P2P Lending Platform News Round-up

by The Secret Investor

Ratesetter cause controversy admitting to using part of its Provision Fund to provide liquidity in their loan market – a decision now reversed… The Secret Investor moves his monthly deposit into a Cash ISA to deploy via an IFISA after 6th April… Bridging loans cause rapid growth at FundingSecure

Totals lent to date (3rd March 2016)

*All data correct at the time this blog was compiled

LOANS TO BUSINESSES

Assetz Capital – £94,091,542
Funding Circle - £1,134,233,040
FundingKnight - £29,982,000
FundingSecure - £21,535,924
Money & Co –  £6 million approx
Rebuildingsociety - £9,335,595
ThinCats - £155,881,000
Invest and Fund - £1 million plus
LendingCrowd - £4.5 million
ArchOver - £10,915,000

PERSONAL P2P LENDING

Zopa - £1,270,000,000
RateSetter - £1,075,168,972

Lending Works - £23,134,530

…………..

LOANS TO BUSINESS

Assetz Capital  

Lent to Date: £94,091,542 – increase of £648,953 – 0.69% growth.

When this blog was compiled there were 39 upcoming and pipeline loans plus 3 managed accounts protected by Provision Funds with, depending on accessibility, returns of 3.75% to 7%.

Highlighted Loan: A borrower who owns two investment properties is seeking a bridging loan of just over £200k. Security is provided by the aforementioned properties although the Loan to Value ratio is quite high at 72.32%. Given this, I would have expected a higher return than 8.75% pa, especially as there are not going to be any capital repayments for the first 24 months of the 5 year term. It is for these reasons that I decided not to invest in this particular loan.

I am not making any fresh deposits into any P2P platforms for the next two months, instead I will add to a Cash ISA with the intention of moving that to an Innovative Finance ISA when they become available from 6th April therefore, although I have a small amount of capital unallocated in my Assetz Capital account, I decided to wait for something more appealing than this particular property loan.

Funding Circle

Lent to Date: £1,134,233,040 – increase of £31,363,900 – 2.84% growth.

Although the amount lent in the past fortnight was about £1 million less than the previous 2 week period, the figure of £31 million is far ahead of any other platform in the section of the blog and only Zopa stands comparison in the wider P2P arena

25 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 £105k to a Plumbing business who are restructuring after two companies that provided them with contract work went into liquidation owing £250k (C risk rating, 11.9% return). What I particularly liked about this borrower is that they explained that they now insure all the debt that is owed to them using Coface who also underwrite the loans on the ArchOver platform. This led me to believe that this business is far more secure than the C rating indicates.

Highlight Rejected Loan:

Loan of just under £52k+. This D rated loan was in the automotive section but the information about the company and why they wanted the loan ran to 12 words! The amount of profit on the balance sheet was tiny and there was no explanation as to how they could afford the repayments.

Gone in a flash: As I am on leave from the day job, I have been able to monitor this site on a pretty constant basis. Some small C and E loans appeared where borrowers were looking to raise £5k to £25k and I was able to get in to make investments before they were fully funded. In these cases, all the capital had been raised and the loan removed from the listings in much less than an hour. Good news for borrowers as they can quickly access finance, not such good news for investors.

I always consider these smaller loans less risky as they are for amounts that an individual could conceivably pay out of their income in a reasonable length of time but it requires plenty of time, patience and regular use of the refresh button to catch these sort of deals!

Defaults: The number of Funding Circle defaults certainly seems to be increasing with 24 reported in the fortnight ending 26th February. Fortunately, none of my loans were included in that number.

Platform News: For the second year running, Funding Circle have been included in the Sunday Times 100 Best Companies to Work For List.

FundingKnight

Lent to Date: £29,982,000 – increase of £330,000 – 1.11% growth.

There were 0 auctions listed when this blog was compiled although, in the past fortnight, the site hosted a £210k expansion loan for a sunbed business.

FundingSecure

Lent to Date: £21,535,924 at the end of January.

At the time this blog was compiled, 2 auctions were taking place.

Highlighted Loans: This site really is on an upward trend in terms of both the number of individual loans and total amount lent. On the evening of 1st March there were 5 active auctions which is unprecedented for this site. In 2015 the usual scenario was that there was 1 loan listed which was small enough to be fully funded by the end of the afternoon.

A major reason for the upturn is because FundingSecure have attracted more short-term bridging loans and indeed this was the case on Tuesday when all 5 of the listed deals were of this nature. The largest of these was for a property developer who was looking to raise £1 million to purchase a brown-field site in the North West which had planning permission for the construction of 32 homes. With a base rate for investors of 12% pa, under a bonus scheme those willing to contribute more than £100k would return 16% pa.

