April's P2P Lending Platform News Round-up

Totals lent to date (18th April 2018)

*All data correct at the time this blog was compiled.

LOANS TO BUSINESSES

• Assetz Capital - £488,600,000
• Crowd2Fund - £17,120,000
• Funding Circle - £3,400,000,000
• FundingKnight - £31,485,000
• FundingSecure - £235,735,508
• Money & Co - £6 million approx
• Rebuildingsociety - £12,300,000
• ThinCats - £279,724,000
• Invest and Fund - £3 million plus
• LendingCrowd - £30,253,516
• ArchOver - £62,464,000

PERSONAL P2P LENDING

• Zopa - £3,210,000,000
• RateSetter - £2,432,917,575
• Lending Works - £102,003,859

LOANS TO BUSINESS

Assetz Capital

Lent to Date: £488,600,000 - £21.8 million growth (4.67%) in the past fortnight.

When this blog was compiled there were 79 loans in the pipeline with 5 of these imminently due to be drawndown.

Highlighted Loan: Borrower in Northern Ireland was looking to raise >£577k to refinance a bridging loan. Security was provided by a portfolio of investment properties, two of which were up for sale and the plan is that the income from these transactions will pay off the loan well before the 12 month term ends. If these sales fail to materialise, the rental income easily covers repayments and would allow BTL finance to put in place if required at the end of this loan. Investors were offered a return of 7% pa. It was difficult to see how this loan could go bad, especially with an LTV of 18%. As I have had a modest amount waiting to be invested on Assetz Capital for some time, I decided to breach my usual £80 maximum bid and used it all. I then set a reminder to sell after 6 months if the properties haven't been sold by then. This is the first time I have "bought to sell" on this platform.

Managed Accounts: The following accounts automatically distribute funds on behalf of investors across different sections of the platform's portfolio and are covered by a discretionary Provision Fund (the target rates of return are in brackets):

Quick Access Account (3.75% pa)

30 Day Access Account (4.25% pa)

Property Secured Investment Account (5.5% pa)

Great British Business Account version 2 (6.25% pa)

Green Energy Income Account (7% pa) – New capital coming into this account have been paused due to the lack of available loans meeting the investment criteria.

Crowd2Fund

Lent to Date: £17.12 million – Crowd2Fund recently added a statistics page to their website.

Over the past 2 weeks, 9 auctions were listed on the site.

Highlighted Loan: A delivery company in Scotland required £40k to provide working capital for a newly won contract with an international furniture retailer however when asked for more details about the contract via the Q&A the borrower was evasive which was disappointing as the financials looked good. Those investors willing to take a chance were offered a return of 12% pa.

Funding Circle

Lent to Date: £3,400,000,000

Funding Circle are unique amongst the major P2P platforms that lend to SMEs in not allowing investors to choose who they lend to. Instead two managed accounts are offered which distribute funds across differing risk profiles of loans within their portfolio. These options are projected to return 4.8% pa and 7.2% pa.

As an active rather than passive investor, I am no longer involved with this site.

Platform News: Funding Circle have opened up their IFISA to new customers. The tax-free wrapper had been available to existing investors since December.

Further to their operations in the UK and US, Funding Circle are now offering finance to borrowers in The Netherlands.

Meanwhile, having removed the ability for investors to see loans as they came on to the site, Funding Circle's loanbook, which used to be refreshed daily, has not been updated with information relating to new loans since the end of March. The platform is getting less and less open and transparent.

FundingKnight

Lent to Date: £31,485,000 – no change.

There were 0 auctions ongoing when this blog was compiled – only 1 loan appeared on this site during 2017. The platform is planning a relaunch at some point in 2018 but there have been no signs of life so far.

FundingSecure

Lent to Date: £235,735,508 at end of March – total updated monthly.

Today 5 auctions were launched on the site.

In the run-up to the end of the Financial Year, I reported that both new auctions and loan parts on the Secondary Market had been slow to find investors. Since 6th April however, there has been a distinct increase in funds flowing into the platform with new borrowers reaching their capital requirements much sooner while the loan parts I was waiting to sell on the Secondary Market for a few weeks have now all sold. It seems as though people had maxed out on their ISA allowance and were waiting for the new Tax Year to begin.

Highlighted Loan: A borrower returned to FundingSecure to raise £30k with security provided by a sailing yacht. The individual had taken out 3 previous loans against the vessel and redeemed them all. Crucially, the LTV was around 40% - and I checked the listings of online boat dealers to confirm the valuation – so I would have been happy to invest more than the permitted £150 for a return of 13% pa.

Defaults: A couple of loans secured against properties have been defaulted in the past fortnight although I didn't have large sums invested in either nonetheless the number of loans defaulting on this site seems to be increasing which is a concern. Furthermore, a riding school I was exposed to was sold for a price that was 28% below the loan amount resulting in a loss of capital for those who had invested.

Money & Co

Lent to Date: £6 million approx. (latest available figure)

When this blog was compiled there were 2 auctions taking place.

