Secret Investor: Record breaking start of the year for Zopa and Funding Circle
Totals lent to date (9th February 2017)
*All data correct at the time this blog was compiled.
LOANS TO BUSINESSES
Assetz Capital - £214,250,158
Funding Circle - £1,960,702,161
FundingKnight - £31,485,000
FundingSecure - £87,462,188
Money & Co - £6 million approx
Rebuildingsociety - £10,800,000
ThinCats - £218,715,000
Invest and Fund - £3 million plus
LendingCrowd - £9,098,261
ArchOver - £29,075,000
PERSONAL P2P LENDING
Zopa - £2,030,000,000
RateSetter – £1,720,520,145
Lending Works – £42,203,163
LOANS TO BUSINESS
Lent to Date: £214,250,158 – fortnightly increase of £8,655,250 – 4.21% growth.
When this blog was compiled, there were 45 upcoming loans with 1 imminently due to be drawndown.
Highlighted Loan: A property developer was looking to raise £434k to purchase a mixed use property in the North West. There is an existing dance studio on the ground floor while the residential accommodation above is going to be converted into flats. The value of the property gives a high LTV of 91% and so the borrower had to utilise other properties in his portfolio as additional security to bring the LTV down to 70%. No doubt it was for this reason that the loan offered a return of 9.5% pa which is much higher than the average for Assetz Capital.
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: £1,960,702,161 – fortnightly increase of £54,838,169 – 2.88% growth.
With another £54 million raised, the site is closing in on a Total Lent figure of £2 billion. No doubt there’ll be some disappointment at board level that Zopa have pipped them at the post when it comes to reaching that milestone.
There were 11 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:
Expansion Loan of >£202k to Film & TV caterers (D risk rating, 17.9% pa return). Having won a contract to service the next Star Wars movie, the company needed an additional vehicle. The borrower also planned to pay off a couple of outstanding Funding Circle loans. The fact that an asset was being purchased was encouraging but negative aspects were a credit rating that was on the floor and the amount of borrowing was increasing however a 17.9% pa return is never going to be without risks. I would imagine a Star Wars film is unlikely to be cancelled leaving the business high and dry.
Highlighted Rejected Loan:
Expansion Loan of £212k requested by grocery store/off licence (C risk rating, 13.5% return): There was lots not to like about this loan. The proposal was quite short and very vague with no explanation of the “new areas” that the sum being raised was going to be used to enable the company to expand into. Then, when queried via the Q&A, the “new areas” turned out to be the addition of a third outlet – so more of the same rather than a new area. The Shareholder Funds/Net Assets value was only 50% of the loan requirement – presumably the guarantor holds assets outside of the balance sheet but information on this is never provided by Funding Circle. The capital amount of the 5 year loan also represents 4 times the value of the most recent profit figure. This business seemed to be sailing close to the wind.
Defaulted Loans Update: The Secret Investor is a happy man! None of his Funding Circle loan have defaulted in past fortnight. His annualised rate of return has crept up to 7.8%. This can’t last!
Platform News: So far, loans to property developers have been rated A+ or A however, having reviewed the statistics, Funding Circle have decided to give some of these loans a B rating. These are likely to have an LTV ratio at or near the 70% maximum this platform permits. Funding Circle say this does not mean the loans are any more likely to default so, one can only assume, that some of these loans have previously been “under risked” by their assessors.
Lent to Date: £31,485,000 – no change.
There were 0 auctions ongoing when this blog was compiled.
Lent to Date: £87,462,188 at the end of December when the figure was last updated.
There were 7 auctions ongoing when this blog was compiled.
Highlighted Loan: All investors were offered a return as high as 14% this week however the loan in question sits a long way down the pecking order with regards to the security held against a large property located in the Midlands. The first charge is held by another borrower with a previous FundingSecure loan having a second charge. This latest FundingSecure capital injection ranks behind the earlier one. Nonetheless, the total LTV for the three loans is still well below 70% at 64.4%. The borrower is working towards securing a longer-term mortgage.
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 – 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.
Platform News: Money & Co received full authorisation from the FCA this week paving the way for them to offer an IFISA once they have set up all the required systems. They believe property-backed loans will be particularly attractive to those investing via their tax-free wrapper.
Lent to Date: £10,800,000 – no change in the past fortnight.
There was 1 active auction taking place when this blog was compiled.
Highlighted Loan: The 1 active auction was added to the site today. It was to enable a clothing business which is prominently a retailer to move into the wholesale arena through an acquisition. Because 2 personal guarantees and a third charge against a residential property were offered as security, ReBS elected to reduce the maximum interest rate available in the auction down to 17% pa (from their usual 20%), this is still high compared to most other sites. Bizarrely, however, no financial data was made available relating to the borrower. Only the accounts of the target company were published in the data pack. Perhaps this is an oversight which will be corrected in the next few days. For the time being, although I have cash from repayments sitting in my ReBS account, I will not be investing in this loan.
Lent to Date: £218,715,000 – fortnightly increase of £4,609,000 – 2.15% growth.
There were 5 active auctions taking place when this blog was compiled.
