Figures collated a day early as the Secret Investor is on holiday

*All data correct at the time this blog was compiled

LOANS TO BUSINESSES

Assetz Capital – £80,000,000 almost
Funding Circle - £794,425,540
FundingKnight - £22,711,500
FundingSecure - £12,715,004
Money & Co –  £6 million approx
Rebuildingsociety - £7,564,885
ThinCats - £126,927,000
Invest and Fund - £1 million plus
LendingCrowd - £1.25 million plus
ArchOver - £6,255,000 

PERSONAL P2P LENDING

Zopa - £1,020,000,000
RateSetter - £764,613,393
Lending Works - £13,192,895

…………..

LOANS TO BUSINESS

Assetz Capital  

Lent to Date: Almost £80 million 

14 loans currently require funding with returns between 6.5% to 18%. A further 12 are upcoming

There are also 2 managed accounts that are covered by a provision fund. These have a capped return of 7%. These managed funds are invested in many of the loans on the site. The returns are lower than if investors directly distributed their capital but there is the protection of the provision fund.

Highlighted Loans: A Welsh leisure company has no less than 3 loans on this site that are upcoming later this month. These are to purchase a brewery and 3 pubs. The loans total over £1 million with security against the assets being purchased and a residential property. Returns range from 10% to 12.75% pa with no fees to investors. I have provided some funds to one of the loans that is to be used to purchase a sports bar in Cardiff close to Glamorgan's cricket ground. Great location and also there are some excellent write ups on Trip Advisor. Being by far the largest of the trio of loans, this also offered the best rate of return. I only hope they are able to repay the sizeable amount of capital over the next 5 years however should anything go wrong there is a debenture and first charge on the pub with a Loan to Value of 44%.

Platform News: Some loans on the platform include buffers – a pot of capital that the borrowers hold to cover repayments during tough times, for example when a tenant vacates a commercial property resulting in the loss of rental income. Some lenders have complained that they had no visibility of instances where these buffers had been exhausted and would have considered selling their holdings had they known.

Assetz Capital's response was that they never intended buffers to be considered as security but have generously agreed that, should any current buffered loan default, they will cover lenders up to the amount of the buffer.

Now that the situation has been publicised, future loans will not have this "buffer cover". Nonetheless, credit should be given to the platform for taking a potential loss due to this misunderstanding between them and their investors.

Funding Circle

Lent to Date: £794,425,540 – growth of £19.2 million since 20th August. This is the third time in succession that the fortnightly increase has shown a decrease. We are of course in the middle of the school holidays but this downward trend may have been a factor in the recently announced major change in the way the site operates – see "Platform News" section.

41 loans are available across 6 risk bands (with minimum rates 6% to 18.2% before fees and defaults)

Highlighted Loan – how not to borrow via FC: I was interested in investing in a loan to a high class hotel – particularly as they have the facilities to host weddings which seems pretty much a licence to print money to this hardened bachelor! They were looking for over £70k to purchase a vehicle but after 6 days the borrower had not responded to any of the questions posted. These related to the type of vehicle the loan was funding. £70k buys a lot of "motor" so investors were keen to know what it was and how it would help the business. There was also concern expressed over the low value of the business' assets on their accounts.

The lack of response caused my capital to go elsewhere.

FC responded to the criticism of lack of answers by posting the following comment on the loan "Please note that although encouraged, it is not obligatory for borrowers to answer questions, and failure to respond does not have a bearing on our prior assessment of a business." I was surprised by this seemingly aloof response from FC as opposed to the hotelier being contacted to seek an explanation for them keeping quiet. It suggests they expect investors to rely solely on FC's risk assessments. When the platform has a zero default rate, maybe I will.

Saved by the guarantor: In mid-July I received notification that a business I had lent to had gone into liquidation having made just 5 repayments. I was due to make one of my biggest losses on this deal (all of £80! I do believe in spreading my capital thinly to minimise risk) however the guarantor has agreed to continue to make repayments via another company.

…as one loan is saved… another company I invested in has begun insolvency procedures very early in their repayment schedule. Here's hoping for another guarantor in shining armour.

…on the bright side: The fashion retailer who defaulted on their loan to which I had contributed a small part (as mentioned in last week's blog) has repaid roughly half of their capital. If only all defaulted loans had positive news so soon!

It has been quite an action packed fortnight for my Funding Circle investments… and then they dropped the following bombshell:

Platform News: From next month interest rates on Funding Circle loans will no longer be determined by auctions instead there will be fixed rates set by FC according to risk band and the length of the loan. Currently, auctions for large loans tend to offer returns well above the minimum rates but the size of loans will no longer be a factor in the new mechanism. This is a concern as smaller loans should be lower risk as they are easier for the guarantor to cover should the borrowing business get into trouble.

