Secret Investor: Funding Circle launch IFISA and a rare default at Assetz Capital

Totals lent to date (29th November 2017)

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

LOANS TO BUSINESSES

Assetz Capital - £384,382,796

Crowd2Fund - £4,000,000
Funding Circle - £2,900,000,000
FundingKnight - £31,485,000
FundingSecure - £188,092,059
Money & Co - £6 million approx
Rebuildingsociety - £12,000,000
ThinCats - £259,050,000
Invest and Fund - £3 million plus
LendingCrowd - £22,816,176
ArchOver - £53,369,000

PERSONAL P2P LENDING

Zopa - £2,840,000,000
RateSetter - £2,201,413,295

Lending Works - £79,479,148

…………..

LOANS TO BUSINESS

Assetz Capital

Lent to Date: £384,382,796 – fortnightly increase of £10,678,773 – 2.86% growth.

When this blog was compiled there were 62 loans in the pipeline with 1 imminently due to be drawndown.

Highlighted Loan: First time Property Developers were looking to raise £1.334 million over several tranches to fund the construction of 14 homes in Cheshire. A unique aspect of this loan is that 90% of the capital required to buy the completed houses has already been pledged by investors on the Property Hub website. With the funds already in place to pay off the amount borrowed this looked like a good offering although, as this was the first time Property Hub have built their own homes, the lack of previous experience of those involved was a risk therefore a return of 7% pa seemed reasonable. Security included a First Charge over the development site, a Company Debenture and a Personal Guarantee.

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)

Note: It can take a long time for funds to be allocated by the higher yielding accounts as they cover areas where there is a low throughput of loans.

Defaults: I have had notification of a default – which is rare for AssetzCapital although many say the platform doesn't default loans until there is absolutely no chance of a recovery. It is not a loan I have manually selected so it must be part of one of the managed accounts I've invested in which will therefore be covered by a Provision Fund. It was a property loan where the capital has not been recovered.

Platform News: With a week remaining in AssetzCapital's campaign to raise £1 million via the Seedrs equity crowdfunding platform they have exceeded their target by 50% underlining the faith investors have in this company.

Crowd2Fund

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

There were 5 auctions added to the site in the past fortnight. As loans are listed for 30 days, only recent additions are noted in this blog.

Highlighted Loan: Vegetable suppliers were looking to raise £100k to upgrade one of their premises. It was a profitable business and the borrower gave honest answers via the Q&A. Investors were offered a return of 12% pa.

Funding Circle

Lent to Date: £2,900,000,000 – the platform should hit the £3 billion mark before the end of the year.

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 options are offered which distribute funds across differing risk profiles of loans within their portfolio. These are options are projected to return 4.8% pa and 7.5% pa.

Defaulted Loans Update: No defaults in this fortnight. It has been many months – if not a year – since I have experienced that scenario. No doubt this is helped by the fact that I have reduced my holdings on this platform from £21k to £7k since Autobid became compulsory in September.

Platform News: FundingCircle will launch their IFISA tomorrow (30th November) when existing taxable portfolios will be renamed Classic Accounts. At one time they were considering forcing investors to set up a separate log in if they wanted to open an IFISA but, sensibly, they have avoided this scenario.

Like FundingSecure, investors will have one log in and then be able to switch between their IFISA and Classic Accounts. As demand is expected to be high, initially only existing customers will be able to take out an IFISA. If they have existing funds invested, these loans will need to be sold from the Classic Account and the capital transferred to the IFISA. As I have been selling up, I can say access to funds has been pretty quick over recent weeks. It has taken a matter of hours to release a few thousand pounds.

I break the news of the IFISA ruefully. A few years ago, FundingCircle was where the majority of my P2P funds were invested but now, due to the compulsory Autobid and increasing rate of defaults, they have fallen firmly out of my favour. They are clearly targeting the mass market of passive investors, tempting them with historical returns but if the recent glut of bad loans continues, and because of the apparent lack of due diligence by the automated credit checking this site employs, I fear many people are set for nasty surprises.

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: £188,092,059 – Total updated monthly.

