Funding Circle sells US business for £33m amid cost-cutting drive

Small business lender Funding Circle has sold its loss-making US arm for £33 million as part of an attempt to simplify the company and stem mounting losses.

Funding Circle said it will offload the unit to Florida-based iBusiness Funding, which lends to banks and small finance businesses, and is part of US financial giant Ready Capital Corporation.

Once viewed as a UK fintech darling, Funding Circle has suffered a torrid last few years, with losses mounting from nearly £13 million in 2022 to £33 million last year.

Its shares have plummeted 78% since it listed on the London Stock Exchange in 2018, valued at 94p on Tuesday morning versus a 440p listing price.

It also said it would cut 120 jobs last month as part of a cost-cutting drive. Chief financial officer Oliver White stepped down at the same time.

While bosses have not yet decided what to do with the proceeds of the deal, chief executive Lisa Jacobs said the UK business is “on track to be profitable” in the second half of the year.

She said: “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.”

Shares rose 10% in morning trading.