Investors have been provided with a table of the new fixed rates and, surprisingly, for all except one of the six risk bands returns will be lower than the current averages. Therefore FC are actually lowering returns with the introduction of fixed rates albeit only marginally.

The reason given for the change is that companies were reluctant to raise funds via Funding Circle without knowing precisely what their interest payments would be therefore the objective is to encourage more loans to be listed on the site.

While it may increase the number of lending opportunities, whether investors will be keen to fund them at lower rates is another matter. Supply and demand will always exist and the fixed rates may have to increase to encourage lenders to fund the requirements of the expected additional borrowers.

FundingKnight

Lent to Date: £22,711,500 – growth of £400,000 (1.79%) since 20th August.

2 loans are listed.

Highlighted Loan: This loan is to fund a commercial array of solar panels in Shropshire. £145,000 is the target figure with a reserve interest rate of 9.5% which appears to have been met. Security is provided by first charge over the leasehold asset, first debenture and assignment of income from the sale of electricity.

FundingSecure

Lent to Date: £12,715,004 – Record increase of £2 million during August (figures updated by FundingSecure at the start of each month). The site goes from strength to strength despite it being the main holiday period. This platform will my main focus for investments this month

There were 2 loans listed on the site on the morning of 2nd September. One was fully funded as it was a small loan of £350 with a wine collection held as security while the other was the refinancing of a £9,000 loan secured against model railway memorabilia with a return of 13% pa – I managed to get a slice of the latter. There were a further six loans being reviewed with the intention of them appearing on the site shortly. These range in value from £10k to £475k.

Platform News: By popular demand, the minimum withdrawal rate has been reduced to £5.

Money & Co

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

As was the case a fortnight ago, a single loan for £1/4 million is currently open on this site. The loan is to provide growth capital to a Facilities Management service provider within the restaurant and pub sector. A return of 8.5% pa is expected for investors. Security is offered from a debenture rather than a personal guarantee.

rebuildingsociety

Lent to Date: £7,564,885 – total has not increased although two loans have recently closed and two further lending opportunities are currently listed

Highlighted Loan: A return of 19.4% pa is available on a loan to an IT Contractor to provide working capital for setting up a cloud infrastructure for a telecoms client in East Africa. This, however, is a very troubled part of the world hence the interest rate is the highest for any loan on all the platforms reviewed.

ThinCats

Lent to Date: £126,927,000 – an increase of £2.4 million since 20th August which represents a slight increase in the rate of growth during the past fortnight. 

5 loans are available to invest in.

Highlighted Loan: A property development in Luton to develop 30 flats in an existing building. The loan is for £400k with a target interest rate of 13% pa. Security is provided by first charge on the assets and personal guarantees from two directors. A further loan is planned for the future to create another 9 flats. On completion, the developers expect to repay the loan via bank refinancing.

Invest & Fund

Lent to Date: Over £1 million

Platform currently has no loans open

LendingCrowd

Lent to Date: Over £1.25 million in total

There are currently 3 loans available to investors.

Highlighted Loan: IT service provider is looking for £30,000 to further expand their business having grown through referrals since being established 3 years ago.

ArchOver

Lent to Date: £6,255,000 – no change in the past 4 weeks (since 6th August) although there are 2 loans currently available for investment.

Highlighted Loan: A company providing credit to wholesalers is looking to raise between £50k and £100k. Interest rate is low compared to other sites at 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 platform we report on which offers insurance on loans hence the lower return due to the lower risk.

PERSONAL P2P LENDING

Zopa

Lent to Date:  £1.02 Billion – an increase of £16 million (1.59%) since 20th August.

Returns: Interest rates are 3.8% to 5% depending on the length of the investment.

Capital is covered by a Provision Fund

Platform News: Having exceeded the £1 Billion lent milestone, new CEO Jaidev Janardana has set himself the bold target to double that figure by the end of 2016

Ratesetter

Lent to Date: £764,613,393 – an increase of £18 million since 20th August

Returns: Interest rates are set according to supply and demand. They currently range from 3% to 5.7% depending on the length of the investment which is down slightly on a fortnight ago.

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

Platform News: The website's lending page has been simplified. Only the current rate for the term selected in now displayed. The old format where the funds looking for borrowers at varying rates are listed is now accessed via a "Ratesetter Expert" link.

Lending Works

Lent to Date: £13,192,895 – an increase of almost £0.5 million since 20th August

Returns: 4.8% and 6.3% for 3 and 5 year investments respectively – no change in that 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.