Lending platform Funding Circle’s small business customers have turned to the bank in higher numbers than before in the first few months of the year thanks in part to Government support schemes.
The company said that it had “higher origination volumes in the UK” and now expects to beat forecasts by quite some distance.
In an update less than two months ago the company expected adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) to be in profit in the first half of this year.
However on Wednesday the business showed it now expected to do better than just reaching a profit.
Adjusted Ebitda, Funding Circle said, will be “no lower” than £40 million.
“Following a good start to the year, trading has been stronger than anticipated and we now expect to deliver total income no lower than £120 million and Aebitda no lower than £40 million profit in H1 2021, well ahead of previous expectations,” said chief executive Samir Desai.
Shares had soared more than 13% around midday after the news.
The business said that, alongside higher volumes in the UK, the extension of a business support package in the US had also boosted performance.
“Our machine learning and technology platform is transforming the small business borrowing experience and as a result of Covid we are seeing an acceleration in the adoption of online borrowing, which has opened up an enlarged opportunity for Funding Circle.
“Whilst we remain mindful of the uncertain economic environment, we are well-placed to continue helping small businesses in 2021.”
James Hamilton, an analyst at Numis said that Funding Circle had benefited both from the US programme and the UK Government’s Covid loan scheme.
Numis had previously predicted revenue for the first half to reach £104 million.