Secret Investor: Funding Circle move to AutoBid and Zopa reduce forecasts for investor returns

Totals lent to date (24th August 2017)

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

LOANS TO BUSINESSES

Assetz Capital - £311,965,092

Crowd2Fund - £4,000,000
Funding Circle - £2,627,174,452
FundingKnight - £31,485,000
FundingSecure - £150,421,858
Money & Co - £6 million approx
Rebuildingsociety - £11,600,000
ThinCats - £246,405,000
Invest and Fund - £3 million plus
LendingCrowd - £16,773,886
ArchOver - £44,197,000

PERSONAL P2P LENDING

Zopa - £2,550,000,000
RateSetter - £2,029,468,151

Lending Works - £66,092,499

…………..

LOANS TO BUSINESS

Assetz Capital

Lent to Date: £311,965,092 – fortnightly increase of £6,565,853 – 2.15% growth.

When this blog was compiled there were 68 upcoming loans with 1 imminently due to be drawn down which means the pipeline is a little smaller than recently.

Highlighted Loan: A borrower in Wales was looking to raise >£241k to purchase a guest house. Although they have several other investment properties, this is the first time they will have operated a business of this nature and they are also going to continue in their full-time occupation as a sales director. Furthermore, the LTV on the premises, the only form of security, was at the high end of the scale at 70%. Taking all these risks into consideration, a return of 8% pa was too low.

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:

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)

Green Exit: Over on another site I have been privy to confidential information about a bad loan that was secured against a Wind Turbine. Because of the withdrawal of Government subsidies, the recovery from the sale of the asset was considerably less than the original valuation and the capital loss is set to be more than 60%. On Assetz Capital I had a small amount invested in the Green Energy Income Account but, given these events, I have decided to sell up and switch the funds to the Great British Business Account.

I was worried about how quickly the GEIA holdings would be disposed of but all bar £200 of the £1,700 total has been released in less than 24 hours. The re-investment in the GBBA is yet to start however suggesting demand for financing is much less than the supply of capital on the site.

Nonetheless, one wonders how the Assetz Capital Provision Fund would cope if there were major problems with the Green Energy portion of the site's portfolio.

Crowd2Fund

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

There was 1 auction which has been 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: A team of venue outfitters were looking to raise £30k to refurbish their premises, Net Assets totalled £46k and these were offered as security. The proposal was written in a positive, upbeat fashion and a return of 11% pa was offered.

Funding Circle

Lent to Date: £2,627,174,452

There were 7 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 >£52k to general store (C risk rating 13.5% pa return). The shop is located in a coastal town which has plenty of tourist traffic. The owner wants to expand the premises and then fill the shelves with stock. Net Assets were slightly negative but the latest profits were >£30k. Hopefully, the expansion will bring in more income.

Bad

Assets Finance Loan of £106k to flooring contractors (C risk rating 13.5% pa return). Although the loan was to fund the acquisition of equipment and vans, no LTV information was provided and the most recent balance sheet reported a modest loss.

Defaulted Loans Update: No defaults last Thursday but today loans to furniture manufacturers and plumbing wholesalers have gone bad due to insolvencies in both cases. I have a total of more than £90 outstanding to the two borrowers.

Platform News: As reported in a dedicated blog earlier in the week, FundingCircle are going to withdraw the ability for investors to manually select which borrowers their funds are allocated to from mid-September. It will then mirror Zopa by offering two "accounts" – one will invest in only the 2 lowest risk bands on the site while the other will distribute capital across all loans. These are expected to return 4.8% and 7.5% pa respectively although this may vary according to the selection of loans randomly allocated to each person.

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: £150,421,858 at the end of July – total update monthly.

There were 2 auctions ongoing when this blog was compiled.

Highlighted Loan: To complete the refurbishment of a replica of an 18th century schooner, £186k was being raised. The boat is offered as security and currently has a LTV of 56% with an expected GDV of 27.8%. A consortium has agreed to purchase the boat but it crossed my mind that consortiums have been known to pull out. FundingSecure explained, however, that should they have to finish the rebuild themselves the projected costs are much less than the value of the completed vessel. I decided to chip away some more at my IFISA Allowance and invested £250.

Defaults: The boatyard in Scotland has found a buyer but the amount received was 13% less than the amount lent even though the original valuation gave a LTV of 62.5% and the redevelopment the loan funded was supposed to increase the worth of the site. Such information tempted me to invest £125 in this loan instead of my usual £75 resulting in a loss of £17. Disappointing but not a catastrophe.

