End-January P2P Lending Platform News Round-up

Totals lent to date (30th January 2019)

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

LOANS TO BUSINESSES

Assetz Capital - £702,900,000

Crowd2Fund - £26,060,000
Funding Circle - £4,600,000,000
FundingSecure - £296,241,109
Money & Co - £6 million approx
Rebuildingsociety - £13,200,000
ThinCats - £385,679,000
Invest and Fund - £3 million plus
LendingCrowd - £50,371,996
ArchOver - £90,440,000

PERSONAL P2P LENDING

RateSetter - £3,039,750,319

Lending Works - £150,948,039

…………..

LOANS TO BUSINESS

Assetz Capital

Lent to Date: £702,900,000 - £3.4 million growth (0.49%) in the past fortnight.

When this blog was compiled, there were 84 loans in the pipeline with 5 imminently due to be drawndown.

Highlighted Loan: The owner of a wholesale fashion business required over £1 million to pay off their debts. Security was provided by a First Charge over their business premises in London which provided a LTV of 48%. The term was 36 months although the amortising period was 20 years with an expected exit from the Assetz Capital loan via refinancing. The thing that concerned me was that the projected profits in 2 years were expected to be 3 times their current value thanks to winning new business. The retail fashion business is undergoing tremendous change due to the transition from high street to online selling therefore I feel such an increase is very ambitious. Braver people than me weren't offered all that much for taking a risk as the return was 5.5% pa.

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 (4.1% pa)

30 Day Access Account (5.1% pa)

Property Secured Investment Account (5.5% pa)

Great British Business Account version 2 (6.25% pa)

Platform News: Assetz Capital have launched their latest Cashback scheme. They will be paying out 1% on funds distributed to borrowers up to 14th February unless the capping point of £20.19 million in newly invested funds is reached before that time. A further 0.25% is offered if these funds come from an ISA account.

To earn the Cashback, these investments have to remain in place until 12th December with the payment being made a week later.

Crowd2Fund

Lent to Date: £26.06 million – latest available figure.

In since the last blog, I received 4 email notifications about new auctions launched on the site.

Highlighted Loan: A recruitment business specialising in finding employees for African divisions of Blue Chip companies requested £133k to fund a marketing campaign. They were a returning C2F customer and both their Annual Profits and Net Assets both exceeded £200k. The loan was Director Guaranteed but, as is usual for this site, there was no indication of their Net Worth. Investors were offered a return of 10.5% pa.

Platform News: Crowd2Fund have requested a £2 million round of equity funding from their investors as they look to further expand. Revenue growth was 317% during 2018 although, with the business currently rapidly growing, their losses are in the region of £3/4 million per year. The platform has applied to the HMRC to allow this capital injection to be eligible for tax relief under the Enterprise Investment Scheme. Previous rounds of funding were not covered by this as the business was regarded as a Financial Services company however Crowd2Fund believe they operate in the Technology sphere as they only provide a platform and do not loan to SMEs themselves. As of yesterday, a quarter of their target had been raised.

Funding Circle

Lent to Date: £4.6 million

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 offer returns in the ranges of 5% - 5.5% pa and 6% - 7% pa.

As an active rather than passive investor, I am no longer involved with Funding Circle however posters on forums who remain with this site express concerns over the apparent lack of due diligence that is undertaken. Furthermore, in their latest update to Stock Market investors, Funding Circle have reported that it expected between 3 and 3.8 per cent of loans issued last year to default, higher than an estimate of between 2.5 percent and 3.5 per cent made three months ago.

On a positive note, the platform has been getting praise on forums for their dogged pursuit of recoveries – they have been getting success after 5 years in some cases. Whether they will have the resources to chase the increasing defaults that are currently occurring remains a concern.

FundingSecure

Lent to Date: £296,241,109 at end of December – latest figures.

This site remains somewhat in a state of flux with a reduction in new loans coming in, those that do take some time to fill and there is no sign of the new products that were due to be launched before the end of January.

When this blog was compiled there were 4 auctions taking place.

