End-November P2P Lending Platform News Round-up

LOANS TO BUSINESSES

Assetz Capital - £667,200,000

Crowd2Fund - £25,600,000
Funding Circle - £4,200,000,000
FundingSecure - £288,360,909
Money & Co - £6 million approx
Rebuildingsociety - £13,000,000
ThinCats - £293,779,000
Invest and Fund - £3 million plus
LendingCrowd - £47,355,576
ArchOver - £83,293,750

PERSONAL P2P LENDING

Zopa - £3,810,000,000
RateSetter - £2,898,655,432

Lending Works - £140,798,232

LOANS TO BUSINESS

Assetz Capital

Lent to Date: £667,200,000 - £8.4 million growth (1.28%) in the past fortnight.

When this blog was compiled, there were 92 loans in the pipeline with 1 imminently due to be drawndown.

Highlighted Loan: Property Developers from the North West requested the initial <£400k tranche of a <£777k facility to purchase land and construct 4 new build homes. Repayment of the loan and the retained interest is expected to be in 12 months after the properties have been sold. The LTV on completion will be 64%. This is based on the 3 bedroom properties that have been agreed with the local planning department however the borrower aims to add further value by putting a fourth bedroom in the loft. I was happy to invest for a return of 7% 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)

Crowd2Fund

Lent to Date: £25.6 million – latest available figure.

In the past fortnight, I received 2 email notifications about new auctions launched on the site.

Highlighted Loan: Providers of cloud-based storage were looking for £106k to fund their expansion into providing ISP and Telecoms services. They have already successfully implemented this business model in Japan and are looking to roll it out in the other countries in which they operate. Annual profits just about covered the amount being borrowed while Net Assets were 50% above that level however the financial information was 12 months out of date which is a reason for not investing in itself. Those braver than me were offered a return of 12% pa.

Funding Circle

Lent to Date: £4.2 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.

Platform News: The Government's British Business Bank have increased Funding Circle's liquidity by £150 million. Although the loan has a 12 year term it is likely to be repaid far sooner than that and is expected to help approximately 2,000 companies.

FundingSecure

Lent to Date: £288,360,909 at end of October – figure updated monthly.

There were 11 loans waiting to be filled when this blog was compiled – the same as a fortnight ago although a couple were added to the site today.

Highlighted Loan: Aside from the one added today, there has definitely been fewer new property loans coming to the site in recent weeks. Whether that is due to a change in direction following the recent take-over, I don't know. Some of the old-style "pawn broking" loans still trickle through and last Friday a borrower was looking to raise £60k with security provided by a high-end luxury car. The LTV was 66.7% and the rate of return was 12% pa. The borrower had twice previously raised funds against this vehicle and repaid on time.

Defaults: FundingSecure report that one borrower who is in default has sold the pieces of fine art that they allegedly offered as security. This matter has been taken to court. When the loans were taken out 2 years ago, my maximum allocation to any individual was £75 however as chunks of finance was raised against separate items, I didn't realise that I was lending to the same individual and so my exposure was more than I intended.

Money & Co

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

When this blog was compiled there were 0 auctions taking place.

rebuildingsociety

Lent to Date: £13,000,000.

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

Highlighted Loan: Online Garden Centre required £54k to upgrade their warehouse. Annual profits over the past few years were £30k and Net Assets were more than double the amount being borrowed although the most recent set of accounts were 11 months out of date. The only security was provided by a single Personal Guarantee from the borrower who had a current Net Worth only about £20k greater than the capital requirement. For this reason, the maximum bid was 17% pa – much higher than is available on most other platforms but not enough to tempt me given such a small PG.

ThinCats

Lent to Date: £293,779,000 – fortnightly increase of £3,371,000 – 1.16% growth.

There were 2 auctions taking place when this blog was compiled plus the second DLP was available (see platform news).

Highlighted Loan: A social enterprise which delivers apprenticeships for youngsters was looking to raise up to £200k last week to assist with the expansion of their operation. Although no security was offered, the loan qualifies for Social Investment Tax Relief which currently provides a rebate of 30%. To be eligible for this however the duration of the loan has to be for at least 3 years and so the repayments will be interest only for that period. The target rate of return was 9% pa.

