P2P Lending Platform News Round-up

by The Secret Investor

FundingSecure launch a Secondary Market which, initially at least, appears to have high liquidity… FundingCircle's loanbook grows at rapid rate aided by their launch on the London Stock Exchange…ThinCat's investors patiently await their new website, the platform has boomed in the past fortnight nonetheless

Totals lent to date (26th November 2015)

*All data correct at the time this blog was compiled

LOANS TO BUSINESSES

Assetz Capital – £83,745,731
Funding Circle - £944,975,000
FundingKnight - £28,091,500
FundingSecure - £16,109,824
Money & Co –  £6 million approx
Rebuildingsociety - £8,567,425
ThinCats - £140,364,000
Invest and Fund - £1 million plus
LendingCrowd - £3.7 million
ArchOver - £8,475,000

PERSONAL P2P LENDING

Zopa - £1,180,000,000
RateSetter - £903,299,573

Lending Works - £17,012,051

…………..

LOANS TO BUSINESS

Assetz Capital  

Lent to Date: £83,745,731 – increase of £692,687 – 0.83% growth.

8 loans currently require funding. A further 9 are upcoming with returns from 9% to 11% although 3 of these are due for drawdown tomorrow.

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

Quick turn-around: A loan to a food manufacturer looking to expand to meet rising demand is reaching the drawdown phase tomorrow (Friday, 27th November) little more than a week after the Credit Report was prepared. Good to see Assetz Capital reacting so quickly and hopefully it will attract more borrowers to the site. Capital being raised is £190,000 and security is provided by a charge taken over the new machinery that will be purchased, a company debenture and a personal guarantee. With a Loan to Value below 30% investors can expect a return of 9% pa.

Funding Circle

Lent to Date: £944,975,000 – increase of £31,012,520 – 3.39% growth.

A record-breaking fortnight has seen the total lent increase by over £31 million but this is not necessarily good news for individuals as the growth has largely been driven by institutional investors. Funding Circle have recently launched the £150m SME Income Fund through an IPO on the London Stock Exchange. This will provide returns from FC's loans in the UK, USA and Europe. These include the whole loans which are not available to retail investors where much of the recent increase in UK volumes has occurred.

Nonetheless, there does seem to be noticeably more throughput on the retail section of the site and so I have allocated 50% of December's P2P investment here with the other half going to reBuildingSociety.

Auto-shopping: With Funding Circle loans now filling up so quickly, I recently switched on the Auto-Bid facility expecting to sell many of the loans picked up during my regular Sunday morning stock-take however I have decided to keep the majority including loans to a jewellers ordering Christmas stock, an off-shore engineering business looking to expand (this business provided excellent responses in the Q&A) and a firm of solicitors expanding into Central London.

One to sell... The one loan I decided to offload was to an events company looking to expand – Funding Circle rated them as a D risk but a previous loan they took out via this site was in the A Band. This downgrading combined with very ambitious growth expectations made me nervous and so I clicked the Sell button.

A rare event: I managed to catch a live auction just after it had been added to the site before it had been fully funded. Just like in the good old days, I reviewed the borrower's proposition and made a bid – albeit at the C Band's 11.9% fixed rate. The loan was to fund the growth of a telecoms business. As this is such a crowded market and with no time for Q&A, cautiously, the bid was for half the amount I would usually invest.

Defaults: According to FC's weekly figures, 7 of the 9 defaults in the fortnight ending 20th November were for loans in the B risk band or lower making me feel a little smug about my decision to focus on the better returns of the C, D and E rated offerings however today another of my investments defaulted because the borrower has got into financial difficulties and cannot be contacted. The loan was half way through its repayment schedule and, because I just allocated £40 to this deal, I have only lost a little over £20 pending any recoveries.

Platform News: FundingCircle scooped no less than 4 gongs in the AltFi Awards. These were for the following categories

• P2P Business Platform of the Year 2015
• Property Lending Platform of the Year 2015
• AltFi Editors Award (Chosen by AltFi)
• Best Clarity of Data Award 2015

FundingKnight

Lent to Date: £28,091,500 – increase of £1.025 million – 3.79% growth.

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

FundingSecure

Lent to Date: £16,109,824 – 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 but they do tend to fill up very quickly.

All quiet: It has been a quiet couple of weeks for new investment opportunities on this site. There have been a few small loans all of which were fully funded by the time I had the opportunity to log on. I did invest in a renewal of a loan secured against micro-sculptures – even though I have already lent to this borrower with security against the same assets – just to get some capital working. I deposited the whole of October's P2P capital injection into FundngSecure but, due to allocating no more than £75 to one borrower (except in the latest instance), over a third was still sitting idle in the FS account. Yesterday however there was a big change – see platform news.

As loans are filled so rapidly, it is great news for borrowers as they can raise funds quickly but it is not so good for investors.

Platform News: The big new yesterday was the launch of FundingSecure's Secondary Market. With capital previously tied up for 6 months, this provides investors with the option of being able to quickly access their funds – subject to someone being willing to purchase them. There is also the possibility of making a quick profit of up to 5% or selling at a discount of up to the same amount if they wish to sell in a hurry. This substantially increased liquidity makes the site even more appealing.

