The number of loans listed on Funding Circle has more than halved – do borrowers not like the fixed rates?... A brief surge of loans listed on ReBuildingSociety tempts The Secret Investor… FundingSecure's popularity with brokers grows

Peer to Peer Lending Review (1st October 2015)

*All data correct at the time this blog was compiled

LOANS TO BUSINESSES

Assetz Capital – £81,391,603
Funding Circle - £845,072,700
FundingKnight - £25,049,500
FundingSecure - £14,584,493
Money & Co –  £6 million approx
Rebuildingsociety - £8,051,885
ThinCats - £130,400,000
Invest and Fund - £1 million plus
LendingCrowd - £1.25 million plus
ArchOver - £7,100,000

PERSONAL P2P LENDING

Zopa - £1,080,000,000
RateSetter - £811,034,474

Lending Works - £14,455,593

…………..

LOANS TO BUSINESS

Assetz Capital Statistics

Lent to Date: £81,391,603 – an increase of just over £1 million (1.37%) in the past fortnight.

6 loans currently require funding. A further 14 are upcoming with returns from 8% to 12.75%.

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

Highlighted Loan: The best of the upcoming offerings appears to be for an installer of energy efficient boilers looking to raise £150k of working capital with a return to investors of 9% pa. The loan is guaranteed by two directors. All those involved have plenty of experience in the field but the business was only set up a few months ago and the Government grants to the arena in which they will be operating are to be reviewed in a couple of years therefore I require a higher rate of return before I would be tempted to get involved.

Platform News: Assetz Capital have issued a further bulletin with regards to the Government's stance on providing grants to renewable energy generation schemes (ie wind farms). As the costs of this support from Whitehall are passed back to utility bill payers there is a desire to cap annual totals which means not all schemes will be receiving state assistance in the coming years.

In light of this, Assetz Capital will only list projects which are looking for funds from investors where government assistance has been agreed.

Funding Circle Statistics

Lent to Date: £845,072,700 – another £25 million has been allocated in the past fortnight. This is a few million higher than the Summer months which is surprising given the number of loans listed on the retail portal has been on quite a steep downward trend both before and after the switch from auctions to pre-determined interest rates. Presumably, the additional capital has come through institutional investors funding whole loans.

Currently 31 opportunities are available across 6 risk bands (with fixed rates from 6% to 18.1% before fees and defaults)

Where have all the loans gone? By putting together a Funding Circle review, I can see that it has been a very quiet fortnight. As I have time to analyse each loan I invest in, my strategy has been to cherry pick from those offering the highest returns – this means with the fixed interest rates that were introduced on Monday I will not be investing in anything below a C risk band.

The number of offerings listed has been less than half the level of a couple of weeks ago and, of those that have been in my bidding range, they have often not provided enough information for me to make an investment decision.

A couple of weeks ago there were 9 loans looking for capital on the rebuildingsociety platform therefore I transferred over some of my FC funds that had accumulated from repayments. I also swallowed my pride and bought a few E risk band part loans at a premium from the FC Secondary Market. That at least upped my annualised return on FC to 8.6% but it is early days for these E rated businesses and that level of return many not be maintained if the predicted amount of defaults occur.

I managed to get involved in one last auction for a loan to refurbish a newsagent's premises and buy stock. They wanted to raise £25k and had been classified as Band C in the final week before the pre-determined interest rates were introduced. I put in a winning bid of 11.5% (well above the minimum of 10.2%) shortly before the auction ended.

Investors in that loan will earn an average rate of 11.1% which is some way below the new fixed return of 11.9% for a C rated 60 month financial injection. So much for things being worse for lenders and better for borrowers under the new arrangements! Perhaps this is why the number of loans listed has shrunk. Time will tell if the number crunches have got their sums correct but if the fixed rates are set at the averages of previous auctions for each risk band then a significant number of borrowers will be receiving higher rates than they would have done.

I also picked up a new "fixed" C loan at the aforementioned 11.9% rate when a company who powder coat metal looked to raise £104k to upgrade their machinery and gain the capital to achieve greater purchasing power. The 11.9% return is only 0.3% below the old minimum bid rate for D rated loans so I was happy to invest in a business that had a comparatively healthy profit margin.

A change in strategy: Previously, following a personal review of the Funding Circle, I sorted the listings by the time remaining on the auctions but, with the introduction of fixed rates, the percentage funded is now the key matrix to monitor – in addition to the interest rate – as no further investment is possible once the capital requirement has been fully met. I have missed out on a few C/D/E rated loans through not seeing them in time.

Slightly on the downside: I thought I was going to get through the fortnight with no bad news but a note was posted yesterday against a loan I am involved with. The borrower is a manufacturer of niche IT equipment. As sales have fallen by 50% they have been granted leave to make half payments for the next few months. By no means is this a disaster and hopefully business will pick up for the borrower.