Platform News: ThinCats have launched their second Diversified Loan Portfolio not much more than a month after their first. There is a fair amount of overlap between the two DLPs with 20 of the 25 loans that the second one will invest in being the same as the first increasing the exposure to these borrowers for those who invest in both. Once again, the minimum investment is £1,000 and the target return after defaults is 6.8% pa.

Invest & Fund

Lent to Date: Over £3 million

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

Highlighted Loan: Property Developers returned for their third <£52k tranche of funding for a £1.885 million facility required to develop a cluster of detached properties in Cheshire. The latest Monitoring Surveyor's report suggests that completion will occur a month later than forecast next Summer but no major obstacles were found. Investors were offered a return of 8% pa and the LTGV was 65%.

LendingCrowd

Lent to Date: £47,355,576 – fortnightly increase of £854,620 – 1.84% growth.

When this blog was compiled, 2 auctions were waiting to be funded on the site.

Highlighted Loan: Building Contractors from the South East were looking to raise >£32k to purchase and replace equipment plus repay short term borrowing. It was said that the equipment would be used to service new contracts in future years although there was no indication as to whether this was business as usual or expansion plans. The real show-stopper, in my opinion, was that the most recent financial information was 14 months out of date. Surprisingly, their capital requirements were over-funded when there were only 2 hours of the auction remaining with investors bidding at an average return of just over 11% pa.

Highlighted Loan: LendingCrowd have introduced a weekly newsletter. They advise this was at the request of investors which is a little surprising as it offers not much more information than that which appears on the platform's dashboard.

ArchOver

Lent to Date: £83,293,750.

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

Highlighted Loan: Building Contractors who cover the whole of the North West returned to ArchOver to refinance the £1.2 million they borrowed from the platform early in 2017. The company has long-term contracts with many of its customers which includes restrictions on tenders from other suppliers. This model makes them ideal to benefit from ArchOver's products which allow them to raise finance with future income offered as security. The refinancing is being undertaken in tranches and the target for this first phase was £400k. Investors were offered a return of 7% pa with insurance provided by Coface.

CapitalRise

CapitalRise infrequently list property-backed loans. Just after the last blog went to press, a Developer from the South East was looking to raise £1.5 million of bridging finance secured against a property for which there is a First Charge and a LTV of 50% that sits on a 1.6 acre site. The venue has planning permission to be rebuilt as a substantial 6 bedroom dwelling. There are two exit options – a sale to another Developer or refinancing to enable the borrower to undertake the re-construction themselves. The structure of this loan would see CapitalRise issue a bond on which 8% interest would be paid quarterly. The anticipated duration would see investors earn a return of 10.7%.

This week I received an update on a CapitalRise loan I invested in during the Spring of 2017 which is funding a Property Development in Central London. The project is a couple of months behind schedule which is not unusual with these sort of projects but, as I invested a large sum due to the lack of availability of IFISAs at the time, I would have preferred to hear more positive news.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £3.81 billion – an increase of £10 million over the past 2 weeks – 0.26% growth – which is the smallest increase on record.

Returns: Zopa's 2 accounts offer returns of 4.5% and 5.2% pa with the latter allocating some funds to riskier loans that offer higher returns.

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

Platform News: Zopa have sold a collection of defaulted loans to a debt collection agency. The funds received are more than Zopa expected to recover using their own procedures which, if true, reduces losses to investors.

Ratesetter

Lent to Date: £2,898,655,432 – an increase of £33,800,986 over the past 2 weeks – 1.18% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 3.3% pa to 5.7% pa depending on the length of the investment. The latter figure is unchanged and the former has increased by 0.8%.

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: £140,798,232 – an increase of £1,833,410 over the past 2 weeks – 1.32% growth.

Returns: 5.0% pa and 6.5% pa via an IFISA or standard account for 3 and 5 year investments respectively. These rates have both increased by half a percent in the past fortnight.

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.