Secret Investor: The Major P2P Platforms Still Don't Offer ISAs
Totals lent to date (26th January 2017)
*All data correct at the time this blog was compiled.
LOANS TO BUSINESSES
Assetz Capital - £205,594,908
Funding Circle - £1,905,863,992
FundingKnight - £31,485,000
FundingSecure - £87,462,188
Money & Co - £6 million approx
Rebuildingsociety - £10,800,000
ThinCats - £214,106,000
Invest and Fund - £3 million plus
LendingCrowd - £8,782,701
ArchOver - £27,063,000
PERSONAL P2P LENDING
Zopa - £1,980,000,000
RateSetter – £1,683,004,483
Lending Works – £38,730,328
LOANS TO BUSINESS
Lent to Date: £205,594,908 – fortnightly increase of £10,456,248 – 5.36% growth.
It has been a busy start to the year at Assetz Capital with borrowers raising over £10 million worth of funds taking the total lent over the £200 million mark.
When this blog was compiled, there were 57 upcoming loans with 5 imminently due to be drawndown.
Highlighted Loan: A company that hires marquees to music festivals was looking to raise £175k to pay off existing debt and also to acquire additional tents to enable expansion. Security was offered via a second charge against their depot. The total LTV when all borrowing is taken into account is 66%. A return of 8% is available which is not significantly greater than the managed accounts this platform offers which are covered by a Provision Fund. One concern is that the borrower has previously been involved in a taxi business which folded but claims to have been a sleeping partner.
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: £1,905,863,992 – fortnightly increase of £52,273,845 – 2.82% growth.
With another £52 million raised, the site is closing in on a Totals Lent figure of £2 billion.
There were 13 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 >£14k to children’s book publishers (A risk rating, 9.0% pa return). My strategy is to try and cherry pick the best of the loans which offer double digit returns however since 2017 began there has been a shortage of attractive loans in the C risk band and above therefore, with the amount of unallocated cash increasing in my FundingCircle account, I have invested in a few lower risk/return offerings. One of these was to the publishers of children’s books who were looking to undertake an overseas marketing campaign. The main attraction was the low amount being borrowed which, should the business fail, a guarantor is likely to be able to pay back over a few years without having to be an individual of too high a net worth.
Highlighted Rejected Loan:
Expansion Loan of £150k requested by veterinary surgery (C risk rating, 13.5% return): The borrower had an existing FundingCircle loan and there was no indication whether the new loan was to refinance that (if so, the interest rate was going to be higher than the first) or if the business was increasing its borrowing. Either way, on the balance sheet the Total Assets/Shareholding Funds figure was negative to the tune of £224k – far more than the amount being borrowed. The fortunes of this business seemed to be heading in completely the wrong direction.
Defaulted Loans Update: Loan to a business in the catering industry was defaulted last week. No payments had been received since October and the borrower had a number of CCJs against their name which suggests FundingCircle could have a number of other creditors ahead of them. I had only invested £20 in this deal of which £3 has been repaid so far.
This is the only default I have had in the past fortnight. Given the recent performance of my FundingCircle holdings, this is a pleasant surprise.
Platform News: FundingCircle have managed to raise another £80 million worth of equity funding. This adds to the £100 million injection that the business received in 2015. The funds are going to be spent on IT infrastructure.
Even more importantly for investors, the UK operations of FundingCircle returned a profit in 2016 Q4 making it less likely that this platform will fold in the immediate future at least.
Lent to Date: £31,485,000 – fortnightly increase of £215,000 – 0.69% growth.
There were 0 auctions ongoing when this blog was compiled.
Platform News: The FundingKnight website will be taken down this weekend (28th/29th January) to facilitate the migration to a new data centre.
Lent to Date: £87,462,188 at the end of December. Monthly growth of £7,142,549 (8.89%).
Total updated monthly.
There were 5 auctions ongoing when this blog was compiled.
Highlighted Loan: This week I contributed to a loan of £70k secured against a luxury boat valued at £150k. This was actually a renewal although the borrower had requested an additional £10k. They were having to renew because a business contract was taking longer than expected to be finalised. It is always reassuring when the reason for a renewal is explained. A return equivalent to 12% pa was offered.
Defaults: In the last blog I mentioned that a loan secured against a parcel of land had defaulted. The good news is that a sale has already been agreed with completion expected by the end of January. Looks like this particular default is going to be quickly resolved.
