P2P Lending Platform News Round-up

by The Secret Investor

In this week's budget, Chancellor George Osbourne announced that investors will be able to save up to £20,000 per year in an Innovative Finance ISA from April 2017, up from the 2016 limit of £15,240… FundingSecure continue to set new records for activity on their site… Assetz Capital review their investor decision making processes

Totals lent to date (17th March 2016)

*All data correct at the time this blog was compiled

LOANS TO BUSINESSES

Assetz Capital – £99,060,756
Funding Circle - £1,165,577,300
FundingKnight - £30,132,000
FundingSecure - £25,672,899
Money & Co –  £6 million approx
Rebuildingsociety - £9,423,595
ThinCats - £156,741,000
Invest and Fund - £1 million plus
LendingCrowd - £4.5 million
ArchOver - £14,375,000

PERSONAL P2P LENDING

Zopa - £1,270,000,000
RateSetter - £1,100,127,694

Lending Works - £24,061,191

…………..

LOANS TO BUSINESS

Assetz Capital  

Lent to Date: £99,060,756 – increase of £4,969,214 – 5.28% growth.

This has been a very busy fortnight for Assetz Capital with almost £5 million of capital distributed to small business.

There were 37 upcoming and pipeline loans listed on the site when this blog was compiled.

Highlighted Loan: I missed out on a rare loan on the Assetz Capital platform that had a return of 11% pa – given their cautious approach to selecting borrowers, most are a few percentage points below that amount. It looked like a good investment too with the business providing finance to garages and Will-makers (an unusual combination!) to enable them to offer payment plans to their customers. These loans were insured by a third party. The funding from Assetz Capital was to provide further scope for expansion. Note to self: Pay more attention to the upcoming loans on this site!

Voting on a Learning Curve: Assetz Capital treat their lenders as partners rather than customers and, as part of this, those who have invested in a particular loan are invited to vote to decide on a course of action if a borrower gets into difficulty. Recently a problem arose when a hotel in Wales was struggling with repayments following a reduction in occupancy levels. Investors were asked to make a decision between two methods of restructuring the debt and a third choice which was to trigger a default. The latter received the most votes but these were outnumbered when the two restructuring options were combined.

Assetz Capital thus had a dilemma as the "defaulters" had won even though the "restructerers" were in the majority. They decided to declare the ballot null and void. This week those who had invested in this loan were asked to vote once more. This time there were just to two options – restructure the payment schedule or default. If the former wins, then there will be a further vote to decide upon the nature of the restructuring.

There have been a number of complaints about the democratic process which had to be abandoned however this is a reminder that this is a young industry and everyone involved is on something of a learning curve. Assetz Capital have advised that all votes in future will only have 2 options. For complex matters, there will be iterative ballots until a decision is reached in binary fashion.

Funding Circle

Lent to Date: £1,165,577,300 – increase of £31,344,260 – 2.76% growth.

Funding Circle's loan book continues to increase at the rate of over £31 million a fortnight

47 new loan requests were listed on the site when this blog was compiled.

Secret Investor's Activity: The loans that offer the highest returns get filled very quickly on this site therefore I have switched on Auto-Bid to pick up my share of C, D & E rated deals. Below are highlights from my activity in the past fortnight:

Highlighted Accepted Loan:

Loan of £21k+ to help a pest control company expand into the fly-screen market (C risk rating, 11.9% return). The business claim to have already done some trading in this new area and were looking to raise capital to buy stock in bulk to increase their profit margins.

Highlight Rejected Loan:

Loan of £65k+. This C rated loan was to cover the outstanding costs of renovating a hotel. The building/decorating work had gone well over budget which raised doubts about the borrower's business acumen. There was further uncertainty as the hotel had been put up for sale. FundingCircle had also listed the loan at a higher risk rating than a previous one for this enterprise.

Shots in the dark: Sunday mornings are when I review the loans that Auto-Bid has acquired over the previous 7 days. Of 5 deals picked up last week, I put 3 up for sale. In all cases, Funding Circle had rated the businesses as higher risk than when they had taken out previous loans but no explanation was provided – particularly with regards to why the downward trend was not expected to continue. I was unwilling to take shots in the dark of this nature. The loans were quickly sold at a 0.1% profit – so long as there is liquidity in the Secondary Market, there is no major issue.

Defaults: No defaults amongst my loans to 442 businesses during the past fortnight however a couple are reported to be in difficulties. I am expecting bad news after Easter as I try to contain my excitement at having received £5 of recovery payments over the past 4 weeks from previously defaulted loans.

Platform News: Reflecting the increasingly international nature of FundingCircle, Jörg Asmussen has joined the board. His most recent roles have included being an Executive Board Member of the European Central Bank (ECB) and State Secretary at the German Ministry of Finance.

FundingKnight

Lent to Date: £30,132,000 – increase of £150,000 – 0.5% growth.

The FundingKnight total lent figure has now made it through the £30 million mark. To put that into perspective, this is as much as borrowers on FundingCircle raise in a fortnight at the moment.

There was 1 auction ongoing when this blog was compiled.

Highlighted Loan: A borrower from Northern Ireland who specialises in cold storage was looking for £150k to expand their blast freezing capability. They made impressive claims that this will bring in high margin revenues and emphasized their prominence in the market place for this service in the region. The only possible weakness was a lack of security with guarantees from a sister company and the directors. Nonetheless, with a reserve interest rate of 11.5% pa, this was quite an appealing deal.

