P2P Lending Platform News Round-up (14th July 2016)

Totals lent to date (14 th July 2016)

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

LOANS TO BUSINESSES

Assetz Capital – £117,856,173

Funding Circle - £1,362,113,440

FundingKnight - £30,835,000

FundingSecure - £49,559,218

Money & Co –  £6 million approx

Rebuildingsociety – £10,113,391

ThinCats - £184,000,000

Invest and Fund - £1 million plus

LendingCrowd - £4.5 million

ArchOver - £19,207,000

PERSONAL P2P LENDING

Zopa - £1,420,000,000

RateSetter - £1,298,770,432

Lending Works - £30,817,485

…………..

LOANS TO BUSINESS

Assetz Capital  

Lent to Date: £117,856,173 – fortnightly increase of £0 – 0% growth.

Having set new records in early June, the past fortnight has been very quiet for this platform. Nonetheless, the pipeline seems to be very strong with 53 loans listed although only 3 of these are due for drawn down shortly.

Highlighted Loan: Tomorrow (15 th July) a bridging loan to a foreign national was due to be drawndown. The borrower, being a resident of Brazil and having no experience of the Buy to Let market, is restricted in the number of ways he can raise finance which is why he came to AssetzCapital. In 12 months, having built up a year's worth of credit history, he expects to be able to obtain long term finance. Security is provided by a first charge over the property being purchased. This is in Croydon where, I believe, many government departments are being relocated in the creation of a "mini Whitehall" to reduce costs to the state so this should be a growth area. However, as a return of 7% pa is offered, that can be earnt via Assetz Capital's Great British Business Account which is also covered by a protection fund so I would not invest directly into this loan.

Managed Accounts: The following accounts automatically distribute investor's funds across the platform's loans and are covered by Provision Funds:  Quick Access Account (3.75% pa return); 30 Day Access Account (4.25% pa return); Great British Business and Green Energy Income Accounts (both of these offer a return of 7% pa) 

Funding Circle

Lent to Date: £1,362,113,440 – fortnightly increase of £21,402,320 – 1.6% growth.

After a dip in throughput during June the fortnightly average is now back above the £20 million mark. There were 41 auctions taking place when this blog was compiled although many were fully funded and closed to further bids.

Secret Investor's Activity: This remains the site which I have the most exposure to because they have the largest number of loans listed. Below are highlights from my activity in the past fortnight:

Highlighted Loan Invested in: Loan of £104k to enable landscape architects to move offices (D risk rating, 13.8% pa return). Although the headline reason was to fund the office move, the borrower explained that cash flow is a problem due to difficulties in getting Chinese clients to make payments. This does make the loan risky but the business is profitable and has turnover in the millions… and as I often say, for returns in the teens risks have to be taken.

Highlighted Rejected Loan:

Loan of £250k to online retailer of children's goods (D risk rating, 13.8% return): This borrower has previously obtained a number of loans on the Funding Circle site but for this offering the risk rating has increased to D from A+. This is always a concern and no explanation was provided for this significant decrease in the credit rating. 

Defaulted Loans Update: Two of my borrowers who are existing defaulters and owe me a combined total of £82 have brought in financial restructuring advisors who claim they will be able to find a way for their clients to settle their Funding Circle debts within a couple of years. I hope that turns out to be true. Further good news. Half of the debt on one of my defaulted loans was paid this week by one of the guarantors while a payment plan has been put in place to enable the other guarantor to finance the remaining 50%. I had £35 of capital at stake. So it was all good news until today when one of my borrowers – a firework retailer who had wanted to diversify – was set to default having been placed into interim liquidation. My exposure to this loan was £64. They are not behind with their repayments which hopefully is a good sign.

FundingKnight

Lent to Date: £30,835,000 – average fortnightly increase of £0 – 0% growth.

There were 1 auctions ongoing when this blog was compiled.