Highlighted Loan: Last year ThinCats offered a loan which qualified for Social Investment Tax Relief but it failed to reach the required funding requirements. Recently, they tried again although this time it was with a loan that qualified for Community Investment Tax Relief. The funds are being raised by a Midlands based Commuunity Development Finance Institution (CDFI) who will lend the money to local companies who are unable to get loans from High Street banks. ThinCats’ investors will not receive any interest from the loan but, if they are tax-payers, the equivalent of 6.2% to 9.1% will be received via tax relief depending on what their tax rate is. In total, the CDFI are looking to raise £3 million with £250k the target for this initial tranche. One crucial issue which may be a deterrent to many is that no security is offered which makes the rate of return seem very poor.
Invest & Fund
Lent to Date: Over £3 million
There were 0 active auctions taking place when this blog was compiled.
Highlighted Loan: The luxury property being developed near the south coast is taking shape nicely according to the photos in the latest surveyor’s report as the borrower returned to Invest & Fund last week for the latest tranche of funding. More than £74k was requested with investors being offered a return of 10% pa which is slightly higher than the norm for this site.
Lent to Date: £9,098,261 – fortnightly increase of £315,560 – 3.59% growth.
There were 2 active auctions taking place when this blog was compiled.
Highlighted Loan: A podiatrist was looking to raise funds to expand into new areas recently. Despite making a loss in the most recent set of accounts, the loan was almost 50% over funded when I checked it out earlier this week. Perhaps that had something to do with the relatively small amount being raised - £11k. The average rate of return was high at 12.6% pa but I was deterred from investing by the balance sheet.
Defaulted Loan: Bar owner continues to be unresponsive even though a CCJ has been served. LendingCrowd are now considering partitioning for bankruptcy and have therefore defaulted the loan. I hadn’t invested too much with this borrower, only £20, and £17 is outstanding.
Platform News: I have seen press reports that this site has launched its IFISA but on logging in to my account and clicking the link, I am told that the IFISA is coming soon in February but is not yet available. The product is set to require a minimum investment of £1,000 and will take the form of a managed fund distributed across Lending Crowd’s portfolio of loans offering a return of 6% pa. I am disappointed that I wouldn’t be able to place the funds I manage myself into an IFISA as, according to my dashboard on this site, they are returning a whisker over 9% pa.
Lent to Date: £29,075,000 – fortnightly increase of £2,012,000 – 7.43% growth.
This has been a busy fortnight for ArchOver with over £2 million of capital raised by borrowers.
There was 1 auction taking place when this blog was compiled.
Highlighted Loan: Building contractors were recently looking to raise £1.2 million worth of expansion capital. This loan was originally listed in December but the requested amount failed to be raised. ArchOver believed this was due to investors being distracted by the Festive Period thus the loan reappeared. Encouragingly, during this hiatus the company has performed better than expected. Investors were offered a return of 7% pa which is high for this platform as rates are usually lower due to the higher levels of security ArchOver require borrows to provide. In this instance, it included an all assets charge and insurance from Coface. The decision to relist proved to a good one as the requirements were fully funded.
Platform News: To expand their portfolio of loans, ArchOver have widened their lending criteria to accommodate borrowers who can provide security by assigning future contracted revenue to ArchOver. These loans are also covered by the business’ Accounts Receivable but won’t be insured. As there is a possibility that contract revenue may not materialise, this does not appear to be as safe as having insurance and this was reflected in the higher rate of return – 8% pa – which was offered by the first loan of this nature to be listed. This was to a firm of financial planners who required £200k of expansion capital. Nonetheless, the borrower was able to raise the requested amount.
This platform, which lists loans from multiple sites, had 6 auctions taking place today. Of these, 4 are covered elsewhere in this blog. The other 2 were property backed loans from Ablrate. Both had 60% LTVs and offered returns 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: £2.03 billion – fortnightly increase of £50 million – 2.53% 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. As predicted in the last blog, these have all reduced by 0.2%. This is the third reduction since September.
Zopa distribute investor’s money mostly to unsecured consumer loans.
Platform News: Despite falling rates of return, Zopa lent a record breaking £80 million during January taking their total figure beyond the £2 billion milestone. Having been formed in 2005, it took 10 years to reach their first Billion but lenders contributed the second in just 18 months underlining how rapidly the P2P sector is growing.
Lent to Date: £1,720,520,145 – fortnightly increase of £37,515,662 – 2.23% growth.
Returns: Interest rates are set according to supply and demand. They currently range from 3.7% pa to 4.9% pa depending on the length of the investment. These have increased by 0.7% and 0.1% respectively 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: £42,203,163 – fortnightly increase of £1,106,208 – 2.69% growth.
Returns: 4.0% pa and 4.7% pa for 3 and 5 year investments respectively. The latter figure has reversed the 0.3% increase from the previous 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.
Platform News: Lending Works are the latest P2P platform to launch their ISA. They are expecting high demand which is likely to have a negative impact on interest rates therefore they are going release funds from ISAs into their market-place in £1 million tranches with a pause for an as yet unspecified time after each tranche is fully funded. They expect the first £1 million target to be reached in a matter of days.
****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.