Platform News: When FundingKnight halved their fees from 1% to 0.5% for trades on their Secondary Market back in August it resulted in a 5-fold increase in activity. They have had the scissors out again and the fees are now 0.25%. Clearly they are hoping for a similar impact.

FundingSecure

Lent to Date: £25,672,899 at the end of February. This represents an increase of £4,136,975 (19.21%) across the month.

February broke all records at FundingSecure – with over £4 million worth of loans funded, this growth was double their previous best. At the start of February, the platform reported that the loans in their pipeline had the total value of £10 million, as that translated into deals valued at £4 million, and they had £20 million in the pipeline at the start of March, will this month's throughput grow pro-rata to £8 million?

This dramatic upturn in activity has caused the dynamics of the site to be turned on their head. Previously, 1 or 2 asset backed loans for modest sums would be fully funded in no time each day but at the time this blog was compiled, there were 8 deals looking to be financed. Many of these were bridging loans – the largest of which was for £350k – and were taking a number of days to fill.

Highlighted Loans: Unusually for this site, an unsecured loan was listed last week. This was to a prominent individual who had been signed-up.to be a brand ambassador. They were looking to borrow £125k with the payments from their contract comfortably covering the 6 month commitment to this loan. A return of 15% pa, although higher than the 12% pa norm for this site, was quite low in my opinion given the lack of security and so my funds went elsewhere.

Waiting for assets to be sold: I have 4 loans which have ended but no payments have been made. I am waiting to see whether the assets can be disposed of.

Secondary Market Changes: Previously when loan parts were sold the premiums/discounts could only be set in 1% increments. This has been changed to 0.25% steps. This is good news for buyers as it will lower the costs of diversification so long as people are willing to sell for a smaller profit margin. Given the modest amounts that I deal in, I'll no longer be making over-purchases with a view to selling part of my investments. A return of just a quarter of a percent doesn't justify the risks of being left with excessive exposure to individual borrowers – or being forced to sell at a discount.

Platform News: How good would it be to have an ISA that was likely to return close to 12% pa? Well that could be the case sometime in the, hopefully, not too distant future as Funding Secure have applied to the Financial Conduct Authority to offer an Innovative Finance ISA. Unfortunately, they will have to wait until they are awarded full authorisation and so this is unlikely to be in place before the 6th April start date for this new class of tax free saving.

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: £9,423,595 – increase of £88,000 – 0.94% growth.

There were 2 auctions active on this site when this blog was compiled.

Highlighted Loan: Shop-fitters, who also provide building services, are looking to raise £70k of growth capital. This is quite a young business – only 3 years of training – but the borrower did have insurance on their personal guarantee. I made a bid at 17% pa.

ThinCats

Lent to Date: £156,741,000 – increase of £860,000 – 0.55% growth.

There were 7 auctions active on this site when this blog was compiled.

Highlighted Loans: A property developer was looking to raise £125k to fund trades people to fit out their latest project – 3 x 2 bedroom dwellings. Not only is there a charge over this development but security is also offered via another location in the borrower's portfolio. This gives a very low Loan to Value of 36% while the target interest rate is 11% pa. This seems to be a very good deal.

Invest & Fund

Lent to Date: Over £1 million

No new loans have been added to the platform since New Year but half a dozen bridging loans are in the pipeline.

Platform News: Invest & Fund have introduced a very slick new website.

LendingCrowd

Lent to Date: Over £4.5 million as of the end of January.

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

Highlighted Loan: Chartered Architects were looking to raise £10k of expansion capital. Quite a modest sum which shouldn't place too much stress on their finances. At the time when 70% of the capital requirements had been funded, investors were going to receive an average return of just over 10% pa.

ArchOver

Lent to Date: £14,375,000 – increase of £2,520,000 – 21.26% growth.

Aided by raising £2.3 million for a healthcare provide (see below), this is the largest fortnightly increase for this platform.

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

Highlighted Loan: Having put in a request for £2.3 million a month ago, a business in the healthcare field returned to ArchOver for a further injection of half a million. As these loans offer returns of 8% pa – higher than the norm for this site – they are proving very popular. This time the full amount had been raised 6 days before the closure date. As before there were triple levels of security in the shape of a charge on all assets, first charge on Accounts Receivable (which will be maintained at no less than 125% of the loan value) and credit insurance supplied by Coface.

INVESTUP PORTFOLIO

There were 8 auctions taking place when this blog was compiled and, frustratingly for a small bankrolled investor such as myself, most required a minimum bid of 4 figures therefore I have not made any investments via this platform over the past fortnight.

Highlighted Loan: Via one of InvestUp partners, Crowd2Fund, an investment in a manufacturer of pre-fabricated timber buildings was listed. They were looking to raise £120k of growth capital which appeared to be easily covered by their balance sheet. A return of 8% pa was offered although, with a minimum bid of £5k, it was well out of my league.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £1.27 Billion – latest figure available.

Returns: Zopa have implemented their 3 new accounts with increasing levels of risk/reward. They offer returns varying from 3.5% to 6.5% pa. The latter is not covered by a Provision Fund.

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

Ratesetter

Lent to Date: £1,100,127,694 – increase of £24,958,722 – 2.32% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 3.7% to 6.1% depending on the length of the investment. These figures tend to fluctuate by no more than a few decimal places.

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: £24,061,191 – increase of £926,661 – 4.01% growth.

Returns: 4.7% and 6.2% for 3 and 5 year investments respectively – the latter has reduced by 0.1% in the past fortnight.

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.