Secret Investor: FundingCircle Join Zopa in the £2 Billion Lent Club
Totals lent to date (23rd February 2017)
*All data correct at the time this blog was compiled.
LOANS TO BUSINESSES
Assetz Capital - £214,790,158
Funding Circle - £2,013,057,461
FundingKnight - £31,485,000
FundingSecure - £96,544,133
Money & Co - £6 million approx
Rebuildingsociety - £11,200,000
ThinCats - £221,102,000
Invest and Fund - £3 million plus
LendingCrowd - £9,370,361
ArchOver - £29,473,000
PERSONAL P2P LENDING
Zopa - £2,060,000,000
RateSetter – £1,747,002,477
Lending Works – £43,408,402
LOANS TO BUSINESS
Lent to Date: £214,790,158 – fortnightly increase of £540,000 – 0.25% growth.
When this blog was compiled, there were 53 upcoming loans with 2 imminently due to be drawndown.
Highlighted Loan: Scottish property developers requested >£714k to complete the refurbishment of a former guest house to create two separate properties. With a positive report from the monitoring surveyor, a forecasted GDV on completion of 60% and security in the form of a first charge on the property plus a Personal Guarantee, it was no wonder the rate of return offered was quite low at 7.5% pa – only just above that of the Provision Fund covered Managed Accounts.
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 (4.25% pa return); Great British Business and Green Energy Income Accounts (both of these offer a return of 7% pa).
Lent to Date: £2,013,057,461 – fortnightly increase of £52,355,300 – 2.67% growth.
Hot on the heels of Zopa, Funding Circle have now also reached a Total Lent figure of over £2 billion.
There were 23 auctions ongoing when this blog was compiled.
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:
Asset Purchase Loan of £53k to building supplies company (C risk rating, 12.5% pa return). C/D/E rated loans were a little thin on the ground last week so I invested with this borrower despite their business making a small loss last year and their request being a little on the short side – not much more than “we want to buy more equipment”. On checking out their website, this is a family business the roots of which were established in 1948 and the net worth of the company is more than 3 times the size of the capital being raised. The fact that recoveries on my Funding Circle portfolio have been exceeding the newly defaulted sums recently also made me a little more bullish.
Highlighted Rejected Loan:
No rejected loans in the past fortnight although the proposal above came close.
Defaulted Loans Update: A borrower who had defaulted paid the outstanding capital on their loan having sold their house. My share of this was £57. Due to their personal circumstances, Funding Circle have decided not to pursue the interest owed therefore this particular account has been closed. The default only occurred in November so it is good that the issue has been resolved so quickly as many debts on this platform seem to take years to be recovered.
I hold few bridging loans on the Funding Circle site as, at 10% pa, they yield less than the loans in the C and higher risk bands but one that I had invested £20 in defaulted last week. With a first charge over the property and a Personal Guarantee from the borrower, Funding Circle were confident of eventually recovering this loss.
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.
Lent to Date: £96,544,133 at the end of January when the figure was last updated.
FundingSecure released their data for January just after the last blog went to press. The first month of the year was another busy one with £8.1 million being distributed across 49 loans. This represented a growth of 10.38%.
An even more important matrix for investors is Total Interest Earnt. FundingSecure passed the £3 million mark in this respect during January. This represents a net return (ie after losses) of 13.16% - by far the best return of any site covered by this blog. Losses on capital are just 0.1% - amazing!
There were 6 auctions ongoing when this blog was compiled.
Highlighted Loans: With the start of the motor racing season approaching and finding sponsorship to cover costs as difficult as it ever was, a couple of drivers have offered their competition vehicles as security to raise the funds for an operating budget. The cars – a Porsche and a BMW – were held as a first legal charge which was registered with Companies House. As is the norm for this site, investors were offered a return of 13% pa.
Defaults: The platform is hopeful of imminently selling two of the assets held as security against my 4 loans that remain in default on this site (out of a total of 145 which I have exposure to) – these are a plot of land and a watch.
Money & Co
Lent to Date: £6 million approx. (latest available figure)
When this blog was compiled there were 0 auctions taking place.
Highlighted Loan: The third loan to “quick sale” house purchasers to enable them to purchase more stock was listed this week. With security provided by their portfolio of properties, investors were offered a return of 9.2% pa. For me, investing in multiple loans with the same borrower is too high risk therefore Money & Co remains a platform with not enough diversification to meet my requirements.
Lent to Date: £11,200,000 – fortnightly increase of £400,000 – 3.7% growth.
There were 3 active auctions taking place when this blog was compiled.
Highlighted Loan: Quite a promising loan was added to the site this week. The borrowers are raising <£135k to purchase a pet shop. It is a profitable business from which the owner has decided to retire. Although the couple who are taking over have no retail experience, the person who is selling up has agreed to work for them a couple of days each week on a consultancy basis. The maximum bid rate was 18% pa, but to cut the borrowers some slack, and also to increase the chances of my bid being accepted, I offered a small sum at 16% pa.
