Totals lent to date (15th October 2015)

A £100 bonus for the first £1,000 invested has tempted The Secret Investor to allocate some capital to Lending Crowd… The continuing speedy funding of loans on Funding Circle has caused The Secret Investor to make some hasty moves – he hopes to sell some of his poor choices on the Secondary Market

*All data correct at the time this blog was compiled

LOANS TO BUSINESSES

Assetz Capital – £81,858,044
Funding Circle - £866,169,800
FundingKnight - £25,049,500
FundingSecure - £14,584,493
Money & Co –  £6 million approx
Rebuildingsociety - £8,156,925
ThinCats - £134,364,000
Invest and Fund - £1 million plus
LendingCrowd - £1.25 million plus
ArchOver - £7,635,000

PERSONAL P2P LENDING

Zopa - £1,100,000,000
RateSetter - £834,223,272

Lending Works - £14,455,593

…………..

LOANS TO BUSINESS

Assetz Capital  

Lent to Date: £81,858,044 – an increase of just under half a million (0.57%) in the past fortnight.

8 loans currently require funding. A further 9 are upcoming with returns from 9% to 12%.

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

Highlighted Loan: A construction company are looking to raise £140k for the purchase of new commercial premises. Investors are offered a return of 10% pa (and no fees) with security provided by the warehouse/office building plus a portfolio of construction machinery. When combined, these generate a loan to value ratio (LTV) of 57% and this was what "clinched it" with regards to my involvement. Drawdown is imminent.

One that got away (for now): I had been hoping to invest in a loan to purchase a sports bar in Cardiff. This was one of 3 loans that the borrower was hoping to fund via the platform (the others were to buy the brewery to supply the pub!). The deal included taking over some discounted debt from the vendors but there has been a last minute hitch relating to that and so the loans have been withdrawn although it is still hoped that the transactions will take place with the help of Assetz Capital sometime in the future.

Funding Circle

Lent to Date: £866,169,800 – increase of £21 million in the last fortnight. Slightly down on the very high growth in September but this site remains the big hitter in the P2P SME field.

Update on Fixed Rates: Funding Circle have provided an overview of activity since the introduction of fixed rates. They do not indicate any reduction in throughput but most loans are being funded very quickly and progressed to the next stage without waiting for the 7 days that the auctions used to require. This explains why the number of loans listed at any given time has significantly reduced.

The platform has acknowledged that the speed at which most loans are funded does not allow those who wish to research the proposals time to do so. They are reviewing how to strike the correct balance between providing quick finance and giving active investors opportunity to consider the data available.

I am encouraged that FC have acknowledged there is a problem for those who do not wish to leave investment selection to the AutoBid facility, such as myself. Therefore I intend to be patient and see what solutions they come up with. At the moment, there seems to be no restriction on the proportion of a loan an individual can acquire. The T&C's state an upper limit of 20% but there is seems to be nothing in the software on the website that prevents this being exceeded. Sites such as FundingSecure impose a cap for the first 24 hours of each listing.

Currently 41 opportunities are available across 6 risk bands (with fixed rates from 6% to 18.1% before fees and defaults)

Still struggling to re-invest: As mentioned in previous blogs, due to the lack of significant variation in actual default rates and the fact that I make a judgement call on each borrower, I only consider investing in loans with returns of circa 12% pa and above. Since fixed rates were introduced this means only C, D and E risk bands fall within range of my strategy but there have been so few of them – and the C & D rated loans fill up as rapidly as the E's nowadays – I have only managed to re-invest in one loan over the past fortnight, this was to a truck repair company looking to move away from a costly invoice financing arrangement.

I have transferred some funds to ReBuildingSociety although far fewer borrowers appear on that platform. While being active on a large number of sites spreads the risks, if a platform only lists a small number of loans then it takes time for repayments to build-up a large enough amount to re-invest and it is possible to have a significant sum spread across many platforms not earning interest.

In the Liquidiser: Three companies who are within my portfolio have gone into liquidation over the past fortnight. Neither are late with their ongoing financial commitments to lenders although one has been granted leave to make half payments for the next 3 months. Usually, when borrowers notify FundingCircle of difficulties rather than the platform having to chase them for late payment, a controlled wind-down of the business is taking place and the guarantors ensure that the loan continues to be serviced although perhaps it is optimistic for me to expect no defaults from all three.

