Secret Investor: Funding Secure launch IFISA and Funding Circle halt development lending

Last post: Apr 20, 2017

The Secret Investor’s favourite platform – FundingSecure – launch their IFISA… FundingCircle is to remove lending to property developers from its portfolio over the next 18 months… The Easter holidays result in a reduction in throughput on most sites

The Secret Investor's favourite platform – FundingSecure – launch their IFISA… FundingCircle is to remove lending to property developers from its portfolio over the next 18 months… The Easter holidays result in a reduction in throughput on most sites

Totals lent to date (20th April 2017)

*All data correct at the time this blog was compiled.

LOANS TO BUSINESSES

Assetz Capital - £239,049,653
Funding Circle - £2,203,061,792
FundingKnight - £31,485,000
FundingSecure - £110,720,939
Money & Co - £6 million approx
Rebuildingsociety - £11,300,000
ThinCats - £229,996,000
Invest and Fund - £3 million plus
LendingCrowd - £10,766,881
ArchOver - £31,778,000

 

PERSONAL P2P LENDING

Zopa - £2,220,000,000
RateSetter – £1,842,755,214

Lending Works – £50,684,792

…………..

LOANS TO BUSINESS


Assetz Capital  

Lent to Date: £239,049,653 – fortnightly increase of £3,585,550 – 1.52% growth.

When this blog was compiled, there were 62 upcoming loans with 1 imminently due to be drawndown.

Highlighted Loan: A chain of care homes in the Midlands is looking to add to its portfolio via the acquisition and subsequent conversion of a vacant pub. It is raising the funding required for the initial purchase (£476k) via Assetz Capital before applying for planning permission to build the new care home. The loan will have a 12 month term with refinancing then being sought – hopefully the go ahead for development will have been received by then. After 3 months, the company expects to receive a VAT refund and intends to make a bullet payment of £126k at that point. There is a first charge over the pub which provides a current LTV of 68% but this will improve to 50% following the VAT refund. There are also company debentures and personal guarantees. Investors are offered a return of 8% pa.

Managed Accounts: The following accounts automatically distribute funds on behalf of investors across the platform's loans and are covered by a Provision Fund:

Quick Access Account (3.75% pa return); 30 Day Access Account (4.75% pa return); Great British Business and Green Energy Income Accounts (both of these offer a return of 7% pa).

Platform News: From 13th April until 11th May, Assetz Capital have increased the return on the 30 Day Access Account by half a percent to 4.75% pa.


Funding Circle

Lent to Date: £2,203,061,792 – fortnightly increase of £35,112,487 – 1.62% growth.

This is the lowest fortnightly growth for Funding Circle since the turn of the year, it still dwarfs most other platforms however.

There was 1 auction ongoing when this blog was compiled although as loan requests tend to fill in a matter of hours on this site, that is not a fair reflection of throughput.

Secret Investor's Activity: This remains the site which I have the most exposure to because they have the largest number of manually selectable loans.

Below are highlights from my activity over the past fortnight:

Highlighted Loan Invested in:

Expansion Loan of £159k to specialists in concrete (E risk rating 21.9% pa return). This is another company with a balance sheet that didn't appear to justify an E rating especially as the loan was being used to buy assets (for resale). By no means was this a rock solid investment as the Shareholder Funds/Net Assets only just covered the amounts borrowed over the past 12 months but I have seen worse C rated companies.

Highlighted Rejected Loan:

In the higher risk bands that I focus on, there were no loans that I rejected although with some I only invested £40 instead of my £80 maximum. These were mostly profitable businesses which had a negative Shareholder Funds/Net Assets figure.

Defaulted Loans Update: Last Thursday one of my loans defaulted after a secondhand car dealer ceased trading. Less than a quarter of my capital had been repaid.

Meanwhile I have had mixed news with regards to loans that have previously defaulted. Two have had payment plans set up which, if fulfilled, will see them fully recovered while for 2 others the guarantors are offering their creditors a dividend of 55p and 5p in the pound respectively however both of these proposals have been rejected by Funding Circle.

Platform News: Funding Circle is going to remove loans to property developers from its portfolio over the next 18 months. Existing loans of this nature will be serviced. The decision has been taken to allow the company to focus on its core strength, lending to small and medium sized enterprises. One of the factors behind the move is to facilitate international expansion, the UK was the only country that FC operates in where loans secured against property were offered.

As I have plenty of exposure to property on other sites, and indeed let a couple of houses, I had never invested in many of these loans on this platform.


FundingKnight

Lent to Date: £31,485,000 – no change.

There were 0 auctions ongoing when this blog was compiled – only 1 loan has appeared on this site in 2017.


FundingSecure

Lent to Date: £110,720,939 at the end of March – the site updates this total on a monthly basis.

There were 10 auctions ongoing when this blog was compiled.