FundingKnight Statistics

Lent to Date: £25,049,500 – growth of almost £1.4 million (5.8%) since 17th September. From a p2p lending review point, the rate of increase continues to accelerate. Although, with not too many loans listed on the retail portal, it has to be assumed institutional activity is the main driving factor.

Just one loan is listed on this p2p lending platform at the moment but, with a reserve interest rate of 12% pa, it looks quite tempting. It is to raise £50,000 to enable the buyout of a majority shareholder at a manufacturer of bespoke building supplies. The director no longer has time to commit to the business. The company has low debt levels and healthy profits margins.

If more loans like this were listed on the platform then some of my capital would be heading in this direction.

FundingSecure Statistics

Lent to Date: £14,584,493– Increase of £1.8 million during September (figures are updated monthly). The past 3 months have seen growth of around £2 million per month.

There are 2 active loans on the site at the moment.

Highlighted Loan: The interesting thing about investing with FundingSecure is the diverse range of items that are held as security. Tomorrow (2nd October) a loan is scheduled to be listed where £15,000 being borrowed against a Dutch Barge which has an estimated value of twice that amount. The barge will be moored for the duration of the loan to reduce the risk of damage. If it hasn't been fully funded by the time I get home from work, I shall be investing to get a return of 12% pa.

Platform News: FundingSecure are very upbeat about the volume of loans listed on their website continuing to grow. An increasing number of brokers are working with this lending platform, as they are impressed by the speed at which capital can be raised. The deals are usually completed in a fortnight. As returns for investors are nearly always in double figures, I am delighted to hear this news. With the loans on Funding Circle drying up, FS is where I have been making deposits of fresh capital to my P2P portfolio in recent months.

Money & Co Statistics

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

Two loans are available for investment on this site but, as they have 3 weeks to be funded, they are the same ones that were available at the time the last blog was written.

Highlighted loan: A light aircraft engine refurbisher is looking to raise £317,000 to refinance existing debt. Security is provided by a debenture and returns over 9% pa can be expected.

rebuildingsociety Statistics

Lent to Date: £8,051,885 – it has been a busy fortnight on this p2p lending platform with the total lent increasing by £392,000 (5.12%). The site has now passed the £8 million lent mark

…and with this increased activity, I switched some of the capital accumulated from repayments on Funding Circle too here. There are far more details about each borrower on ReBS and all seem very willing to respond to questions from potential lenders, something that has been increasingly lacking on FC recently.

It is just a pity that the number of loans being added to the site has tailed off this week. Only 2 remain open of the 9 that recently appeared.

Highlighted Loan: A supplier of art work to hotels is looking to raise £200k to consolidate existing loans which were taken out at unfavourable rates when times were tough. They are looking to substantially reduce their interest payments – they must have been very high as the closing rate on the ReBS loan is likely to be well into the teens. The difficult times for the business seem to be in the past as they have a very healthy order book which encouraged me to invest.

ThinCats Statistics

Lent to Date: £130,400,000 – this is an increase of almost £3.5 million since the statistics were last updated on 1st September. 

10 loans are available to invest in.

Highlighted Loans: A restaurant chain are looking to raise £470k to open eatery number 9. A return of 11.75% is offered. The company has previously used the Thin Cats lending platform to raise capital and have a good payment record. The number of restaurants in the group has reached a "Critical Mass" providing enhanced purchasing power. Security is provided via a first debenture over all the assets of the business.

Invest & Fund Statistics

Lent to Date: Over £1 million

No new lending opportunities have been added to the site in the past fortnight.

LendingCrowd Statistics

Lent to Date: Over £1.25 million in total

There are currently 4 loans available.

Highlighted Loan: An online music magazine is looking to raise £30k to expand their business. 11% of that total has been raised so far at an average rate of 11.24% pa.

Platform News: LendingCrowd have extended their very generous "Summer Cashback" Offer until the end of November. New investors will receive £100 if they lend £1,000 before the end of the promotion period.

ArchOver Statistics

Lent to Date: £7,100,000 – an increase of just £50,000 since 17th September.

Highlighted Loan: A building services company is looking to raise £275k. Interest rate is low compared to other sites at around 6.5% but in addition to security via a first, floating charge on the borrower's Accounts Receivable, the loan is also insured. This is the only p2p lending platform that we report on which offers insurance on loans hence the lower return due to the lower risk.

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

PERSONAL P2P LENDING

Zopa Statistics

Lent to Date:  £1.08 Billion – as was the case the previous fortnight, another £30 million has been lent by this platform since 17th September.

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 Fundy

Ratesetter Statistics

Lent to Date: £811,034,474 – an increase of almost £25 million since 17th September which takes the platform over the £800 million threshold.

Returns: Interest rates are set according to supply and demand. They currently range from 3.3% to 5.9% depending on the length of the investment.

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.

Lending Works Statistics

Lent to Date: £14,455,593 – an increase of £0.5 million since 17th September which is down slightly when compared to recent months.

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

A quick Lending Works review shows that as well as providing 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.