Secret Investor: First investment on Crowd2Fund and increasing returns from RateSetter

Totals lent to date (7th September 2017)

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

LOANS TO BUSINESSES

Assetz Capital - £318,600,133

Crowd2Fund - £4,000,000
Funding Circle - £2,662,933,479
FundingKnight - £31,485,000
FundingSecure - £162,140,508
Money & Co - £6 million approx
Rebuildingsociety - £11,700,000
ThinCats - £246,705,000
Invest and Fund - £3 million plus
LendingCrowd - £17,594,016
ArchOver - £45,897,000

PERSONAL P2P LENDING

Zopa - £2,590,000,000
RateSetter - £2,047,442,364

Lending Works - £68,520,832

…………..

LOANS TO BUSINESS

Assetz Capital

Lent to Date: £318,600,133 – fortnightly increase of £6,635,041 – 2.13% growth.

When this blog was compiled there were 65 loans in the pipeline with 1 imminently due to be drawndown.

Highlighted Loan: A property developer is looking for funding to convert lock-up garages in South London into 8 flats. They require a total of £2.16 million but the initial tranche will be less than half of that total and gives an LTV on the current site valuation of 65%. This is the second time the borrower has raised finance via Asestz Capital for this sort of project. Investors were offer a return of 7% pa.

The borrower has had a very "interesting" life. Following a bankruptcy in the US as a result of the 2008 Financial Crisis, a disgruntled business partner made accusations of smuggling, money laundering and murder, none of which were substantiated in court.

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 (3.75% pa)

30 Day Access Account (4.25% pa)

Property Secured Investment Account (5.5% pa)

Great British Business Account (7% pa)

Green Energy Income Account (7% pa)

Liquidity: As mentioned in my previous blog, concerns about the viability of environmentally-friendly energy projects following the withdrawal of government subsidies led me to the conclusion that I should switch my holdings in the Green Energy Income Account (GEIA) to the Great British Business Account (GBBA). The funds were quickly released from the former but, even after more than a fortnight, only a small proportion has been allocated within the GBBA suggesting that demand from investors within these accounts exceeds the supply of loans.

Crowd2Fund

Lent to Date: £4 million – latest figure available.

There were 7 auctions added to the site in the past fortnight. As loans are listed for 30 days, only recent additions are noted in this blog.

Throughput really seems to be increasing at Crowd2Fund and I have made my first investment into one of their loans today.

Highlighted Loan: High end tailors were looking to raise £300k to pay off their bank overdraft and expand their internet presence. As security was provided by a second charge over a residential property in addition to a Personal Guarantee, the return was lower than usual for this site at 8% pa however there was no indication for the LTV of the charges against the house.

Funding Circle

Lent to Date: £2,662,933,479 – fortnightly increase of £35,759,027 – 1.36% growth.

Although dwarfing most other platforms, this growth is less than it was a couple of months ago when the fortnightly growth figure was in the high £40/low £50 million.

There were 4 auctions ongoing when this blog was compiled although, as loan requests tend to fill in a matter of hours on this site, that is not a fair reflection of throughput.

Highlighted Loans:

Good

Expansion Loan of >£41k to fire compliance experts (A risk rating 9.0% pa return). Funding was required due to an increase in workload following the Grenfell disaster. Profits and Net Assets were both more than double the value of the loan.

Bad

Expansion Loan of >£157k to construction company (A risk rating 9.0% pa return). It is intriguing how Funding Circle set their risk bands. Similar to above, this loan was required to fund contracts that have been won and was also allocated an A rating but the most recent profits were half of the amount being borrowed and Net Assets were negligible. Why would anyone wish to rely on the soon-to-be-mandatory AutoBid?

Defaulted Loans Update: Last week loans to a garage and a pub were defaulted due to the borrowers being in arrears. Across the two loans I had just over £30 outstanding.

Today, an online retailer was defaulted because their repayments were two months overdue after the company ceased trading but I only had £3.25 of capital outstanding.

FundingKnight

Lent to Date: £31,485,000 – no change.

There were 0 auctions ongoing when this blog was compiled – only 1 loan has appeared on this site in 2017. The platform is planning a relaunch in 2018.

FundingSecure

Lent to Date: £162,140,508 at the end of August – monthly increase of £11,718,650 (7.79%).

Today 4 auctions appeared on the site. All were filled in no time.

Highlighted Loan: A £95k loan to refurbish a property in the Midlands came up for renewal last week. Having completed the upgrades, the owners had decided not to sell and were looking to refinance via a conventional mortgage – a process which was already underway. This caused me to believe this was a safe bet and I allocated £300.

