Small business lender Funding Circle has reached an agreement with iBusiness Funding for the sale of its US operations in a £33 million all-cash deal.
Funding Circle last month announced plans to cut around 120 jobs in the UK in a bid to slash costs and secure annualised run rate savings of around £15 million.
After posting a £33.2 million loss for 2023, the company in March signalled its intention to ensure "simplification and profitability".
Lisa Jacobs, Funding Circle CEO, says: "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%."
Specialist business lender IBF has processed over $6 billion in SBA loans to date, and the team processes over 1,000 business loan applications through its platform daily. It is a wholly owned subsidiary of Ready Capital Corporation (NYSE: RC).
The transaction is expected to close by the end of June.
The deal signals the end of an expensive and expansive business strategy amid a tightening of lending crieria against higher risk loans. The firm has already substantially retreated from Europe after booking a £34.3m writedown in 2020 related to its Dutch and German divisions and posting an £84 million loss for 2019.