment from losses.