Secret Investor: What the Peer-to-Peer Lending Platforms are Offering to Businesses in 2018

Totals lent to date (4th April 2018)

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

LOANS TO BUSINESSES

Assetz Capital - £466,800,000

Crowd2Fund - £4,000,000
Funding Circle - £3,300,000,000
FundingKnight - £31,485,000
FundingSecure - £235,735,508
Money & Co - £6 million approx
Rebuildingsociety - £12,300,000
ThinCats - £279,724,000
Invest and Fund - £3 million plus
LendingCrowd - £29,447,596
ArchOver - £62,464,000

PERSONAL P2P LENDING

Zopa - £3,160,000,000
RateSetter - £2,408,575,252

Lending Works - £99,296,054

…………..

LOANS TO BUSINESS

Assetz Capital

Lent to Date: £466,800,000 - £13.1 million growth (2.89%) in the past fortnight.

When this blog was compiled there were 79 loans in the pipeline with 2 of these imminently due to be drawndown.

Highlighted Loan: The owner of a mixed used property in East Anglia was looking to raise £238k for the refinancing of existing borrowing. The property consisted of a convenience store and flats. I had two concerns over this loan – the LTV was high at 70% and the borrower was a foreign national with a UK residency that was due to expire in May. With a British spouse with whom they have a couple of kids, the renewal was expected to be a formality however I didn't think the 7% pa return covered the risks.

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 version 2 (6.25% pa)

Green Energy Income Account (7% pa) – New capital coming into this account have been paused due to the lack of available loans meeting the investment criteria.

Crowd2Fund

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

Over the past 2 weeks, 5 auctions were listed on the site.

Highlighted Loan: Toy wholesalers are looking to raise £55k to expand their range of products ahead of opening retail premises. Given the demise of Toys R Us and the shift of retail sales from the High Street to online this doesn't seem to be a move in the correct direction. Annual profits where less than the amount being borrowed but net assets had more than 2.5x coverage of the loan.

Funding Circle

Lent to Date: £3,300,000,000

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 managed accounts are offered which distribute funds across differing risk profiles of loans within their portfolio. These options are projected to return 4.8% pa and 7.2% pa.

As an active investor, I am no longer involved with this site.

FundingSecure

Lent to Date: £235,735,508 at end of March – monthly increase of £7,945,549 (3.49%).

Today 1 auction was launched on the site.

Auctions continue to be reasonably slow to fill on the site. Many were renewals on developments for which investors have doubts as to whether they will ever reach completion. This seems to have had a knock on effect for the Secondary Market as my loans have been slow to sell. May be there will be a pick up after the Easter holidays when the new ISA allowance has begun.

Highlighted Loan: Two racing cars were offered as security last week against a couple of loans for £32k. They had been built to compete in a formula called Silhouette S1 but, even though I am quite a hard core petrolhead, this was not a category I knew anything about. After a spot of Googling, I discovered this category of car was eligible to enter the Belgium Touring Car Championship which died out in 2011. There was no indication of what series the cars currently compete in (if any) and if there is no category for them to race in, their value would be very low – certainly less than £32k. I decided to give them a miss. A return of 13% pa was offered.

Defaults: Property secured against one of my defaulted loans has been repaid. Meanwhile a couple of items of railway memorabilia have been sold but not for the expected value. Only investor's capital has been repaid.

Money & Co

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

When this blog was compiled there were 2 auctions taking place.

Highlighted Loans: We reported in the last blog that the 9th £50k tranche of funding to purchase a Financial Services company, a loan we had been following over quite a few blogs, was finally fully funded despite the balance sheet only being presented as a series of percentages. In the past fortnight, the tenth has tranche appeared but, surprisingly, that has already reached 100% of the requirements.

rebuildingsociety

Lent to Date: £12,300,000 – most recent figure.

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

Highlighted Loan: House-builders were looking to raise £53k to fund their latest development. The business looked sound but one of the properties held as security was due to be sold which seemed a little odd (why borrow when a significant sum is about to come in?) and made me too nervous to invest.

Defaults: I had 2 defaults last week due to Workspace Consultants hiring Insolvency Practitioners and Event Planners wishing to set up a CVA. In the case of the latter, they expect to pay off the ReBS loan in full over the next 3 years. I had less than £25 outstanding across the 2 loans.

ThinCats

Lent to Date: £279,724,000 - £5,145,000 growth (1.87%) in the past fortnight.

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

Highlighted Loan: A holding company that had many engineering companies within their portfolio requested £550k to purchase an air conditioning company. Security was provided by a cross corporate guarantee. The holding company has an EBITDA in the region of £1 million. Investors were offered a return of 9% pa.

Invest & Fund

Lent to Date: Over £3 million

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

Highlighted Loan: Just after the last blog went to press, a Property Developer in the Midlands requested a 12 month £825k Bridging Loan to allow processing time for enhanced planning permission to convert office space into student accommodation. The worrying thing about this loan was that it will be refinanced by development funding however if approval from the planning department is not forthcoming then the LTV is a high 76.7% therefore it might be difficult to find another source of funding. Given this risk, I felt a return of 9.25% pa was too low.

LendingCrowd

Lent to Date: £29,447,596 – fortnightly increase of £746,400 – 2.6% growth.

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

Highlighted Loan: Holiday Let Management company returned to LendingCrowd to increase their borrowing. I had invested in their original loan but at £60k the new requirement was 50% higher than that and exceeded their annual profits. Although the business has expanded over the winter months this is still a major increase in their commitments and so I decided not to renew my investment. The average return of those who had put in bids when I reviewed the proposal was 11.26% pa.

ArchOver

Lent to Date: £62,464,000 – no change.

There were 2 auctions taking place on the day this blog was compiled.

Highlighted Loan: A firm of solicitors are in the process of raising £2 million via 5 £400k loans on this platform. Just under half of this will be used to refinance existing borrowing with the remainder providing working capital after the company underwent major restructuring so that they now bring in business directly from clients via internet marketing rather than using brokers. This strategy was introduced just over 12 months ago and, while the value of Work in Progress has risen 44%, this is still early days in my opinion. Unusually for this site, there is no insurance cover and so investors were offered a return of 10% pa instead of the usual 7% pa. The only security was a charge over the Working in Progress which would have to be maintained at double the value of the loan. But what would happen to the Work in Progress if the company folded? As solicitors are notorious for finding loop-holes in contracts when loans to them go bad, I decided to steer clear even though I have capital waiting to be invested on this site.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £3.16 billion – an increase of £30 million over the past 2 weeks – 0.96% growth.

Returns: Zopa's 2 accounts offer returns of 4.0% and 4.6% 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: £2,408,575,252 – an increase of £20,488,006 over the past 2 weeks – 0.86% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 2.8% pa to 4.8% pa depending on the length of the investment. The former is at the same level it was at 2 weeks ago while has increased by 0.2%.

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: £99,296,054 – an increase of £2,133,586 over the past 2 weeks – 2.2% growth.

Lending Works are another platform who have decided to only quote an approximate value for their totals lent.

Returns: 4.5% pa and 6.0% pa via an IFISA or standard account for 3 and 5 year investments respectively. These have not changed over the past month.

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.