SME lending marketplace Funding Circle has gained backing for the securitisation of loans originated from its platform.

The investment from the European Investment Fund (EIF) and German development bank KfW marks the “first of its kind” across Europe, facilitating greater SME lending and reducing dependency on bank loans.

George Passaris, ‎Head of Securitisation at the European Investment Fund said: “Small businesses across the UK will benefit from the European Investment Fund’s significant new support for Funding Circle, one of the UK’s largest peer-to-peer platforms.

“This new engagement demonstrates the European Investment Fund’s firm commitment to help companies across Europe and across the UK to expand, create jobs and explore new opportunities.”

The EIF is part of the European Investment Bank Group and KfW, a government-backed German Promotional Bank.

George added: “The EIF is pleased to work alongside KfW on the first securitisation transaction in Europe to support alternative financing of SMEs that will help Funding Circle provide more loans to small and medium-sized businesses.”

Sachin Patel, Global Co-Head of Capital Markets at Funding Circle said: “This landmark transaction is the first of its kind.

“The investment by KfW, with the support of the EIF, marks the next step in our journey to open up a traditional fixed income asset class to new types of investors for the first time.

“We’re committed to building the infrastructure where any investor, big or small, can lend to small businesses across the world.”

Since launching in 2010, Funding Circle has facilitated the lending of approximately £1.5bn to 17,000 businesses.

Its investors include private lenders, financial institutions and the UK government.