Today there was a traditional FundingSecure "pawn broking" loan listed on the site where £10k was being borrowed against diamond jewellery that was valued at £15k. Once more a return of 12% pa was offered.

Buying to Sell: The sharp upturn in the number of loans listed on this site appears to have had a knock-on effect with the secondary market. I over invested in a loan secured against a luxury sportscar with the intention of selling the excess at a profit but these loan parts have not attracted any buyers. With so many large auctions recently, it appears fewer people have the need to resort to the secondary market to get their capital working.

Platform News: Where borrowers agree, on a trial basis, investors will receive interest before loans are drawn-down. This benefits those who lend as their capital is not sitting idle waiting for the deals to be finalised – especially with the large loans that take some time to fill. Loans should also be fully funded more quickly thus assisting borrowers so it is a win-win situation.

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: £9,335,595 – increase of £150,000 – 1.63% growth.

There were 3 auctions active on this site when this blog was compiled although two were soon to close.

Highlighted Loan: A provider of innovative motor vehicle leasing to small businesses was looking to raise £48k to support the ongoing development of their enterprise. Confident responses in the Q&A gave me trust in the borrower who made the following very interesting observation. In his opinion, the cost of raising capital via the P2P market is similar to conventional banking however he saw reBuildingSociety as a way to build relationships with lenders that may lead to them making use of his services. I invested in this business via InvestUp.

Platform News: With a view to meeting the needs of passive investors following the introduction of Innovative Finance ISAs, reBuildingSociety are looking to introduce a range of managed accounts yielding 4% to 8% pa depending on accessibility.

Defaults: I have had my first reBuildingSociety default and it is a loan that was taken out as recently as November so very little capital has been paid back. The reason for the default is because the borrower had other loans which they had not disclosed to the platform therefore reBuildingSociety have requested an immediate payback of all funds. I fear a long protracted legal battle but hopefully repayments will continue to be made until that is resolved.

ThinCats

Lent to Date: £155,881,000 – increase of £2,504,000 – 1.63% growth.

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

Highlighted Loans: A Thai restaurant chain continues to go from strength to strength thanks to being able to raise funding via the ThinCats platform. Their latest loan is for £160k to "fit out" their 10th outlet. With a target interest rate of 11.75% pa, an excellent record of repayments on previous TC loans and the expectation that the capital will be paid back well before the end of the 5 year term, this appears to be an excellent investment. Just a shame the £1k minimum bid is beyond the means of this Skinny Cat.

Invest & Fund

Lent to Date: Over £1 million

No new loans have been added to the platform since New Year.

LendingCrowd

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

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

Highlighted Loan: High end Estate Agents in the West Country are looking to raise £50k to relocate one of their offices to a more prominent location. This is a very profitable business and the borrowers expect the move to improve matters further. I have made a bid at over 11% pa.

ArchOver

Lent to Date: £11,855,000 – increase of £940,000 – 8.61% growth.

There was 1 auction taking place when this blog was compiled. This is the huge £1.8 million loan to the healthcare company that was mentioned in my previous blog. At the time of writing it was just under 70% funded.

Highlighted Loan: ArchOver have traditionally been known for their comparatively low risk/low return deals but increasingly lenders have been earning 8% pa on their investments. There was such an opportunity last week when a finance house specialising in small and medium sized enterprises returned to the platform for a further injection of £100k. Security was provided by a first charge on Accounts Receivable (which will be maintained at no less than 125% of the loan value) and credit insurance supplied by Atradius.

INVESTUP PORTFOLIO

There were 13 auctions taking place when this blog was compiled.

Highlighted Loan: Via one of InvestUp partners, Ablrate, I invested in a loan to cover the costs of setting up a bottling plant. Security was provided by a charge on the equipment being purchased and via a guarantee from the parent company. The return was 10% pa.

PERSONAL P2P LENDING

Zopa

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

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.

Platform News: The platform expects to launch its Zopa Plus account in mid-March. This will give retail investors access to riskier loans which were only previously offered to institutions but capital will not be covered by a Provision Fund. After defaults, returns of 6.5% are anticipated.

Ratesetter

Lent to Date: £1,075,168,972 – increase of £23,881,013 – 2.27% growth. Curiously, the amount of increase is identical to the last £1 to the previous fortnight.

Returns: Interest rates are set according to supply and demand. They currently range from 3.4% to 5.5% 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.

Platform News: Ratesetter no longer use their Provision Fund to provide liquidity when larger loans to property developers are listed on the site after its lenders expressed concern about this practice.

Lending Works

Lent to Date: £23,134,530 – increase of £842,589 – 3.78% growth.

Returns: 4.7% and 6.3% for 3 and 5 year investments respectively – no change 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.