Funding Circle secures £700 million agreement with Waterfall to expand short term SME lending capacity
.png)
Funding Circle has strengthened its funding partnership with Waterfall Asset Management through a reported £700 million agreement to support UK short term small business loans.
The deal adds fresh institutional capital into the non bank SME lending market at a time when many businesses continue to manage higher borrowing costs and tighter bank appetite in 2026.
Quick summary
What happened: Funding Circle expanded its relationship with Waterfall Asset Management via a £700 million funding agreement focused on short tenor loans.
Who is involved: Funding Circle, the UK based SME lender, and US asset manager Waterfall Asset Management.
Funding structure: Institutional capital provided to purchase or fund newly originated short term SME loans, likely via a forward flow or securitisation style arrangement.
Why it matters for SMEs: Additional committed capital increases Funding Circle’s ability to originate short duration loans, supporting working capital and cash flow finance demand.
What happened
Funding Circle announced a strengthened partnership with Waterfall Asset Management under a £700 million agreement to fund short term UK SME loans.
In practical terms, Waterfall provides institutional capital which Funding Circle deploys into eligible newly originated loans. Those loans are either purchased outright or funded under a forward flow arrangement, with repayments flowing back to the institutional investor.
The disclosed headline figure is £700 million. Specific pricing, advance rates, duration of the agreement and eligibility criteria were not publicly disclosed.
Source: Official announcement
SME impact score
Impact rating: 4 out of 5
Reasoning: The £700 million size represents significant committed capital from a recognised institutional investor. While detailed structural terms were not disclosed, the scale suggests meaningful support for Funding Circle’s short term origination capacity in the UK market.
Why this matters for UK SMEs
Short term loans are commonly used for working capital, stock purchases and bridging cash flow gaps. A dedicated institutional funding line of this size may help ensure continued availability of fast access finance.
If competition among alternative lenders remains strong, additional capital could also support stable pricing or faster approval processes, although borrower rates will still be influenced by base rate conditions and credit risk.
Market signal analysis
Liquidity signal: Positive, as fresh institutional capital is being allocated into UK SME credit assets.
Institutional confidence: High, given the scale of the commitment and the repeat nature of the partnership.
Competition signal: Increasing, as well capitalised non bank lenders can maintain or grow market share.
This suggests that alternative SME lending continues to attract global asset managers seeking yield, even as traditional bank lending appetite remains selective. According to the Bank of England, bank lending growth to small businesses has been uneven, which may create space for institutional funded platforms.
Borrowing conditions outlook
Over the next three to six months, non bank lenders with committed funding lines are likely to remain active in the short term credit segment. Pricing will continue to reflect funding costs and credit performance, but capacity appears supported.
Who may benefit most
Established SMEs seeking loans with shorter repayment profiles, particularly those managing seasonal working capital needs or rapid inventory cycles, may benefit from sustained product availability.
Businesses that value speed of decision and fixed term clarity may also find this segment of the market competitive.
Funding Agent market note
Institutional forward flow arrangements remain a core engine of UK alternative lending. The size of this agreement reinforces that capital markets funding continues to underpin SME credit availability outside the high street banks.
Compare your options
SMEs considering short term finance should compare total cost, repayment structure and flexibility across bank loans, marketplace lenders and asset backed facilities before committing.
2026 SME lending capital tracker
This agreement adds to the steady flow of institutional money into UK SME credit platforms in 2026. Asset managers, private credit funds and securitisation investors continue to view short duration SME assets as an investable yield segment, supporting ongoing lending capacity in the non bank market.