Highlighted Loan: A borrower returned to FundingSecure to raise £422k to purchase land and buildings in Devon with repayment expected from sales of plots in 12 months when planning permission is in place. As the FS model requires a maximum term of 6 months, interest would be due at that point. There was no indication of how that interim payment would be funded and, as agreement for planning often takes longer than anticipated, I wasn't tempted by this loan even though the LTV was 64% with a return of 13% pa.

Defaults: I have had more bad loans as it turns out that the value of the security provided by a Property Developer in the North West is now much less than the capital lent 2 years ago therefore refinancing cannot occur and a default has taken place.

There has been some good news as one property loan was been repaid more than 2 weeks before its sixth month term was due to end. Unfortunately, this has become the exception rather than the norm.

Money & Co

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

When this blog was compiled there was 1 auction taking place which concerned a £250k loan to a German Property Developer. This was the seventeenth tranche of funding to this borrower who seems to have been the site's only customer since last Summer. Investors were offered a return of 8% pa even though no financial information was provided.

rebuildingsociety

Lent to Date: £13,200,000.

There were 2 auctions taking place when this blog was compiled.

Highlighted Loan: Electronic and white goods wholesalers required £113.4k to make bulk stock purchases and to pay off an existing Funding Circle loan. This was one of those scarey ReBS loans. The borrower has a CCJ against them although this has not been enforced since it was issued in 2014. Their profits are less than half the amount being borrowed. It is claimed that the funds will purchase discounted stock which will double profits – but only if it can be sold. There is only an Equitable Charge against the property offered as security which means additional borrowing could be raised against the security without ReBS being notified. ReBS would not be able to sell the property in the event of a default without applying to the courts. It is unlikely that anyone would bid on this loan at less than the maximum bid rate of 20% pa, I wouldn't bid at any price!

ThinCats

Lent to Date: £385,679,000.

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

Since the last blog was published, ThinCats launched Diversified Loan Portfolio 4.

Invest & Fund

Lent to Date: Over £3 million

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

Highlighted Loan: Property Developers in the East Midlands returned for their fifth >£37k tranche of funding for a £557k facility as they continue to convert a former shoe factory into 10 apartments. The works have now been completed on site with only minor snagging items to be finalised while sales are progressing on five of the flats. Investors were offered a return of 8% pa.

LendingCrowd

Lent to Date: £50,371,996 – increase of £864,280 (1.75%) in the past fortnight.

On the evening this blog was compiled, 1 auction was added to the site.

Highlighted Loan: Pig farmers from Scotland requested £43k to enable them to replace temporary buildings with permanent ones. Their most recent profits were more than 3 times higher than the amount being borrowed but these figures were 14 months old, no where near recent enough for me to commit funds. Those who did invest would earn an average return of 7.4% pa.

ArchOver

Lent to Date: £90,440,000.

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

Highlighted Loan: Subsea engineers who specialise in under-water grouting returned to ArchOver to raise £300k to put the infrastructure in place to support the contracts they have won for 2019. This will add to the £1.13 million already raised through ArchOver. As the loan was secured against future revenue and insured by Coface, investors were offered a return of 6.5% pa.

CapitalRise

Another of this platform's offerings was listed recently. This was the first £4.9 million tranche of a £6.4 million facility to refinance development funding for a luxury house in the heart of London. Security was provided via a second charge over the property which has a LTGDV 59%. The term is for 12 months at the end of which investors will earn a return of 10%. 

PERSONAL P2P LENDING

Ratesetter

Lent to Date: £3,039,750,319 – an increase of £33,969,665 over the past 2 weeks – 1.13% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 3.1% pa to 5.9% pa depending on the length of the investment. These figures are slightly lower than a fortnight ago.

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

Platform News: Ratesetter have announced that they have over 75,000 investors which puts them just 4,000 behind the leaders in terms of retail customers, Funding Circle. This is a site I have begun to return to now that their highest rate is approaching a Provision Fund protected 6% pa and the company has (hopefully) improved its internal procedures following the wholesale lending scandal of 2017.

Lending Works

Lent to Date: £150,948,039 – an increase of £2,745,428 in the past fortnight – 1.85% growth.

Returns: 5.0% pa and 6.5% pa via an IFISA or standard account for 3 and 5 year investments respectively.

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.