Highlighted Loan: A North East retailer that allows customers to buy household goods using short term credit was looking for £120k of capital to expand into a new region. A reserve interest of 13% pa is one of the highest to be listed on this site which appears to indicate the potential risks – particularly with the unknowns of post-Brexit Britain. Should a recession materialise then the business is likely to suffer from a higher rate of defaults. However, as the Government has abandoned his plans to balance the country's books by 2020, perhaps there will be fewer austerity measures squeezing disposable income.

FundingSecure

Lent to Date: £49,559,218 at the end of June. Monthly growth of £5,771,325 (13.18%).

Total lent to date is updated monthly.

Highlighted Loan: Things do seem a little quieter at FundingSecure although a steady trickle of bridging loans continue to appear. One of these was to enable the development of a property in Scotland to be completed. Only £35k was being borrowed against a property currently valued at £165k. Because of this, the investment was considered to be lower risk than many others featured on the site and offered a return of 10% pa instead of the usual 12%. I considered investing but decided I wanted to keep my returns on this site at 12% or above. I use other sites for lower risk investments.

Defaults: In my last blog I mentioned that a loan I had invested in which was secured against a copy of the Magna Carta was on the brink of being defaulted. I am delighted to say that the debt has been settled.

Money & Co

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

When this blog was compiled there was 1 auction taking place which was to fund the takeover of the financial planning and advisory business that was featured in the previous blog.

Platform News: Money & Co are relaunching their managed investment product – called the Portfolio Service – during breakfast and evening events at their London offices on 27 th July.

The product currently returns in the region of 8% pa although as the minimum commitment is £100k for 12 months, it is out of my league.

rebuildingsociety

Lent to Date: £10,113,391 – fortnightly increase of £294,970 – 3% growth.

This was the busiest fortnight for ReBS since February when they began regularly updating their totals lent figure on their website. It has seen them pass the £10 million lent mark. There were 3 active auctions when this blog was compiled.

Highlighted Loan: Borrower was looking to raise £240k to fund the purchase of a car parts business from the retiring owner. The company in question is located in a part of the country where there is little competition and the current owner will act as a consultant for the next two years. The only questionable part of the borrower's plans relate to setting up an eBay shop. Given that is such a competitive arena it could be something of a dead end but, as the set up costs for such a venture are low, it is not a great risk. The loan has high levels of security as it is backed by first charges from two properties in the borrower's portfolio, a debenture of the car parts business plus a personal guarantee of £50k which is insured. With ReBS offering returns in the high teens, a loan with this level of security appears to be a good deal.

Platform News: The site ended the Summer promotion where they paid investor's interest from the day bids were made rather than money being dormant until loans are drawndown. This was an excellent deal for investors but no doubt it caused a drain on the platform's funds.

ThinCats

Lent to Date: £184,000,000 – fortnightly increase of £1,850,000 – 1.02% growth.

When this blog was compiled ThinCats had more active loans available than usual with 10 listed.

Highlighted Loan: A regular ThinCats borrower has requested a £220k bridging loan to develop the site of a former pub into 14 flats. Although interest is going to be rolled up and not paid for the first 12 months, a return of 13% pa makes this very attractive but I am too Skinny a Cat to be able to afford the £1,000 minimum bid on ThinCats.

Platform News: Since being acquired by ESF, the ThinCats platform has been receiving substantial investment from its new owners. Most significant for investors is the hiring of a monitoring manager who will research the credit worthiness of each borrower to ensure that data on those raising funds will be presented in a detailed and consistent manner. Previously it was the responsibility of the Sponsors to provide this information but their primary responsibility is to the borrowers not the lenders. The IT team is now almost four times larger than it was at the time of the takeover. Most of their work has been behind the scenes, in particular meeting the requirements of the FCA so the required authorisation can be gained to offer IFISAs. This has seen their databases relocated from Ireland to the UK.

