End-September P2P Lending Platform News Round-up

Totals lent to date (25th September 2019)

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

LOANS TO BUSINESSES

Assetz Capital - £887,000,000

Crowd2Fund - £31,480,000
Funding Circle - £5.4 billion
FundingSecure - £315,581,236
Money & Co - £6 million approx
Rebuildingsociety - £15,800,000
ThinCats - £511,073,000
Invest and Fund - £60 million
LendingCrowd - £65,447,956
ArchOver - £109,904,000

CapitalRise - £25 million

PERSONAL P2P LENDING

RateSetter - £3.5 billion

Lending Works - £194,099,826

…………..

LOANS TO BUSINESS

Assetz Capital

Lent to Date: £887,000,000 - £7.8 million (0.89%) since the last blog.

When this blog was compiled, there were 95 loans in the pipeline with 0 imminently due to be drawndown as Assetz Capital's pipeline continues to expand.

Highlighted Loan: Borrower from the North West requested the first >£125k tranche of a >£500k facility to construct a new 5 bedroom house. The initial funding will be used to refinance the development plot with the remainder covering the build process. The plan was to repay the loan once the property has been sold – the GDV was 64% and investors were offered a return of 6.5% 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)

90 Day Access Account (5.75% pa)

Property Secured Investment Account (5.5% pa)

Great British Business Account version 2 (6.25% pa)

Crowd2Fund

Lent to Date: £31.48 million.

Since the last blog, I have received 5 email notifications about new auctions launching on the site.

Highlighted Loan: A business which provides domiciliary care and agency nursing staff requested £85k to grow their business by taking on more employees. As Annual Profits and Net Assets both exceeded £200k, on the face of it, the loan could easily be covered however there was mention of cash flow difficulties due to staff being paid weekly while invoices are only sent out quarterly. This rang some alarm bells. Investors were offered a return of 12% 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. Matters may improve as 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.

Further concerns are being expressed about the liquidity of the site as the amount of time required to sell loans has been increasing according to those posting on forums – over 100 days seems to be the norm.

FundingSecure

Lent to Date: £315,581,236 at end of August – monthly growth of £3,184,101 (1.02%).

When this blog was compiled there were 6 auctions taking place – some had been waiting to be filled for a number of weeks.

Highlighted Loan: Harking back to the days when FundingSecure was a pawn-broking site rather than a "Charitable Fund for inept Property Developers", a Rolex watch was recently offered as security to renew a £1,500 loan. The item came with the original box and paperwork. Investors were offered a return of 9% pa although they could contribute no more than £25. The LTV was 54.55%.

Defaults: While the number of updates has increased, they usually advise that the sale of the asset in question has been delayed.

Platform News: Funding Secure have launched a managed account that allows investors access to their funds in 30 days – in contrast to their loans which can tie capital up for years! However, funds will only be repaid if the site has adequate liquidity. The initial target return (ie not guaranteed) was 5% pa but this was increased to 5.3% pa following feedback from investors – or maybe the take-up rate was lower than expected. In comparison, Assetz Capital's 30 Day Access Account offers a return of 5.1% pa but is covered by a Provision Fund and, given the number of dubious loans on FundingSecure, this lack of additional security is critical.

Money & Co

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

There was a single auction taking place when this blog was compiled and that was the one featured in my last blog to enable a car tuning business to take over a competitor.

rebuildingsociety

Lent to Date: £15,800,000 latest figure available.

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

Highlighted Loan: Drainage and Plumbing Engineers returned having raised £50k on ReBS a couple of years ago. Now their requirements have more than doubled to £106k as they look to pay a deposit on a new depot for which a mortgage has already been arranged – so essentially this is an extra amount of debt that the mortgage provider is not willing to cover. Aside from a couple of Personal Guarantees which have no collateral behind them, a charge is being taken over a property belonging to one of the director's families which has Net Equity of £280k. Given the risks, investors were offered a return of up to 15% pa.

ThinCats

Lent to Date: £511,073,000.

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

Invest & Fund

Lent to Date: £60 million – latest figure available.

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

Highlighted Loan: Property Developers from the Midlands requested the first >£627k tranche of a >£1 million bridge-to-sale loan secured against 10 completed apartments located on the site of disused commercial premises. This initial drawdown refinanced a Development Loan from I&F while the remaining <£350k will be used to provide cash flow for the borrower's other projects. With sales for all 10 units already agreed, the LTV of 75% didn't look too unreasonable against the 7.25% pa return on offer.

LendingCrowd

Lent to Date: £65,447,956 – increase of £514,060 (0.79b%) since the last blog.

On the morning this blog was compiled, 0 auctions were taking place.

Previously, LendingCrowd have been listing loans just about every day but over the past few weeks hardly any have been listed. There have been no announcements, possibly they are getting loans funded via institutional investors.

Although many loans used to be listed, there were few which I was tempted by which resulted in a fair amount of repayments building up in my account. I decided to move this to Assetz Capital's 90 Day Access Account which pays 5.75% pa – only a little less than my 6.3% pa actual return on LendingCrowd.

ArchOver

Lent to Date: £109,904,000.

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

Highlighted Loan: I didn't renew my involvement in a loan to an office hire business based in London. They have benefitted greatly from the uncertainty surrounding Brexit as companies held back on their capital commitments but the dynamics of their operation may change after the end of October. Furthermore, unlike many loans on this platform, this didn't have insurance rather security was provided by charges over the business and future income. Investors were offered a return of 10% pa on this £200k refinance.

CapitalRise

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

CapitalRise have listed 2 loans since the last blog.

Highlighted Loan: Property Developer requested £660k to assist in the purchase of a high-end property in Central London which they plan to refurbish subject to obtaining a Licence to Alter. The big question is what happens if the licence is not granted but this scenario is mitigated against by a comparatively low LTV of 46.4% (there was also a Personal Guarantee). Permission is expected to be received in 6 to 12 months at which point development finance would be sourced – possibly via CapitalRise. Investors were offered a return of 7.75% pa.

PERSONAL P2P LENDING

Ratesetter

Lent to Date: £3.5 billion – latest figure available.

Returns: Interest rates are set according to supply and demand. They currently range from 3.0% pa to 5.4% pa depending on the length of the investment. These figures are little changed from when the last blog was compiled.

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 are going to revamp their offerings on 3rd October. Out goes the Rolling market and in come products called Access, Plus and Max. These will be distinguished by their "Going Rate" of return and the fees charged on withdrawals – respectively these are 3%/zero fees, 4%/30 days of interest charged and 5%/90 days of interest charge.

The going rate will be set by Ratesetter – clearly this will give a more consistent rate of return – although investors will still be able to set a higher rate which will be met if there are no funds available to lenders at the going rate or a lower rate if they wish to get their money earning ahead of the crowd.

The current 1 Year and 5 Year markets will continue with rates set by supply and demand.

Lending Works

Lent to Date: £194,099,826 – an increase of £1,822,760 (0.95%) in the past fortnight.

Returns: 5.0% pa and 6.5% pa depending on whether or not investors require quick access to their funds 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.