Karmarama beat two other creative agencies in the final stages of the pitch, which was managed by Squadron Venture Media. Karmarama will be charged with creating a national TV campaign for the company.
The appointment marks the first time that Funding Circle has appointed a creative agency to handle its advertising.
Ben Bilboul, the group chief executive of Karmarama, said: "Funding Circle are a hugely inspiring and innovative team with a fantastic purpose helping businesses who want to grow, so we’re absolutely thrilled to be chosen as their partners."
Funding Circle was founded in 2010 and allows users to lend money to small and medium-sized businesses through crowdfunding. So far this year, more than £180 million has been lent to businesses through Funding Circle.