Highlighted Loan: Money & Co's throughput seems to be based on a small number of borrowers who are repeatedly returning to the site to raise capital. An example of this is the company that speedily buys houses (below market value) who returned for their seventh tranche of borrowing which was for £200k. My concern with this borrower remains in that they buy property at 80% of market value which is much higher than the 70% LTV maximum that most sites employ.

rebuildingsociety

Lent to Date: £12,300,000 – most recent figure.

There were 3 auctions taking place when this blog was compiled.

Highlighted Loan: ReBS seem to be moving into the construction industry having recently listed a loan to another Property Developer who required >£33k to act as working capital to enable them to purchase plots of land at short notice. A second charge over a property provided an LTV of 41% but the borrower has also been lending from family members and I expect they will require further capital injections in future therefore I decided to give this one a miss. A maximum return of 12% pa was available, one of the lowest on this site.

ThinCats

Lent to Date: £279,724,000 – no change.

There were 2 auctions taking place when this blog was compiled although both were to the same borrower.

Highlighted Loan: A contemporary music college required £1 million to add to the £2.4 million that they raised last year as they seek to refinance the funding used to acquire a new campus in Birmingham. The business seems to be doing well with EBITDA exceeding forecasts by 88% (may be the forecasts were low!) and investors were offered a return of 8% pa. There were multiple aspects to the security on offer including Corporate and Personal Guarantees plus a second charge over a property.

Invest & Fund

Lent to Date: Over £3 million

There were 0 auctions taking place when this blog was compiled.

Highlighted Loan: The constructor of a small retirement complex requested >£2 million to refinance existing borrowing in the shape of a bridge-to-sale loan after development fell a little behind schedule. Completion was due to occur at the start of December and the Contractor Site Manager was terminated shortly after that deadline was missed. There were quite high levels of security which included a First Charge over the development, All Assets debenture and Personal Guarantees. The LTV was 60%. As a result of this a return of 7.25% pa was offered instead of the usual circa 9% for I&F.

LendingCrowd

Lent to Date: £30,253,516 – fortnightly increase of £805,920 – 2.74% growth.

3 auctions took place on the day this blog was compiled.

Highlighted Loan: Building Engineers were looking to raise £109k to provide working capital for a newly won contract. The financials more than covered the loan and I was happy to invest for a return of 12% pa.

Platform News: LendingCrowd are offering £400 in cashback to those who lend £20k or more before 30th April. In my view, the throughput is too low on this site to adequately diversify such a large sum. I suppose buying with a view to selling in a few months is an option but I have no experience of the LendingCrowd Secondary Market, also I've had a few loans go bad very early on this site.

For less well-heeled investors, LendingCrowd's current CashBack promotion offers £100 to those who invest £5,000 to £9,999 and £200 when £10,000 to £19,999 is lent.

ArchOver

Lent to Date: £62,464,000 – no change.

There was 1 auction taking place when this blog was compiled.

Highlighted Loan: Engineers in the oil and gas industry renewed one of their ArchOver loans (for £230k out of the £4.1 million total borrowed via the platform) due to their need for Working Capital because a dispute with one of their clients which was expected to be resolved in November may not be settled until July. This seemed to be one of the riskiest loans the platform has listed. There is no explanation of what happens if the dispute is not settled in the company's favour and the only security is provided by the business' assets. Furthermore, this tranche ranks behind several other phases of ArchOver funding. Reflecting the risk, investors were offered a return of 10.5% pa but that was nowhere high enough to tempt me.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £3.21 billion – an increase of £50 million over the past 2 weeks – 1.58% growth.

A busy fortnight for Zopa sees them close in on FundingCircle in the race to be the P2P that has lent the most.

Returns: Zopa's 2 accounts offer returns of 4.0% and 4.6% pa with the latter allocating some funds to riskier loans that offer higher returns.

Zopa distribute investor's money mostly to unsecured consumer loans.

Ratesetter

Lent to Date: £2,432,917,575 – an increase of £24,342,323 over the past 2 weeks – 1.01% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 2.8% pa to 5.0% pa depending on the length of the investment. The former is at the same level it was at 2 weeks ago while the latter has increased by 0.2%.

Capital is covered by a Provision Fund. Ratesetter proudly boast that no investor has lost a penny since they launched in 2010.

Lending Works

Lent to Date: £102,003,859 – an increase of £2,707,805 over the past 2 weeks – 2.73% growth.

Lending Works have passed the £100 million lent mark.

Returns: 4.5% pa and 6.0% pa via an IFISA or standard account for 3 and 5 year investments respectively. These have not changed over the past month.

As well as a Provision Fund to cover investor's risks, this site also insures borrowers against redundancy, fraud, illness and accidents making this a very fair site for all concerned.

****Disclaimer: This blog contains the views of the Secret Investor. Your capital is at risk when lending via all P2P Platforms. You're recommended to speak to a qualified Independent Financial Advisor.