P2P Lending Platform News Round-up

by The Secret Investor

P2P Lending continues to go from strength to strength with many sites reporting above average growth… The Secret Investor switches on his Funding Circle AutoBid facility as he implements a major change of strategy… FundingSecure's lenders raise £600,000 worth of capital in a matter of days

Totals lent to date (12th November 2015)

*All data correct at the time this blog was compiled

LOANS TO BUSINESSES

Assetz Capital – £83,053,044
Funding Circle - £913,962,480
FundingKnight - £27,066,500
FundingSecure - £16,109,824
Money & Co –  £6 million approx
Rebuildingsociety - £8,539,925
ThinCats - £136,913,000
Invest and Fund - £1 million plus
LendingCrowd - £3.7 million
ArchOver - £8,475,000 

PERSONAL P2P LENDING

Zopa - £1,150,000,000
RateSetter - £881,767,773

Lending Works - £16,436,675

…………..

LOANS TO BUSINESS

Assetz Capital  

Lent to Date: £83,053,044 – increase of £870,000 – just over 1% growth – in the past fortnight.

7 loans currently require funding. A further 7 are upcoming with returns from 9% to 11%.

3 managed accounts protected by provision funds with returns of 3.75% to 7% depending on accessibility.

Highlighted Loan: It has been a quiet couple of weeks and the most attractive upcoming deal remains a 5 year loan of £325,000 to buy a public house. This is due for drawdown in late November with a return of 9.5% pa. Rooms are going to be furnished to provide rental income. Security is provided by legal charges on 3 properties, a personal guarantee and a charge on the borrower's construction business.

Funding Circle

Lent to Date: £913,962,480 – increase of £26,465,080 (3%) in the past fortnight. This growth, which has taken the platform through the £900 million mark, included a very busy week-ending 6th November when the number of loans increased by 28%. Funding Circle may make it to £ Billion before Christmas.

One swallow doesn't make a summer but perhaps this is the start of the promised growth in throughput following the switch to fixed rates. Loans that offer the highest returns still get filled very quickly however which makes life tough for "rate tarts" such as myself.

Sell, Sell, Sell: The speed at which the most popular loans are funded leaves little time for the borrower's proposition to be considered in detail which has caused me to make some rash investments. I have rectified the situation by selling the loans I had reservations about. I put them up on the Secondary Market with no mark up and the money appeared in my account within a minute – as my clear-out took place on a Sunday morning they must have been snapped up by the AutoBidders.

New Gaming Strategy: The ease of moving on the loans I was unhappy with has led to the instigation of a new strategy. I have switched on my AutoBid facility for C, D and E rated loans and will review whatever they pick up on a regular basis – looks like my Sunday morning Funding Circle "car boot sale" will become a regular activity! Well that was my expectation but the first few investments made via this route I was happy to keep.

I have set the limits for AutoBids on the Secondary Market as high as possible to avoid buying back my rejects!

Those who opposed the removal of the auctions were accused of turning P2P Lending into an online game so after Funding Circle changed the rules it was natural that a new strategy needed to be developed. Considering the sums I have invested, it seems far more than a game to me although I do enjoy attempting to maximise my returns.

Winners of the Game: One of the reasons given for eliminating auctions was that they were difficult for newcomers and passive investors to understand however it is unlikely those people will grasp the subtleties of how to set their AutoBid parameters – especially as they are intimidatingly hidden behind an "Advanced" link. This means those less savvy will be picking up all the discarded loans on the Secondary Market. Due to the lack of information available there is a large element of luck in picking out the loans that are going to go bad but, even so, active investors are likely to continue to achieve above average returns for this site.

Funding Circle reported that transactions on the Secondary Market increased significantly as soon as fixed rates were introduced – no doubt others realised the correct strategy from day 1. As Funding Circle take 0.25% commission on all part loans resold this must have greatly boosted their balance sheet. Whether this was part of their plan or an unexpected windfall, they appear to be the real winners of the game.

Loan defaulted: In the 29th October blog, I mentioned that a loan I am involved in had defaulted after just 5 repayments, costing me £70. A week after that another loan, to an independent cycle shop, defaulted after just 7 repayments – fortunately I only invested £40 rather than my maximum of £80 in this deal so £33 is lost subject to any recoveries Funding Circle can obtain. This means my account was £100 worse off in the space of a week.

This is less than half the income from interest payments received in October from all the platforms I have invested in and I have yet to make a loss on P2P Lending over the course of a month. Hopefully, this spate of defaults won't continue and ruin that record.

As I am constantly increasing the funds invested in P2P defaults are likely to become more frequent but returns should also be on an upward trend.

Sigh of relief: Funding Circle report information relating to defaults on Thursdays. After bad news the previous two weeks, having checked my account today I am pleased to report no more of my investments have been set to this status although quite a few of the people I have lent to are keeping the recovery department busy as they try to track them down.

FundingKnight

Lent to Date: £27,066,500 – increase of almost £1 million (3.6%) in the past fortnight.

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

Highlighted Loan: The single auction was to raise half a million pounds to fund a Wind Turbine in Cumbria with a Loan to Value of less than 50% although the valuation assumes that Feed In Tariff funding will be agreed with OFGEM (negotiations are currently ongoing). This has a reserve interest rate of just under 10% pa.

