Funding Circle, the renowned small business lender, has reached a significant milestone by selling its US operations to iBusiness Funding (IBF) in a £33 million all-cash transaction. This strategic move is part of Funding Circle’s broader plan to streamline operations and enhance profitability.
Last month, Funding Circle announced a major cost-cutting initiative, which included laying off around 120 employees in the UK. This effort aims to secure annualized run rate savings of approximately £15 million. The company’s 2023 financial results revealed a £33.2 million loss, prompting a shift towards “simplification and profitability.”
Lisa Jacobs, CEO of Funding Circle, emphasized the importance of this transition: “In March, I announced that we were simplifying the business by exiting the US and focusing on profitable growth in the UK business. Alongside the UK restructuring actions announced in May, we are continuing to execute against this plan with the sale of the US business to IBF. The UK business is on track to be profitable in H2, in line with our guidance. Over the medium term, we expect net income growth of 15-20% CAGR with PBT margins of >15%.”
iBusiness Funding, a specialist business lender and a wholly owned subsidiary of Ready Capital Corporation (NYSE: RC), has processed over $6 billion in SBA loans and handles over 1,000 business loan applications daily. This acquisition aligns with IBF’s robust lending operations and expertise in the US market.
The transaction is expected to close by the end of June, marking the conclusion of Funding Circle’s ambitious yet costly expansion into the US. This follows a broader strategic retrenchment from Europe, which included a £34.3 million writedown in 2020 related to its Dutch and German divisions and an £84 million loss for 2019.
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