Defaults: The land held as security against one of my loans has been bought – interestingly the new purchaser used funds raised via this site although, after one close call, I decided not to re-invest. All those involved in the original capital injection have been repaid.

Platform News: A small but most useful addition to the website sees the amount held in an investor's main account displayed on the transfer page of the IFISA account. This saves a memory test when moving repaid funds into the tax free wrapper.

Money & Co

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

When this blog was compiled there were 2 auctions taking place but both borrowers have been covered in previous editions. The £259k loan to a property developer in Northern Ireland that was featured 2 weeks ago was only 50% filled while the purchaser of the private equity firm that sources funding from High Net Worth individuals retuned for a fifth tranche of capital.

rebuildingsociety

Lent to Date: £11,700,000 – fortnightly increase of £100,000 – 0.86% growth

There were 4 active auction taking place when this blog was compiled.

Highlighted Loan: Civil Engineers returned to refinance their existing borrowing from the ReBS community. They wished to borrow >£53k to aid cashflow until they begin receiving income from a £1.8 million contract. As security was provided by a Second Charge over a residential property, an All Assets Debenture and a Personal Guarantee, the maximum bid rate was 12% pa instead of the usual 20% pa for this site.

Platform News: To encourage loans to be funded more quickly ReBS are paying CashBack at the rate of 4% pa on bids that are waiting for the auctions to complete. This will be available until 31st December.

ReBS are hoping to expand the number of companies that raise funds via their platform by permitting the submission of VAT Returns instead of Management Accounts – which not all businesses keep – to give up to date information about the health of the business. Two years of Filed Accounts will continue to be a requirement for all borrowers.

They have also been promoting the "Transfer Bids" facility. When a borrower re-finances an existing ReBS loan, investors can transfer the capital they have outstanding from the original financing deal into the new loan. ReBS claim they are the only platform to offer this, although if a business was increasing their debt, would investors be keen to maintain their exposure?

ThinCats

Lent to Date: £246,705,000 – fortnightly increase of £300,000 – 0.12% growth.

There were 0 active auctions taking place when this blog was compiled although one was due to begin at 12:30 on Friday, 8th September.

Highlighted Loan: Property Developer in the North East was looking to raise £225k to convert former offices into 6 residential dwellings. As the purchase price was £260k this gave a high LTV of 86.5% but once the properties have been fitted out and sold the borrower was expecting to make a profit of £288k which gives plenty of margin. Investors were offered a target return of 11.5% pa.

Invest & Fund

Lent to Date: Over £3 million

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

LendingCrowd

Lent to Date: £17,594,016S – fortnightly increase of £820,130 – 4.89% growth.

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

Highlighted Loans: Convenience Store operator required £65k to pay off expensive debt and undertake a refit. The most recent Profit and Net Asset figures, when combined, covered the cost of the loan. I always worry about large chains putting small retailers out of business but, in this case, the borrower has a WH Smith franchise. Returns in the low teens were available.

Platform News: LendingCrowd have extended their August Cashback offer until 30th September. Therefore, they had to rename it the End of Summer Cashback offer! Investors will receive £150 if they lend £2,500.

ArchOver

Lent to Date: £45,897,000 – fortnightly increase of £1,700,000 – 3.85% growth.

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

Highlighted Loan: An IT Support company who are expanding globally needed to replace their invoice financing as their current provider wouldn't deal in contracts that involve foreign currency. They turned to ArchOver to raise a total of £650k. Of that, £150k will have monthly capital repayments over the next 2 years. The remaining £0.5 million worth of finance will be repaid via a bullet payment at the end of the term with interest paid every month. Unlike many other loans on the ArchOver platform, this loan is not insured although security is provided by charges over all assets and future payments. As IT Support contracts are usually multi-year deals, income streams are fairly predictable. Investors were offered a return of 8.5% pa.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £2.59 billion – fortnightly increase of £40 million – 1.57% growth.

Returns: Zopa's 2 accounts offer returns of 3.7% and 4.5% pa with the latter allocating some funds to riskier loans that offer higher returns.

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

Ratesetter

Lent to Date: £2,047,442,364 – fortnightly increase of £17,974,213 – 0.89% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 3.2% pa to 5.9% pa depending on the length of the investment. Returns on this site are on something of an upward trend, perhaps the recent controversy over wholesale lending has sent investors elsewhere reducing the supply of funds. Compared to a fortnight ago, the highest and lowest returns available have increased by 0.6% and 1.4%.

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: £68,520,832 – fortnightly increase of £2,428,333 – 3.76% growth.

Returns: 4.0% pa and 5.0% pa via an IFISA or standard account for 3 and 5 year investments respectively. These rates are unchanged from a fortnight ago.

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.