Aegon and Funding Circle have announced a strategic long term partnership designed to support the growth of small businesses in the UK.

Aegon will invest in loans to UK small businesses originated through Funding Circle.

The partnership will see Aegon fund £160 million of loans in the first 12 months under a framework agreement, with the intention to extend this step-by-step into a four year funding program.

In the first year the investment aims to help approximately 2,600 UK businesses to access finance, creating an estimated 6,400 new jobs.

Aegon joins a range of investors lending directly to small businesses through Funding Circle, including 65,000 individuals, local councils, the government-owned British Business Bank, the European Investment Bank and other financial institutions.

Mike de Boer, CFO of Aegon Bank NV, said: “Funding Circle allows small businesses to access much needed funding. The strategic partnership we have signed with Funding Circle is another important step in the strategy of Aegon to cooperate with Fintech partners in the direct lending landscape. This partnership gives Aegon access to attractive small business loans over the next four years, which helps to further diversify our investment portfolio. High savings inflow of our successful Fintech Knab banking operation is used to invest in the Funding Circle loans.

“This agreement follows an extensive due diligence on the loan origination, compliance and risk-returns of the Funding Circle loans. Funding Circle has shown that their robust process, technology and financial innovation capabilities have a positive impact on the UK economy and small businesses in particular. Funding Circle provides quick and transparent funding to small businesses.”

Samir Desai, CEO and co-founder of Funding Circle, added: “This partnership is validation of the attractive risk-adjusted returns that are being generated to investors by lending through Funding Circle. Now investors of all shapes and sizes can benefit from the stability of the asset class whilst also providing much-needed job creation and economic growth. We hope our joint programme with Aegon will develop to deliver increased lending to UK small businesses over the coming years.”