Highlighted Loans: Another bridging loan came through last week, FundingSecure's pipeline seems particularly strong in this area. The borrower was looking to raise £350k with security provided by a plot of land in the North West which had planning permission for 12 dwellings. The LTV was 62.5% and the base rate of return was 13% but bonuses up to 4% were available to investors willing to provide a large proportion of the necessary capital.

Defaults: There have been no major developments in resolving my 6 loans currently in default.

Platform News: I was delighted to hear that FundingSecure have launched their ISA in the past week as I believe this is the site with the best risk/return ratio. It is a self-select account so I will have complete control over how my funds are invested. I shall be transferring across my Cash ISA in the near future.


Money & Co

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

When this blog was compiled there were 2 auctions taking place.

Highlighted Loan: The loan to the marquee company highlighted in the previous blog was closed early to allow the funds to be drawn down and enable those with ISA Accounts to start earning interest. A new loan to raise the remaining amount required by the borrower has been listed.


rebuildingsociety

Lent to Date: £11,300,000 – fortnightly increase of £100,000 – 0.89% growth.

There were 2 active auctions taking place when this blog was compiled although both have been listed for some weeks and were highlighted in previous blogs.


ThinCats

Lent to Date: £229,996,000 – fortnightly increase of £3,015,000 – 1.33% growth.

There were 5 active auctions taking place when this blog was compiled.

Highlighted Loan: Bakery in the South West required £260k to enable them to open a third retail outlet. Investors were offered a return of 12.75% - 13.25% pa via 2 loans. This appeared to be a good rate of return given the high levels of security offered which included a first charge over the premises being purchased plus Company and Personal Guarantees. The only question mark was how the loan was going to be repaid in 12 months' time. This is planned to be done via an enterprise wide debt restructuring project but will it be successful?


Invest & Fund

Lent to Date: Over £3 million

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

Highlighted Loan: Developer from the south east who is constructing 8 flats on the site of a former detached property, returned to the platform for a further tranche of funding worth >£154k out of a total facility of £2.1 million. The project is undergoing some difficulties with remedial work required after elements constructed to date failed to meet building regulations. The borrower is funding the required changes via another source. Given these issues, the return of 9% pa offered is beginning to look a little on the low side.


LendingCrowd

Lent to Date: £10,766,881 – fortnightly increase of £21,200 – 0.2% growth.

There were 0 active auctions taking place when this blog was compiled.

Highlighted Loan: Scottish publicans from the Highlands were looking to raise £104k to consolidate existing debt and complete an ongoing programme of refurbishments. On first inspection of the accounts, things didn't appear too good as the Shareholder Funds/Net Assets were negative by a sum almost equal to the loan amount. When questioned via the Q&A, the borrower explained that their accountant had included in the figures a "loan" made by the management team when the business was established. This was more of an investment than a loan as there were no plans to repay it. They also explained that the LendingCrowd borrowing would be secured against their operating premises which provided a LTV of 60%. Following these clarifications, I was happy to invest.

Platform News: In addition to their managed IFISA account which has a target return of 6% pa, LendingCrowd have announced that they will be launching a self select IFISA. This could potentially offer higher rates of return – my self select account on this site is currently returning just over 9% pa although, as I have not been using this site for very long, that is likely to reduce as my defaults increase.


ArchOver

Lent to Date: £31,778,000 – fortnightly increase of £380,000 – 1.21% growth.

There were 3 auctions taking place when this blog was compiled.

Highlighted Loan: Asbestos removal company was looking to raise £550k of expansion capital as they look to become one of the Top 5 businesses in their field. Investors could expect a return of 7% pa and the loan was secured via a charge over the accounts receivable. Insurance was also provided by Coface.


INVESTUP PORTFOLIO

This platform, which lists loans from multiple sites, had just 3 auctions taking place today and all were from P2P Lenders covered elsewhere in this blog. Very disappointing as I thought the concept of investing on many platforms from a single site was very good. Transferring funds between P2P Lenders using InvestUp is also a chore therefore I continue to withdraw my funds from here as repayments are made.

 

PERSONAL P2P LENDING


Zopa

Lent to Date:  £2.22 billion – fortnightly increase of £40 million – 1.83% growth.

Returns: Zopa's 3 accounts offer returns of 2.9%, 3.7% and 6.1% pa depending on the levels of access and whether or not they are covered by the Provision Fund.

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


Ratesetter

Lent to Date: £1,842,755,215 – fortnightly increase of £17,519,937 – 0.96% growth.

Returns: Interest rates are set according to supply and demand. They currently range from 3.0% pa to 5.1% pa depending on the length of the investment. Compared to a fortnight ago, the former figure is unchanged while the latter has increased by 0.3%.

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: £50,684,792 – fortnightly increase of £1,358,126 – 2.75% growth.

Lending Works has now provided borrowers with more than £50 million of capital.

Returns: 3.6% pa and 4.5% pa via an IFISA or standard account for 3 and 5 year investments respectively. These rates are unchanged over the past fortnight.

As well as a Provision Fund to cover investor's risks, 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.


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