Today 4 auctions were launched on the site.

Highlighted Loan: After a few days of enjoying some Winter sunshine I returned to find a request to borrow £360k secured against a greenfield site very close to Edinburgh Airport that had not been fully funded by Tuesday afternoon despite being listed since the previous Friday. This was despite offering the usual return of 13% pa. With such a high number of "rate tarts" around, it is very rare for loans to be listed for so long on this site. So, what was putting investors off?

The plot of land had planning permission for a redevelopment into an industrial park for businesses related to the airport and the loan was expected to be repaid from the sale of these units. This is a very unusual and specific market. Although the LTV was indicated at 60%, past experience with previous loans such as the one that was secured against a Scottish Boatyard (in which a number of people, including me, lost capital) suggests that it is very difficult to put an accurate valuation on none standard properties. Even worse, there was a clerical error in the valuation documentation which stated that the site was unsuitable for lending!

Defaults: A property held as security against one of my bad debts has edged closer to being sold. There is no progress to report on the other 9 defaulted loans.

Money & Co

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

When this blog was compiled there was 1 auction taking place which was closing today (29th November).

Highlighted Loan: Online retailers of trophies were looking to raise £200k of Working Capital. While they made a loss in 2015 and 2016 the borrower claimed this was due to one-off expenditure however no figures for 2017 were provided. Security was provided via little more than a Personal Guarantee. My gut feeling was this loan was towards the riskier end of the spectrum therefore I felt the 10% pa return offered to investors was too low.

rebuildingsociety

Lent to Date: £12,000,000 – no change.

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

Highlighted Loan: Borrower was looking to raise >£49k to help fund the purchase of a garden supplies business from the current owners who are retiring. This was only a small proportion of the total cost of the acquisition, the remainder was going to be repaid over the next 5 years. The purchasers currently manage the business but with the financials looking tight and minimal security being offered, I decided to give this one a miss.

ThinCats

Lent to Date: £259,050,000 – fortnightly increase of £1,200,000 – 0.47% growth.

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

Invest & Fund

Lent to Date: Over £3 million

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

LendingCrowd

Lent to Date: £22,816,176 – fortnightly increase of £1,051,180 – 4.83% growth.

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

Highlighted Loan: A chain of service stations in the South East were looking to raise £106k over 3 years to increase stock, refit/develop of one of their branches and support cashflow. The financials were 12 months out of date but, at that time, the business appeared to be able to cover the loan. Adding to the risk was the fact that the borrower was a sole-trader. I decided to risk £40 at a high rate of return – 12.85% pa – and hope for the best.

Defaults: A loan to building contractors was defaulted just after the last blog went to press because the borrower was declared insolvent. They had only made 3 repayments, so I have lost £57 worth of capital. Four of my loans on this site have defaulted out of a total of 90. The latter figure includes 11 which have completed fully repaid.

Platform News: LendingCrowd are offering 6 baubles filled with gin to each investor who lends more than £2k via the platform before 15th December (subject to availability). This is worth somewhat less in value than the £200 they are offering to new customers who invest more than £5k before 3rd January but at least they are getting into the Christmas Spirit in all senses of the term.

ArchOver

Lent to Date: £53,369,000 – fortnightly increase of £2,820,000 – 5.58% growth.

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

Highlighted Loan: A high-end brand of Italian beds required half a million pounds of working capital to fund the expansion of their business having signed agreements to supply some well-known retailers. The loan was secure against future Accounts Receivable and insured by Coface. Investors were offered a return of 7% pa.

Platform News: ArchOver have launched a swish new website.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £2.84 billion – fortnightly increase of £50 million – 1.45% 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: £2,201,413,295 – fortnightly increase of £23,145,764 – 1.06% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 4.1% pa to 5.8% pa depending on the length of the investment. The latter figure is 0.5% lower than 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: £79,479,148 – fortnightly increase of £2,053,873 – 2.65% growth.

Returns: 4.0% pa and 5.3% pa via an IFISA or standard account for 3 and 5 year investments respectively. Compared to 2 weeks ago, the latter figure is 0.2% lower.

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.