Funding Circle breaches securitization limit as it switches from servicer to sponsor

Funding Circle
By Owen Sanderson
07 Nov 2019

Funding Circle has breached the terms of its securitization SBOLT 2018–1 — a book of loans originated on the platform and was bought by Pollen Street Capital’s P2P Global fund. The breach was driven by a shift in the company’s business model from a pure tech platform to a non-bank lender using its own capital. Funding Circle has asked investors to waive the breach.

SBOLT 2018–1 contained a “liquidity covenant”, specifying that Funding Circle could be replaced as a servicer if it breached “burn rate” limits.

This required Funding Circle to limit the amount of its cash outflows in a specified time period. But the limit was set before Funding Circle floated and ...

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