End-July P2P Lending Platform News Round-up

Totals lent to date (17th July 2019)

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

LOANS TO BUSINESSES

Assetz Capital - £823,800,000

Crowd2Fund - £31,480,000
Funding Circle - £5.4 billion
FundingSecure - £309,544,744
Money & Co - £6 million approx
Rebuildingsociety - £15,600,000
ThinCats - £491,727,000
Invest and Fund - £60 million
LendingCrowd - £61,825,216
ArchOver - £104,339,000

CapitalRise - £25 million

PERSONAL P2P LENDING

RateSetter - £3.2 billion

Lending Works - £184,399,804

…………..

LOANS TO BUSINESS

Assetz Capital

Lent to Date: £823,800,000 - £4,200,000 (0.51%) in the past fortnight.

When this blog was compiled, there were 105 loans in the pipeline with 1 imminently due to be drawndown.

Highlighted Loan: A father and son in Scotland requested £390k to refinance an existing £240k Bridging Loan with Assetz Capital and to buy out the share in a warehousing business of one of the borrowers. I am never a fan of when money is essentially loaned for personal use rather than being invested in the company, as in this instance. The warehousing complex which has 2 other tenants is offered as security and provides a LTV of 48.75% - there is also a Corporate Guarantee. The borrowers recently went through an insolvency triggered by the overheads of operating trucks – haulage is now contracted out to third parties. After 5 years of capital and interest payments it is hoped to refinance the loan. Given all the negatives, I felt a return of 6% pa was too low.

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)

90 Day Access Account (5.75% pa)

Property Secured Investment Account (5.5% pa)

Great British Business Account version 2 (6.25% pa)

Platform News: Assetz Capital's third round of equity funding via the Seedrs platform closed on 5th July having raised £1.9 million, smashing their target of £1 million.

Crowd2Fund

Lent to Date: £31.48 million.

Since the last blog, I have received 3 email notifications about new auctions launching on the site.

Highlighted Loan: Commercial Artists who work with the medium of glass requested £150k to construct studios which will "significantly shorten" their supply chain and increase the range of products they are able to offer. The balance sheet looked good with Annual Profits and Net Assets both exceeding the amount being borrowed. This seemed a promising investment especially as the return was 11.5% pa.  

Funding Circle

Lent to Date: £5.4 billion

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. At the moment, these options are projected to offer returns in the ranges of 4.3% - 4.7% pa and 4.5% - 6.5% 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 have expressed concerns over the apparent lack of due diligence that is undertaken however in its latest update to shareholders, Funding Circle advise that they are lowering their growth forecast due to them tightening their criteria for accepting higher risk loans – they also blame worsening economic conditions for them receiving fewer requests for borrowing from SMEs. The improved credit checking is good news for investors as they should experience fewer defaults while being bad news for shareholders as FC make profit from each loan they list.

FundingSecure

Lent to Date: £309,544,744 at end of June – monthly increase of £1,481,750 (0.48%).

When this blog was compiled there were 5 auctions taking place.

Highlighted Loan: The second £100k tranche of a £475k facility to expand a holiday park on the Isle of Wight was listed recently. The borrower's previous loan with FundingSecure to develop another part of the site was refinanced by a bank and the expectation is that the same will happen in this instance. When the full facility has been drawndown the LTV will only be 31.2% and this will reduce further as the development of the park advances. It was therefore no surprise that the rate of return was 9% pa, very low for this usually high-risk platform.

Defaults: Not much news in the past fortnight... another "promising" update about a loan secured against a powerboat but those seem to appear every few months without the outstanding amount being repaid.

Platform News: FundingSecure report that they have taken on even more staff to clear the backlog of late loans. They certainly need it although as they are going to list fewer "safer" loans, which will provide less revenue from fees, I do wonder if their business model is sustainable.

The site has also changed their terms and conditions so that loans only begin to accrue interest after the closing deadline rather than as soon as investors pledge funds. Although fairer to borrowers, this reverses a policy introduced by the previous owners of the platform when they attempted to ensure loans were fully funded quicker by paying interest immediately.

