End-May P2P Lending Platform News Round-up

Totals lent to date (22nd May 2019)

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

LOANS TO BUSINESSES

Assetz Capital - £789,900,000

Crowd2Fund - £29,430,000
Funding Circle - £5,000,000,000
FundingSecure - £305,796,810
Money & Co - £6 million approx
Rebuildingsociety - £15,300,000
ThinCats - £448,030,000
Invest and Fund - £60 million
LendingCrowd - £58,687,696
ArchOver - £99,222,000

CapitalRise - £25 million

PERSONAL P2P LENDING

RateSetter - £3.1 billion

Lending Works - £173,191,569

…………..

LOANS TO BUSINESS

Assetz Capital

Lent to Date: £789,900,000 - £7.2 million growth (0.92%) in the past fortnight.

When this blog was compiled, there were 98 loans in the pipeline with 0 imminently due to be drawndown.

Highlighted Loan: A restaurant in the Home Counties requested £520k to refund existing borrowing. Although the loan was for 5 years, the amortisation period was 20. The LTV was high at just under 70% and the business was run by a mother & son for whom no ages were provided so there was no indication as to whether the parent was close to retirement age or if her child was married – if not they could meet someone and move elsewhere. Because of all these issues, the return of 5.5% pa seemed far 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)

Defaults: Assetz Capital have promised to refund all investors involved in a wind farm loan that went badly wrong after the borrower went bust and the value of the project's assets plummeted when the Government withdrew subsidies. I had only invested via Provision Fund protected Managed Accounts. However it does appear as though covering the £1.75 million loan will put the platform under stress as they will have to find the required funds to cover the loss externally. This is in addition to the £1 million of equity funding required for their growth plans which is being raised via the Seedrs platform.

Crowd2Fund

Lent to Date: £29.43 million.

Since the last blog, I have received 6 email notifications about new auctions launching on the site.

Highlighted Loan: Vaping retailers with a presence both online and in the high street requested £75k to open two new outlets which will bring their total portfolio to 11. The most recent financial figures indicate Annual Profits which cover the amount being borrowed and Nets Assets of £500k however it was admitted via Q&A that they expect to make a loss when the next set of accounts are published due to the costs of setting up new outlets and because they are having to write-off £176k-worth of stock due to changes in EU legislation. There is the risk of further legislation coming in to dissuade the use of e-cigs therefore no wonder the return was high at 11% pa.

Funding Circle

Lent to Date: £5 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 although these forecasts have been on a downward trend in recent months.

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 although Funding Circle's pursuit of bad debt is reportedly better than any other platform.

FundingSecure

Lent to Date: £305,796,810 at end of April – figure updated monthly.

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

Highlighted Loan: A £42k loan that was used to purchase a former water tower was renewed last week when the interest was paid and the term extended for another 12 months. It had been decided to allow the loan to continue while the structure is converted into a 3 bedroom dwelling. This seemed to contradict the exit strategy which was to see repayment take place through development refinancing. Having invested when this first came to the site, I was relieved that the renewal was fully-funded and I could bid my farewell to this.

Defaults: A couple of "Park Homes" have been sold – their selling price is yet to be announced. Meanwhile, another loan has been set to "unredeemed" (defaulted). No doubt there will be another protracted process as the platform's agents try to sell property held as security.

Money & Co

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

There was 1 auction taking place when this blog was compiled. It was a familiar borrower in the shape of a Germany Property Developer who was requesting £250k in what was their twenty-second tranche of funding since last Summer.

rebuildingsociety

Lent to Date: £15,300,000.

There were 6 auctions taking place when this blog was compiled.

Highlighted Loan: A Metal Finishing business requested £54k to purchase raw materials in bulk to obtain a discount. Retained Annual Profits were only just over half the amount being borrowed although Net Assets were £87k. A positive was that turnover has increased by a factor of 4 in the past 2 years but as the only security was provided by Personal Guarantees, that was a negative. Hoping that the business would continue expand, I invested for a return 20% pa.

ThinCats

Lent to Date: £448,030,000.

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

Invest & Fund

Lent to Date: £60 million – latest figures

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

Highlighted Loan: Property Developers from the Midlands requested their third >£151k tranche of a £740k facility to construct 5 dwellings. After initial delays, the project is due to complete in a couple of months. Assuming buyers can be found, this seemed a fairly safe offering for a return of 7.75% pa.

LendingCrowd

Lent to Date: £58,687,696 – increase of £692,360 (1.19%) in the past fortnight.

On the morning this blog was compiled, 1 auction was listed.

Highlighted Loan: An installer of luxury kitchens in Yorkshire requested >£59k to refinance existing borrowing, buy additional stock and employ a consultant. However, the financials made poor reading with very small Annual Profits and negative Net Assets. There was also no reply to the query in the Q&A about what security covered the loan. When I checked this out 2 hours before the auction was due to end the loan was 93% funded at an average return of 13.49% pa. I wonder how much of this was via the AutoBid process.

Platform News: Lending Crowd have reduced the exposure to individual loans from 5% to a maximum of 2% for customers using the AutoBid tools although this limit can be as low as 0.5% for those with over £5,000 invested. This indicates how much throughput this site enjoys however I am not tempted to invest in a high proportion of their offerings.

Lending Crowd have sourced additional institutional funding from the Scottish Investment Bank and a Dutch entrepreneurial bank so this may increase the throughput of loans on the platform even more.

ArchOver

Lent to Date: £99,222,000.

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

Highlighted Loan: Providers of office space in London requested £210k to refinance existing borrowing with ArchOver. Business is booming at the moment as companies rent rather than purchase commercial property due to the uncertainty over Brexit – but what will happen when that ends? (If it ever does!) ArchOver has First Charges over all 9 locations that the company operates and future revenues too although the former may fall in value if the outcome of Brexit reduces property prices. It does appear as though ArchOver believe the risks to this business are increasing as the returns on offer have increased to 8.5% pa compared to 8% pa on previous loans to this borrower.

Platform News: ArchOver have re-assured investors that one of their borrowers who operate in the steel industry has no dependency on British Steel on either their supply or demand side.

CapitalRise

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

In the past fortnight, I have not received notifications of any new lending opportunities on this site.

PERSONAL P2P LENDING

Ratesetter

Lent to Date: £3.1 billion – latest figure available.

Returns: Interest rates are set according to supply and demand. They currently range from 3.0% pa to 5.1% pa depending on the length of the investment. These figures are little changed from 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.

Lending Works

Lent to Date: £173,191,569 – an increase of £3,301,638 in the past fortnight – 1.94%.

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.