Platform News: Funding Knight had a stand at Olympia's The Finance Professional Show, hopefully this exposure will generate more traffic to the site.

FundingSecure

Lent to Date: £16,109,824 – Figure updated at the start of each month. During October the site passed the £16 million mark and hopes to attract even more loans to the platform as they also exhibited at the Finance Professional Show in London on 4th November.

While there were no auctions taking place when this report was compiled, several are listed each week.

Bit of a whopper: A loan for £600,000 was listed just after the last blog went to press. This was secured against a property development in Northern Ireland. As usual with loans of this size, beyond the base interest rate of 12% pa Funding Secure offered bonus rates of 13, 14 and 15% to those committing £10k+, £25k+ and £50k+ respectively.

Despite the sizeable sum, the loan had been fully funded in 4 or 5 days. Although a couple of my existing investments have renewed – the borrowers paid off the interest and relent the capital for another 6 months – this is the only new FundingSecure opportunity I have been able invest in during the last couple of weeks as all the others, which were for much smaller sums, have been gobbled up before I got home from work.

Money & Co

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

There were no auctions taking place when this report was compiled.

rebuildingsociety

Lent to Date: £8,539,925 – increase of £40,000 in the past fortnight.

This was a quiet period compared to the previous 2 weeks when £343,000 was lent.

A couple of auctions were taking place when this blog was compiled.

Highlighted Loan: A groundworks and highways company are looking to raise £27,500 as the two brothers who own it look to expand. There is some risk in that the brothers do not own property and security is offered solely against plant and equipment however as they seem to have an established business I was happy to support the duo with a bid at 14% pa.

ThinCats

Lent to Date: £136,913,000 – increase of £1,734,000 in the past fortnight.

8 loans are available to invest in.

Highlighted Loan: Property developers are looking to raise £180,000 at a target rate of 11% pa to convert a former school into three houses and two flats. This is third time the company has raised finance via Thin Cats. In its current state, the site is valued at £250,000 but this is expected to quadruple when the development is completed. As well as first charge over the property, security is also provided by a debenture over the enterprise and future rental income.

Invest & Fund

Lent to Date: Over £1 million

The site listed 3 auctions when this blog was compiled but all had ended.

LendingCrowd

Lent to Date: Over £3.7 million.

Lending Crowd have advised that, although new loans do not appear on the platform as often as they would wish, each application is analysed in great detail to ensure that their credit risk is accurately established. They aim to deliver quality not quantity.

As a result, there is only one auction currently on the platform. I am still 3 loans away from investing £1,000 before the end of November to get my £100 bonus therefore it looks as though I shall be heading back to their Secondary Market.

Highlighted Loan: The one loan is quite appealing and is something I was quick to place a bid on. It is for £60,000 and will be spent on upgrading a hotel in a remote area of Scotland to enable higher rates to be charged. My only concern is whether there is the demand for a more upmarket service and will there be anything left for investors should things go bad as there is a mortgage company that has a first charge over the bricks and mortar. Despite these reservations, I had good vibes about the business and decided to invest.

Platform News: LendingCrowd are celebrating having received the Business to Business Prize at HeraldScotland's Digital Business Awards evening at which they were praised for their forward-thinking processes.

ArchOver

Lent to Date: £8,475,000 – increase of £460,000 in the past fortnight.

When this blog was compiled, 4 loans were available for investment.

Highlighted Loans: A company providing IT support to clients in the retail sector are looking to raise £500,000 to further their on-going expansion. Security is provided by a first, floating charge over Accounts Receivable and the loan is also insured. This level of security means the return is one of the lowest in this section of the blog at 6.75% pa but the low risk is confirmed by the fact that no loans have defaulted on the site.

Platform News: The next £100m worth of loans on this platform will be insured by Coface who specialise in the field of credit insurance for unpaid invoices. Both companies have hinted at expanding the ArchOver's low risk lending model beyond the shores of the UK.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £1.15 Billion – increase of £20 million in the past fortnight.

Returns: Interest rates are 3.8% to 5% depending on the length of the investment. These are unchanged from a fortnight ago.

Capital is covered by a Provision Fund

Ratesetter

Lent to Date: £881,767,773 – increase of close to £25 million in the past fortnight which is above average for recent months.

Returns: Interest rates are set according to supply and demand. They currently range from 3.4% to 6.1% depending on the length of the investment. As this blog is compiled on Thursdays these values are likely to be at lower end of the spectrum as rates are highest during the weekends before ebbing away on Wednesdays and Thursdays. There is also a 4 weekly trend which see the best returns around the 25th of the month.

I don't have time to track the Ratesetter market in detail and, as investors have no choice in who their funds are lent to, I am happy to use the AutoBid facility on this platform especially as it is historically low risk.

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: £16,436,675 – increase of £0.73 million in the past fortnight which is at the upper end of the scale for this site.

Returns: 4.7% and 6.1% for 3 and 5 year investments respectively – the former figure is a fraction lower than it was a fortnight ago.

As well as a Provision Fund to cover investor's funds, 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.