Money & Co
Lent to Date: £6 million approx. (latest available figure)
When this blog was compiled there was 1 auction taking place.
Highlighted Loan: A supplier of DIY legal services was looking for £114k+ to continue rebuilding their business following the loss of a major client a few years ago. This is the fourth capital injection they have raised via Money & Co but following the latest drawdown only 2 will be outstanding. Investors can expect a return of around 8% pa which seems low considering the loans are only backed by a Personal Guarantee with no assets securing them.
Lent to Date: £10,800,000 – no change in the past fortnight.
There were 0 active auctions taking place when this blog was compiled.
Lent to Date: £214,106,000 – fortnightly increase of £2,660,000 – 1.26% growth.
There were 6 active auctions taking place when this blog was compiled.
Highlighted Loan: This week the loan with the highest rate of return – and therefore risk – was to the management team of a boutique hotel which is due to open next month. The latest injection of £150k to enable the refurbishments to be completed will take total borrowing (including accrued interest) to £1.05 million and leave the Gross Development Value ratio of the property at a worryingly high 85%. Although Personal Guarantees are also provided, as the borrowers have invested all their assets into this venture, these are of little value. The plan, once the business is up and running, is to refinance via a long-term mortgage but even at that point the projected Loan To Value is expected to be 70% which is right on the limit for most platforms. If things don’t go to plan, the value of the property could well reduce and, should the business fail, investors would be putting their capital at a fair amount of risk for a return of 15% pa. So much for ThinCats’ New Year resolution of only lending to the safest borrowers at low rates!
Invest & Fund
Lent to Date: Over £3 million
There was 1 active auction taking place when this blog was compiled.
Highlighted Loan: Just after the last blog was published, Invest & Fund listed the third tranche of funding for <£79k to a property developer in the Midlands who is constructing 2 properties each with 5 bedrooms. Total funding will be £2.4 million with investors being offered a return of 9.5% pa.
Lent to Date: £8,782,701 – fortnightly increase of £297,100 – 3.5% growth.
There were 3 active auctions taking place when this blog was compiled.
Highlighted Loan: Furniture wholesalers were looking to raise >£84k to enable them to buy their way out of an expensive finance arrangement and to provide expansion capital. The business model sees furniture commissioned to be built in India then imported to the UK and distributed to major retail outlets. Profits after tax were low, which was a concern, although the cheaper finance should help the bottom line. I tentatively invested £40 in this loan, half my usual amount.
Lent to Date: £27,063,000 – fortnightly increase of £500,000 – 1.88% growth.
There were 0 auctions taking place when this blog was compiled.
Highlighted Loan: Accountants who are expanding to offer a full range of back-office services returned to ArchOver to raise another £60k to grow their operations further as their accounts receivable have increased enough to support this additional borrowing. Importantly, the profitability of the business has increased as it has developed, something which is not always the case. The capital requirements were quickly funded even though investors were only offered a return of 5.5% pa which is much lower than that which is available on many other platforms in this section of the blog due to the high levels of security provided. This includes insurance provided by Coface.
This platform, which lists loans from multiple sites, only had 1 auction taking place today from Invest and Fund who are covered elsewhere in this blog.
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: £1.98 billion – fortnightly increase of £30 million – 1.54% growth.
Like FundingCircle, this each another site that is imminently due to reach the £2 billion mark.
Returns: Zopa’s 3 accounts offer returns of 3.1%, 3.9% and 6.3% pa depending on the levels of access and whether or not they are covered by the Provision Fund. These rates are unchanged since the last blog but Zopa have advised lenders that they are due to be cut by 0.2% pa imminently. This is the third reduction since September.
Zopa distribute investor’s money mostly to unsecured consumer loans.
Lent to Date: £1,683,004,483 – fortnightly increase of £30,865,493 – 1.87% growth.
Returns: Interest rates are set according to supply and demand. They currently range from 3.0% pa to 4.8% pa depending on the length of the investment. These have increased by 0.1% and 0.3% 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: £41,096,955 – fortnightly increase of £1,889,441 – 4.82% growth.
Returns: 4.0% pa and 5.0% pa for 3 and 5 year investments respectively. The latter figure has increased by 0.3% over the past fortnight.
As well as a Provision Fund to cover investor’s finances, this site also insures borrowers against redundancy, fraud, illness and accidents making this a very fair site for all concerned.
Platform News: Lending Works have launched their swish new website.
****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.