Fees vs Defaults: Everyone fears defaults will eat into their P2P profits and possibly their capital too but I note that, after 2 years of investing via this site, my total Funding Circle defaults are less than the fees I have paid!

FundingKnight

Lent to Date: £25,749,500 – increase of £700,000 in the last fortnight.

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

FundingSecure

Lent to Date: £14,584,493– Figure updated at the start of each month.

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

Highlighted Loan: FundingSecure listed a different type of offering recently. Security was held against a Land Rover but the loan was also underwritten. With this reducing the risk involved the returns were set at 8% pa rather than the usual 12%+. Interestingly, it did not appear to fill up as quickly as other loans of similar value – it was listed for 4 or 5 days instead of 4 or 5 hours.

This was not something I invested in as the capital I have allocated to lower risk/return loans is with other platforms and it is not worth moving around the small amount I'd invest with a single borrower. If underwritten loans were regularly listed on this site, then I would consider moving across some of my "safer" capital.

There has still been a steady flow of "traditional" FundingSecure loans and over the past couple of weeks I have made investments that had security against a Range Rover and a power boat as well as a few bridging loan – all with returns between 12% and 13%.

Crunch Time: Between now and Christmas, my first batch of FundingSecure investments are due to mature – a couple have been already been repaid before the end of their 6 month term.

So before I eat lunch wearing a silly paper hat I'll be finding out first-hand what the default rate of this site is like. According to those posting in forums, the platform seems to have a good track record when loans go bad. They nearly always recover the full amount of capital and interest due to investors through the sale of items held as security although it can take a while for buyers to be found. Of course capital is not earning interest when assets are waiting to be sold but with double digit rates of return, a bumpy ride is to be expected sometimes.

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: £8,156,925 – increase of £105,040 in the past fortnight.

While not as busy as a few weeks ago, there have been a couple of loans that attracted some of my unallocated repayments from Funding Circle.

Highlighted Loan: I had to act quickly today with my bid of 17% to get a piece of a loan to a Midlands' newsagents looking to expand. They were raising £35k and as the capital was guaranteed by a director with a very high net worth, almost the full amount was raised in less than a day.

ThinCats

Lent to Date: £134,364,000. This represents a growth of £4 million in the first fortnight of this month. 

9 loans are available to invest in.

Highlighted Loans: A media company is looking to take out its third loan with the platform for £100,000. This will return 10% over the next 3 years and will be used to purchase another business from the owner who is retiring. The directors will then run the two entities as complimentary divisions specialising in "creative" and "digital" activities. Security is provided by debentures and personal guarantees.

Invest & Fund

Lent to Date: Over £1 million

The site listed 9 auctions when this blog was compiled but all were 100% funded.

LendingCrowd

Lent to Date: Over £1.25 million in total

There are currently 4 loans available

Highlighted Loan: An IT Support company are looking raise £50,000 over 5 years to consolidate existing debt and help fund growth. They appear to be an expanding, dynamic business and security is provided by a director guarantee, floating charge and debenture. The average interest rate for investors is 11.27%

ArchOver

Lent to Date: £7,635,000 – increase of £535,000 in the past fortnight

Highlighted Loans: A company providing credit to SMEs has 2 loans listed. Both are for £100,000 but one will be repaid over 12 months while the other has a duration of 2 years. With this site requiring more security than the others listed in this section of the blog, the former will return 6.5% pa and the latter 7.5%.

The low risk is underlined by the fact that no loans have defaulted on this site.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £1.10 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: £834,223,272 – increase of £23 million in the past fortnight

Returns: Interest rates are set according to supply and demand. They currently range from 3.2% to 6.4% depending on the length of the investment – the latter figure is much higher than the recently.

Although rates remain at broadly the same level from month to month, certain trends have emerged. The monthly cycle sees the best returns around the 25th of the month. Within this, rates also vary on a weekly basis. They rise during the weekend and into Mondays then reach their lowest ebb on Wednesdays and Thursdays.

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

Platform News: Like many platforms, Ratesetter have set up a "refer a friend" scheme. Both the referrer and the new account holder will get £50 when the latter has invested £500. Unlike other promotions of this nature, the offer is only temporary and is due to end on 31st October. It has been introduced to celebrate the site's 5th birthday.

Lending Works

Lent to Date: £14,952,659 – increase of £0.5 million in the past fortnight.

Returns: 4.8% and 6.1% for 3 and 5 year investments respectively – these are unchanged from 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.