Funding Circle Payment Holiday Stance…
Whilst most lenders are granting three month payment holidays, allowing cheaper overdrafts and generally helping borrowers stay afloat, Funding Circle’s stance seemed disproportionately draconian.
We’re heard from several clients that whilst Funding Circle have said borrowers could take a payment break, that would be reported to the Credit Reference Agencies. They have warned that this would have a detrimental effect to the business’s credit rating.
Having spoken to Funding Circle, we now have an explanation, though sadly not a solution!
The contract for a Funding Circle loan is between the Borrower and the Investor, while with a traditional lender this is between the Borrower and the Lender. As part of their ‘Intermediary’ role, Funding Circle are contractually obliged to report any non-payments to the Credit Reference Agencies.
Funding Circle are evidently in talks with the Credit Reference Agencies to see if there is a way around this obligation, given the obvious extenuating circumstances. They are now waiting for a response, which was promised for the end of this week.
As yet they haven’t heard anything.
If we hear anything else, we will of course let you know, but, as ever, if you hear first please let me know!