Secret Investor: Funding Knight to relaunch and busy times for Crowd2Fund

Totals lent to date (13th July 2017)

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

LOANS TO BUSINESSES

Assetz Capital - £296,196,556

Crowd2Fund - £4,000,000
Funding Circle - £2,486,319,357
FundingKnight - £31,485,000
FundingSecure - £140,327,383
Money & Co - £6 million approx
Rebuildingsociety - £11,600,000
ThinCats - £242,697,000
Invest and Fund - £3 million plus
LendingCrowd - £13,839,486
ArchOver - £40,397,000

PERSONAL P2P LENDING

Zopa - £2,440,000,000
RateSetter - £1,977,918,868

Lending Works - £60,377,558

…………..

LOANS TO BUSINESS

Assetz Capital  

Lent to Date: £296,196,556 – fortnightly increase of £5,788,042 – 1.99% growth.

After a record breaking June with £21 million being raised during the final fortnight of the month, Assetz Capital are looking to grow further by adding to their nationwide network of brokers. July has started quietly however with £5 – 6 million being about the 2 weekly average for the year so far.

When this blog was compiled there were 72 upcoming loans with 1 of these imminently due to be drawndown.

Highlighted Loan: Borrower from the Midlands was looking to raise £325k to fund both the purchase and redevelopment of a property which was to become a ground floor commercial unit and 6 residential flats. I have faith in the project as the borrower is an estate agent so they should have no problem finding tenants – indeed they are going to relocate their own business to the ground floor but I was a little concerned that the LTV at Day 1 is well over 70% (although the GDV will be 55%). Furthermore, with a return of 7.5% pa it is not worth investing directly into this loan when the platform offers Managed Accounts covered by a Provision Fund that return 7% 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:

Quick Access Account (3.75% pa)

30 Day Access Account (4.25% pa)

Property Secured Investment Account (5.5% pa)

Great British Business (7% pa)

Green Energy Income Accounts (7% pa)

Possible Loss: I mentioned in my previous blog that lenders had been asked to vote on a proposal from a borrower who could not afford to repay their loan. They wanted to undertake a quick sale of the property provided as security which was likely to result in a shortfall when the capital owed to investors was repaid.

This was an interesting situation as those who had exposure to the loan via the Managed Accounts may have been covered by the discretionary Provision Fund but not those who invested directly. Such a scenario won't materialise on this occasion however as the proposal was rejected and a follow up vote was announced today to decide whether to allow the borrower to attempt to sell the assets at full market value or invoke insolvency proceedings.

Crowd2Fund

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

There were 6 auctions that were added to the site in the past fortnight. Loans are listed for 30 days thus only recent additions are noted in this blog.

Highlighted Loan: A long established high-end clothing retailer was looking to raise £316k to open their 8th store. A return of 9% pa was offered although there seemed little in the way of security with only a Director's Guarantee mentioned.

Funding Circle

Lent to Date: £2,486,319,357 – fortnightly increase of £48,455,944 – 1.99% growth.

There were 10 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.

Secret Investor's Activity: This is one of the sites which I have the most exposure to -because they have the largest number of manually selectable loans.

Below are highlights from my activity over the past fortnight:

Highlighted Loan Invested in:

Working Capital/Asset Purchase Loan of >£184k to newsagents (D risk rating 17.9% pa return). The capital injection was required to pay off an existing Funding Circle loan and also to purchase a delivery van. The amount being borrowed had reduced and the risk rating had come down from E to D plus an asset in the shape of a vehicle was being purchased. It was all good news.

Highlighted Rejected Loan:

Expansion Loan of >£83k to security alarm installers (C risk rating 13.5% pa return). They wanted the funding to purchase another company's order book. There was no information about the business being bought but the borrower's balance sheet didn't look good. The most recent profits were only £5k while the net assets were in the red to the tune of £30k.

Defaulted Loans Update: Last week a loan to a garment printing company which become insolvent was defaulted even though the guarantor had put a payment plan in place to continue to service the loan. I have £23 of capital outstanding.

Then this week I had 2 further defaults. The first, to commercial glaziers, was 4 months in arrears and the guarantors were unable to make payments due to extenuating personal circumstances. As this loan was originally taken out in 2013, I only had £7 of capital outstanding. The second was to a replacement vehicle windscreen operation that had got into financial difficulties. Their repayments are 3 months behind schedule. I will lose £25 if there are no recoveries.

But I also had a default "reversal" today. A loan to a letting agency was put on the "naughty list" because the borrower had another loan which had defaulted. Funding Circle decided that the correct procedures had not been followed and restored the loss of £12 back to my account. I have never had this happen before.

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.

Platform News: After many months of silence, I received an email from FundingKnight which provided an update on the state of the platform. The owners, GLI Finance, re-affirmed their commitment to the site after restructuring their operations. FK now share their managing director with sister company, Sancus Finance, which offers a wide range of investment opportunities to institutions and High Net Worth Individuals – Secured Cash Flow Funding, Asset Backed Loans, Supply Chain Finance amongst other categories. The new MD plans to align FK with its sister company. This could well involve a rebranding exercise and changes to the size of the deals listed on the platform. It seems FK are still committed to retail investors however as they are continuing to work towards being awarded full authorisation from the FCA so that they can offer an IFISA.

FundingSecure

Lent to Date: £140,327,383 at the end of June – monthly increase of £10,468,549 (8.06%).

This is the second month in succession that the rate of growth has exceeded £10 million.

There were 7 auctions ongoing when this blog was compiled.