Invest & Fund

Lent to Date: Over £1 million

There was 1 auctions taking place when this blog was compiled

Highlighted Loan: The latest tranche of a loan to a property developer who is constructing student flats in Wales was listed on the Invest & Fund site this week. This is for £135,288 and is the second drawdown from the £1,006,500 development facility. While there appears to be adequate security in the shape of a first charge over the development site plus charges over other properties in the borrower's portfolio, I am never keen when interest is rolled up and paid at the end of the term – although I appreciate that is often a necessity with properly development as income is only available on completion. Therefore, a return of 9.5% pa is too low for my liking. I would be looking for 13% pa as with the similar loan on ThinCats.

LendingCrowd

Lent to Date: Over £4.5 million as of the end of January.

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

Highlighted Loan: An employment agency supplying doctors to the NHS is looking for £55k to fund the writing of bid documents by an external consultancy. I was very surprised this was not done in-house but perhaps the documents are more specialised than I realise. However, as I was not 100% comfortable with the proposition, I decided not to invest. When this blog was compiled, the loan was 58% funded at an average rate of 11%.

ArchOver

Lent to Date: £19,207,000 – fortnightly increase of £0 – 0% growth.

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

Highlighted Loan: ArchOver receive plenty of repeat business from their borrowers. Having raised £350k via the platform, Civil Engineers are looking to raise a further £100k to service orders from Blue Chip companies. The latest loan offers a return of 7.5% pa. This is offered with a high level of security due to accounts receivable being maintained at 125% of the value of the loan and insurance provided by Coface. The low risk is underlined by the fact that no loans have defaulted on this site.

Platform News: Due to the uncertain arising from the Brexit vote, ArchOver have taken the decision to increase the returns available to investors although the rates charged to borrowers remain unchanged. Clearly this is going to put a squeeze on the ArchOver business model. Hope they survive. The increase in rates doesn't seem to be excessive but no doubt every little helps. ArchOver are optimistic that the fallout over leaving the EU will soon settle down and they can return their margins to the previous levels. This doesn't seem to take into account the length of time it will take to renegotiate the UK's relationship with Europe – a minimum of 2 years once Article 50 has been invoked – yet alone the fact that neither major political party have a plan for implementing Brexit.

INVESTUP PORTFOLIO

Despite listing loans from numerous platforms, there were only 11 auctions taking place when this blog was compiled. Many were from sites covered elsewhere in this blog – reBuildingSociety, ThinCats and ArchOver.

One auction from another platform was to provide £50k of expansion capital to a discount online retailer. This is hosted by Crowd2Fund. I visited the site in question and, for the small number of items I selected, they were either unique to the seller or being sold at a healthy discount when compared to high street shops. Margins must be very tight with an operation like this and, with only a Personal Guarantee offered as security, I considered a return of 9% pa too low for the risks involved. My opinion may be tainted having had a couple of loans I made to online retailers via Funding Circle default. Running out of patience: While I am fan of the InvestUp concept, their website is not the slickest and this week, when trying to reinvest repayments made from ReBuildingSociety loans I manage from this aggregation platform, I discovered I had to withdraw them to my InvestUp master account before re-apportioning them to another ReBS borrower. As this takes a few days, before another few days are then required to pass the funds back to ReBS to be invested in the new loan, this seems a frustratingly slow process and quite the opposite of the goal of InvestUp which is to make P2P investing easier. I am pleased that I only have a small amount invested in this site and may start withdrawing.

PERSONAL P2P LENDING

Zopa

Lent to Date: £1.42 Billion – latest figure available.

Returns: Zopa's 3 accounts offer 3.5%, 4.3% and 6.7% pa depending on the levels of access and whether or not they are covered by the Provision Fund. Zopa distribute investor's money mostly to unsecured consumer loans.

Ratesetter

Lent to Date: £1,298,770,432 – fortnightly increase of £21,628,505 – 1.69% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 2.9% to 5.9% depending on the length of the investment. These figures tend to fluctuate by no more than a few decimal places. 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: £30,817,485 – fortnightly increase of £888,589 – 2.97% growth.

This site has now exceeded the £30 million lent mark.

Returns: 4.7% and 5.8% for 3 and 5 year investments respectively and are unchanged compared to a fortnight ago. As well as a Provision Fund to cover investor's finances, 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.