In a strategic shift that was anticipated, Funding Circle US announced in a press release today that it has agreed to sell its entire United States small business lending operation.
The buyer?
They happen to be a company that was started in the same office I was in when working for Knight Capital Funding from 2014-2016. That company is iBusiness Funding, now a division of Ready Capital Corporation (NYSE: RC). The owner of Knight started iBusiness Funding, LLC in 2015 and operated from that same Miami Beach office until they moved to Fort Lauderdale. After that, iBusiness Funding and Knight Capital were acquired by Ready Capital in 2019.
Just a few days ago, iBusiness Funding put out a press release announcing their new signage on a building in downtown Fort Lauderdale that they say is the largest in the city, plus some other announcements.
The transaction, valued at £33 million in cash, is expected to close by the end of June, subject to standard closing conditions.
This news comes just months after Funding Circle CEO Lisa Jacobs declared the company's intention to streamline operations by exiting the US market and focusing on achieving profitability within its UK business. The sale of the US division aligns with this plan, allowing Funding Circle to fully dedicate resources to the UK market, where they anticipate reaching profitability in the second half of 2024.
For iBusiness Funding, the acquisition presents a significant growth opportunity. By absorbing Funding Circle's US business, including its loan portfolios, iBusiness gains a wider customer base and strengthens its position as a leading provider of SBA small business loans, particularly for loans under $500,000. Its flagship product, LenderAI, features end-to-end SBA lending functionality from origination through servicing.
Both companies highlight a shared commitment to supporting underserved borrowers, with iBusiness CEO Justin Levy expressing his enthusiasm for welcoming the "exceptional FC USA team" to the iBusiness family.
It remains to be seen how Funding Circle's UK operations will perform post-divestiture, but the company projects strong growth with a net income increase of 15-20% CAGR and profitability margins exceeding 15% over the medium term.
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