Furthermore, the Secondary Market provides the opportunity to quickly diversify risk – a key strategy in P2P Lending – but the problem is, although many loan parts are available to purchase on the secondary market many are being sold at a high premium and buyers will make a loss if the loans are close to maturity. FS responded quickly when this was pointed out to them and added a column to the Secondary Market to indicate the actual returns that purchasers will see. In the worst cases, they will lose 30%!

I sold the loan part I bought that was secured against the Micro Sculptures at par and it went immediately. I also purchased 4 or 5 loan parts to get the capital that was sitting in my Funding Secure account working. I carefully selected those that had a long time left to run and were being sold at the smallest premiums – alas none were getting released at a discount. Before tax, I will get returns of 9%+ which, although less than the 12% minimum when loans are bought in auctions, is still better than having funds sitting idle.

Although individuals' purchases are capped when loans are first listed on the site, when possible I shall buy more than I wish to keep with a view to reselling at a premium on the Secondary Market.

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: £8,567,425 – increase of £27,500 – 0.32% growth.

The steady stream of high return loans appearing on this site has prompted me to split December's capital injection between here and Funding Circle even though this site is only lending a tenth of the funds that it was handling a month ago.

As of 9 pm today, when an auction ended, there was 1 remaining auction on this site.

Highlighted Loan: One of the more unusual companies I have invested in is the DNA Testing Agency which was looking to raise £27k worth of expansion capital via this platform. Just before the auction ended last Monday the average rate investors had obtained was slightly below 15% pa for a 5 year term. Security was provided by a director and corporate guarantees.

ThinCats

Lent to Date: £140,364,000 – increase of £3,451,000 – 2.52% growth.

This was quite a boom month for Thin Cats with almost £3.5 million of growth despite four auctions being withdrawn recently for a variety of reasons – an issue with the security offered, failure to raise the required capital and one borrower had a better offer elsewhere.

4 loans are available to invest in.

Highlighted Loan: Loan of £350,000 to purchase a scrap metal business from the owner who is retiring due to ill health. The borrower is a previous Thin Cats customer and already has a complementary company. Investors can achieve a very healthy 14% with security held against the business which is valued at double the purchase price.

Platform News: The swish new ThinCats website has been delayed for a few more weeks thus the clunky current version (which appeared to have crashed completely on Monday evening) will have to be endured for a little longer. Nonetheless, investors will be keen that all the bugs are ironed out before the upgrade goes live.

Invest & Fund

Lent to Date: Over £1 million

There was one auction listed that required funding.

It has been a quiet period for this platform but all their lenders received an email recently informing them that 5 new loans are in the pipeline. The first of these – a bridging loan to develop a property in London – is the one that is on the site. Investors are offered a return of 9.5%. The current LTV is 63.4% but will reduce to 35.8% once the redevelopment is completed. There will be no capital or interest repayments until the loan matures and, because of this, I would have expected a higher return.

LendingCrowd

Lent to Date: Over £3.7 million when the site last updated their figures.

There was one auction taking place when this blog was compiled although a couple more had been listed earlier in the week.

One I declined: I decided not to get involved in a loan to a company that provides satellite broadband to those remote areas of Scotland that don't have access to fibre cables. I have concerns over the sustainability of the business as the Scottish government plan to roll out access to fibre connections for three quarters of a million households over the next 5 years. I might have been over cautious as due to the topography of this country there may well always some sort of market for a satellite service but I suspect growth will be limited.

One I accepted: A loan of £110,000 to raise funds to enable a letting agency to purchase a competitor. The takeover is friendly and the expected extra income this will generate comfortably covers the repayments. I have purchased enough loan parts from the Secondary Market to ensure that I have invested £1,000 before the offer of a £100 bonus expires at the end of November. I was going to allocate the whole bonus to this borrower and class it as a "free" loan but, having seen Lending Crowd's pipeline of upcoming loans, I decided to spread it across 2 or 3.

Platform News: LendingCrowd have launched an app so that iPhone or iPad users can buy and sell their loan parts on the move.

ArchOver

Lent to Date: £9,915,000 – increase £1,440,000 – 16.99% growth.

An excellent fortnight for ArchOver with the totals lent figure increasing by almost £1.5 million.

When this blog was compiled, 2 loans were available for investment.

Highlighted Loans: ArchOver loans are one of the safest available in the P2P market as security is provided by a first, floating charge over Accounts Receivable in addition to the loans being insured. This also means the returns are often lower than other sites however a loan to a company providing financing to the legal industry offered quite a reasonable 8% pa and the £150,000 required was soon fully funded. 

PERSONAL P2P LENDING

Zopa

Lent to Date:  £1.18 Billion – increase of £30 million – 2.61% growth.

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

Zopa distribute investor's money mostly to unsecured consumer loans however capital is covered by a Provision Fund

Ratesetter

Lent to Date: £903,299,573 – increase of £21,531,800 – 2.44% growth.

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, slightly down on a fortnight ago.

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 – although that has not happened in November!

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.

Like Zopa, most of Ratesetter's lending was to the unsecured consumer market – they famously announced a tie up with GiffGaff to provide funding for mobile phones – but recently the number of commercial and property loans has increased and they account for 40% of the currently outstanding section of their loanbook.

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: £17,012,051 – increase of £57,376 – 3.5% growth.

Returns: 4.7% and 6.1% for 3 and 5 year investments respectively – 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.