Highlighted Loan: Frustrating! The day after the last blog went to press, the site listed a £60k loan secured against 3 brand new prestige cars with a combined value of more than £130k giving an LTV in the mid-40s. With a return of 12% pa this looked good and I made sure I was logged on to the FundingSecure site at the appointed hour when the loan was due to appear; planning to chip away at my IFISA allocation with a £500 investment. It seems many others had the same idea because when 11 am arrived the responsiveness of the website suddenly slowed right down and by the time I got to the page where the amount to be contributed is chosen, the capital was 100% funded. I wonder if I had been beaten by some sort of automated software that others were using. I will keep my eye open for this loan on the secondary market but no doubt, due to the high popularity, any segments will be sold at a big premium.

Defaults: The assets associated with some of my 6 defaulted loans edge closer to being sold but no purchases have been agreed yet. Indeed, the sale of a yacht has fallen through while a seventh loan, secured by a plot of land with planning permission for student accommodation, has been defaulted because the borrower is showing no signs of paying it off. Not a good fortnight.

Money & Co

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

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

Highlighted Loan: A borrower was looking to raise >£52k to purchase a minority shareholding in a financial services company that raises equity from High Net Worth Individuals. In the future, they plan to take a controlling interest. Security was provided in the shape of a Debenture. The operation relies on a commission-based business model which relies on enterprises being identified that are attractive to investors. This seems riskier than the 8% pa rate of return offered.

rebuildingsociety

Lent to Date: £11,600,000 – fortnightly increase of £100,000 – 0.87% growth.

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

Highlighted Loan: A road haulage firm was looking to raise >£54k to fill a hole in their balance sheet which arose when a customer went bust. This loan was originally listed in March but was withdrawn when an anomaly with the Operating Licence was discovered. This "fit for purpose" authorisation from a government agency is mandatory for truck companies but it had been registered in the name of another company. I then realised I had already invested in this firm via LendingCrowd 2 years ago and the latest payment was a couple of weeks overdue. I was concerned that the funding being raised via ReBS was urgently required to cover the LC loan but the borrower provided assurances via the Q&A that matters were in hand and the payment was late because the accounts department had cancelled the wrong direct debit mandate. Almost a week later, however, the payment was still outstanding and with a few hours to go in the ReBS auction, the latest loan was only 50% funded.

Defaulted Loan Update: I had good news about the defaulted loan to the consultants who operated in the oil and gas industry last week. They have been making payments into the CVA and ReBS investors are expected lose no more than 5p in the pound however no dividend can be made from the CVA until a sum owing to the HMRC has been paid.

ThinCats

Lent to Date: £242,697,000 – fortnightly increase of £157,000 – 0.06% growth.

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

Highlighted Loan: Scottish Property Developers were looking to raise £190k to purchase a property for which they have planning permission to create 4 self-contained flats. The current valuation is £260k thus the LTV is on the high side at 73% although that will reduce as the development progresses. As well as a charge against the property, there was also a Personal Guarantee. A return of 11% pa was available.

Invest & Fund

Lent to Date: Over £3 million

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

Highlighted Loan: Property Developer looked to raise >£166k secured against an apartment block he has recently refurbished so that he can deploy the funds elsewhere. Two of the six apartments have already been sold and the remaining four are receiving finishing touches. Investors were offered a return of 9.5% pa.

LendingCrowd

Lent to Date: £13,839,486 – fortnightly increase of £513,465 – 3.85% growth.

There was only 1 active auction taking place when this blog was compiled although several have been listed in the past fortnight. To avoid funds being tied up for too long, investors usually have just 24 hours to decide whether to commit to each loan.

Highlighted Loans: A packaging manufacturer was looking to raise £64k to fund the purchase of machinery which will make their operation more efficient. Their balance sheet comfortably covered the amount they requested and I also liked the fact that an asset was being purchased. I put in a bid as high as I dared at over 11% pa… and it was low enough to be accepted.

ArchOver

Lent to Date: £40,397,000 – fortnightly increase of £1,950,000 – 5.07% growth.

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

Highlighted Loan: A manufacturer of IT solutions that allows patients to be monitored in their own homes was looking to add £100k to their existing £130k loan from ArchOver. As most of their equipment is rented rather than sold to the NHS, from time to time the business needs a capital injection to manufacturer more stock. As this provides a steady, reliable income stream, this company seems ideally suited to the ArchOver model of securing borrowing against accounts receivable. Investors are offered a return of 8% pa.

CAPITALRISE

CapitalRise listed their latest investment this week as they raised the £1.35 million required by a property developer in Hampshire who is constructing 12 luxury homes. The loan's duration was just under 2 years and offered a return of 10.5% pa. A worrying aspect was the LTV of 66% was actually the GDV figure. There was no indication of the current value of the site.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £2.44 billion – fortnightly increase of £40 million – 1.67% growth.

Returns: Zopa's 2 accounts offer returns of 3.9% and 6.1% 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: £1,977,918,868 – fortnightly increase of £25,586,781 – 1.31% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 2.6% pa to 4.6% pa depending on the length of the investment. Compared to a fortnight ago, the former figure is unchanged and the latter is 0.3% higher.

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: £60,377,558 – fortnightly increase of £2,017,824 – 3.46% growth.

Returns: 3.5% pa and 4.8% pa via an IFISA or standard account for 3 and 5 year investments respectively. The upper rate has not changed over the past fortnight but the 3 year returns have increased by 0.2%.

As well as a Provision Fund to cover investor's risks, this site also insures borrowers against redundancy, fraud, illness and accidents.

****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.