I have never previously made a loss on Funding Secure where 296 other loans in my account have completed successfully although I've 11 investments with assets waiting to be sold. As this was one of the site's first offerings backed by property, it gives cause for concern as to how accurate their other valuations are.

Money & Co

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

When this blog was compiled there was 1 auction taking place.

Highlighted Loan: Quite a straight forward 12 month £259k bridging loan to enable a developer to purchase a site in Northern Ireland which had planning permission for 25 dwellings. LTV was 70% and a return of 10% pa was offered. Assuming all valuations are accurate, this does not compare well with FundingSecure where returns of 13% pa are available on comparable loans.

rebuildingsociety

Lent to Date: £11,600,000 – no change.

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

Highlighted Loan: Event organisers in the Health Care field were looking raise >£37k to expand their business. Interestingly, the borrower was also an ReBS lender. Although only a Personal Guarantee was available, assurances were given that should the business fail, the borrower could find work as an Occupational Therapist Contractor which would provide more than enough income to cover the loan.

ThinCats

Lent to Date: £246,405,000 – fortnightly increase of £775,000 – 0.32% growth.

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

Highlighted Loan: Another property developer from Northern Ireland was raising £150k to build 8 mews houses. A return of 11% pa was offered although this loan will rank behind an earlier one for £180k which was used to pay for the removal of Japanese Knotweed. The total lent provides a worryingly high LTV of 80% but this will reduce to 38% when the development is completed.

Invest & Fund

Lent to Date: Over £3 million

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

Highlighted Loan: The 16th and final >£20k drawdown of Tranche A relating to the development of 12 flats in South Wales was recently completed. Although the project has gone over budget, the borrower will cover the shortfall from his own funds. They will look to raise Tranche B next month.

LendingCrowd

Lent to Date: £16,773,886 – fortnightly increase of £1,191,000 – 7.64% growth.

This is the first time LendingCrowd have raised more than £1 million in the space of 2 weeks.

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

Highlighted Loan: Chain of bars in the South West were looking to raise £163k to fund their ongoing expansion but the balance sheet didn't look good. There was a small loss in the most recent set of accounts (which were 18 months out of date) and Net Assets were just £3.5k. It appeared to be a business that was sailing close to the wind.

Platform News: LendingCrowd's August Cashback offer where investors will receive £150 if they lend £2,500 remains active until the end of the month.

ArchOver

Lent to Date: £44,197,000 – fortnightly increase of £2,050,000 – 4.86% growth.

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

Throughput seems to be increasing here at ArchOver. Unhappy with the AutoBid-only policy being introduced at Funding Circle. I am considering transferring funds to this ultra-safe site.

Highlighted Loan: Specialist window contractors, who had already raised £1 million via ArchOver, were looking to raise a further £120k to use as working capital while waiting for funds to arrive from projects that are about to complete. ArchOver have a first charge over the company's accounts receivable which currently stands at £1.52 million with a further £567k held as retentions. The loan was also insured. As a result, the return offered was lower than other platforms in this section of the blog at 6.25% pa.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £2.55 billion – fortnightly increase of £30 million – 1.19% growth.

Returns: Zopa's 2 accounts offer expected returns of 3.7% and 4.5% pa with the latter allocating some funds to riskier loans that offer higher returns. These returns can vary according to the selection of loans randomly allocated to each investor.

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

Platform News: As defaults are set to increase in the sphere of unsecured consumer lending, Zopa have cut the forecasted returns for their 2 accounts by 0.2% and 1.6% pa respectively.

Ratesetter

Lent to Date: £2,029,468,151 – fortnightly increase of £13,054,798 – 0.65% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 2.6% pa to 4.5% pa depending on the length of the investment. Compared to a fortnight ago, the figures have reduced by 1.5% and 0.1% respectively. That's a big fall for the lower figure but having risen significantly, it has returned to the level it was at 6 weeks ago.

Capital is covered by a Provision Fund. Ratesetter proudly boast that no investor has lost a penny since they launched in 2010.

Platform News: Following their recent intervention with wholesale lenders to whom they had allocated investor's funds, Ratesetter have withdrawn themselves from the P2P Finance Association as their actions, which resulted in a lack of transparency over who money was actually being lent to, breached the Association's code of conduct. Ratesetter were a founding member.

Lending Works

Lent to Date: £66,092,499 – fortnightly increase of £1,868,386 – 2.91% 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.