Money & Co

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

There was 1 auction taking place when this blog was compiled. This was a familiar borrower in the shape of a Germany Property Developer who, after more than 6 weeks, was only 29% of the way towards their £250k target for their twenty-third tranche of funding since last Summer.

rebuildingsociety

Lent to Date: £15,600,000.

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

ThinCats

Lent to Date: £491,727,000.

There were 2 auctions taking place when this blog was compiled but these were parts A and B of the same loan.

Highlighted Loan: Night Club owners in Scotland requested £1 million to refinance an existing ThinCats loan which they used to execute a management buy-out and also to repay borrowing against another premises within their portfolio which houses a bar and restaurant. The current LTV is 57% but, under the covenant that will be put in place, this can increase to as much as 65% which seems rather high for a return of 6% pa. The most recent retained profits were very low at £35k and Net Assets were less than half the amount being borrowed. Only just over half the amount being borrowed would have capital and interest repaid with the remainder having interest-only payments. The two parts of the loan had the same rate of return.

Invest & Fund

Lent to Date: £60 million – latest figures

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

Highlighted Loan: Property Developers in the Midlands requested their fourth >£90k tranche of a £740k facility that was being used to construct five houses. The build is a month away from completion and investors were offered a return of 7.75% pa with repayment planned to take place when the properties are sold.

LendingCrowd

Lent to Date: £61,825,216 – increase of £695,600 (1.14%) in the past fortnight.

On the evening this blog was compiled, 1 auction was taking place.

Highlighted Loan: Marketing Consultants requested £32.4k to fund their expansion plans – lease new premises, hire more staff, increasing marketing, etc. I wondered whether the contracts with clients were already in place to support the additional staff or whether they were hoping to win more business through marketing, the latter scenario would make the loan far more risky as the marketing campaign may not be successful. Furthermore, although Annual Profits were more than double the amount being borrowed, Net Assets were minus to the tune of £50k. Despite all these negatives, the loan was 19% over funded with investors bidding to earn average return of just under 10% pa.

ArchOver

Lent to Date: £104,339,000.

There were 4 auctions taking place when this blog was compiled.

Highlighted Loan: A market leading designer, supplier and installer of sash and casement windows requested £100k to refinance £60k of existing borrowing with ArchOver and add a further £40k of expansion capital. This brought the total lent via the platform to £930k. These loans are secured against future revenue and insured by Tokio Marine HCC therefore it was a surprise to see that the return was as high as 8.5% pa.

Still Waiting: The loan secured against a claim to the HMRC for an R&D rebate which had been delayed by 2 months due to a delay in submitting the paperwork has been put back a further 8 weeks due to current problems at the Government's offices which mean the claims are taking longer than usual to process, therefore, the loan continues to accrue interest at the penalty rate of 13% pa. Hopefully, the borrower will have the funds to cover this.

CapitalRise

Lent to Date: £25 million approx. (latest available figure)

CapitalRise listed 1 loan in the past fortnight.

Highlighted Loan: A borrower who is renovating a large house in Central London that they recently purchased requested their first £940k tranche of a £2.1 million facility. No current LTV was provided but it was expected to be just under 54% at the completion of the project however this was only against a Second Charge. On a positive note, the plan is to refinance via conventional lending at the end of the 12 – 14 month term and CapitalRise have seen indicative mortgage terms from a selection of UK banks to that effect. A return of 9.5% pa was offered.

PERSONAL P2P LENDING

Ratesetter

Lent to Date: £3.2 billion – latest figure available.

Returns: Interest rates are set according to supply and demand. They currently range from 3.6% pa to 5.8% pa depending on the length of the investment. The lower figure is little changed over the past fortnight but the higher one has increased by 0.5%.

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: £184,399,804 – an increase of £2,828,434 (1.56%) in the past fortnight.

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