Defaults Update: It appears as though one of my defaulted loans is going to be resolved quite quickly as the borrower had taken out insurance on their Personal Guarantee however balancing out this good news, another loan has defaulted after ReBS appointed administrators at a food business because payments had not been made since November. This brings the total number of defaults to 4 for me on this site out of the 16 loans I have exposure to thus it is quite a high proportion.
Lent to Date: £221,102,000 – fortnightly increase of £2,387,000 – 1.09% growth.
There were 10 active auctions taking place when this blog was compiled.
Highlighted Loan: To facilitate a management buy-out of a chain of children’s care homes, borrowers were looking to raise £950k this week. The business is currently in administration due to crippling debt. Although those looking to take over sat on the existing board they claim not to have been party to the lending which took place at unsustainably high rates. They expect their take-over to be a success as the underlying balance sheet is very profitable but there were some on the Q&A page who had doubts over how much responsibility the borrowers bore with regards to the current dire financial situation. Security was provided by company debentures, first charges over two care homes that were owned outright (value £600k) and Personal Guarantees up to £400k from the directors. Given the reservations, I felt a return of 10.5% pa was a little on the low side. The borrowers were guaranteed to get the loan as it had been underwritten by ESF Finance, ThinCats’ owners.
Platform News: ThinCats suspended their Secondary Market towards the end of last week after technical difficulties were encountered. The mechanism for trading loan parts has not been reinstated.
Invest & Fund
Lent to Date: Over £3 million
There were 0 active auctions taking place when this blog was compiled.
Highlighted Loan: The developer from Cardiff who is constructing 12 flats returned to the site for a further drawdown of <£57k from his total loan of over £1 million. The latest onsite reports indicate that some areas of the project are falling behind schedule although the contractors are confident of making up for lost time. Despite these potential problems, the return of 9.5% pa remains the same as earlier tranches. This is another platform with too few borrowers for my liking.
Lent to Date: £9,370,361 – fortnightly increase of £272,100 – 2.99% growth.
There was 1 active auction taking place when this blog was compiled.
Highlighted Loan: Seafood specialists were looking to raise £25k+ to fund an additional fishing vessel. The problem with this loan was the very high Current Liabilities figure which it emerged via the Q&A was due to an accountancy error and the sums involved were Long-Term Liabilities relating to another failed business venture that the borrower had been involved with. While it was reassuring that this latest loan was to be used to purchase an asset, the confusion over the balance sheet and the previous failed ventures meant I didn’t have the confidence to invest.
Platform News: LendingCrowd made their IFISA available to investors on 15th February. It is a managed account with a target return of 6% pa. So, as it is a target, investors are not guaranteed that return and there is no Provision Fund. On the other hand, presumably the benefits could be higher. Indeed, the returns I’ve achieved to date by manually selecting loans on this site are over 9% pa although this income is taxable.
Lent to Date: £29,473,000 – fortnightly increase of £398,000 – 1.37% growth.
There was 1 auction taking place when this blog was compiled.
Highlighted Loan: One of ArchOver’s most frequent borrowers – a company that provides finance to SME’s returned to the site last week to raise a further £1/2 million. This will refinance a loan that is due to expire. The latest capital injection will be used to fund projects in the humanitarian and educational spheres. Interestingly, a return of 8.5% pa is offered which is much higher than many of the previous loans to this organisation despite the customary high levels of security for this site with a charge against the Accounts Receivable and loan insurance from Coface provided.
This platform, which lists loans from multiple sites, had 7 auctions taking place today. All except 1 were from P2P Lenders covered elsewhere in this blog. The remainder was a property backed loan from Ablrate which had a 60% LTV and offered a return of 10% pa.
Site was launched in early October.
No new loans have been added to this site in the past fortnight.
PERSONAL P2P LENDING
Lent to Date: £2.06 billion – fortnightly increase of £30 million – 1.48% 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.
Lent to Date: £1,747,002,477 – fortnightly increase of £26,482,332 – 1.54% growth.
Returns: Interest rates are set according to supply and demand. They currently range from 3.6% pa to 5.5% pa depending on the length of the investment. The former has reduced by 0.1% while the latter has increased by 0.6% over the past fortnight.
Capital is covered by a Provision Fund. Ratesetter proudly boast that no investor has lost a penny since they launched in 2010.
Lent to Date: £43,408,402 – fortnightly increase of £1,106,208 – 2.69% growth.
Returns: 4.0% pa and 4.5% pa via an IFISA for 3 and 5 year investments respectively.
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.
Platform News: Just before the last blog was published, Lending Works launched their IFISA. To avoid demand outstripping the requirements of those wishing to borrow via the platform, and thereby depressing interest rates, Lending Works had planned to only accept the transfer of £1 million worth of ISA funds however such was the enthusiasm from investors that £2.4 million had been received in the first 24 hours at which point the “gates” were closed. Last Friday, Lending Works opened up the second tranche of IFISA funding. Due to an increase in loan requests they were able to raise the limit for this round of investments to £5 million.
****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.