The first full year results for lending through Funding Secure are as follows –
Expected ROI (Annualised)
Actual ROI (Annualised)
The ‘Expected ROI’ figure is taken from the average headline figure across each of the loan parts held over the last 12 months. The ‘Actual ROI’ has come in significantly lower at 3.08%. Now the first thing to say is any platform that offers 12.00 – 16.00% potential returns is inherently high risk as the borrower would paying an interest rate of 20.00 – 30.00%. Part of the reason the return figure is so low is because I’ve chosen to withdraw most of the repayments given a slightly skewed figure based on remaining problematic loans. That said approximately 50.00% of the loans I lent against are gone overdue some of these are in default with little prospect for recovery. Most of the income has been generated by selling the loan parts early at a discount which has also applied downward pressure on returns.
Funding Secure boasts total lending of in excess of £290,000,000 up to the end of these 12 months, with active investors (which it calls members) in excess of of 5000.
So although it looks bad I’m still refining my approach to lending with Funding Secure and I think an improved strategy could deliver more worthwhile returns. For now Funding Secure will remain active in my portfolio in measured way while I continue to experiment, but i’m under no illusions it will be one the highest risk platforms in my portfolio.
The first 6 month results for lending through the Funding Secure platform are as follows –
Results look poor right ? Well not so fast. As explained in the introduction piece Funding Secure offer exclusively ‘return on term loans’, this a 6 month review, add a couple of weeks for offers to be activated means none of my investments have actually reached term yet. That said Funding Secure do display the accrued interest for each loan part calculated daily. Hence how the 12.08% ‘Expected ROI’ has been arrived at.
Theres not too much more I can say at this point other than in lieu of any concrete results Funding Secure remains one of the smallest exposures with-in my portfolio. I would still consider Funding Secure to be one of the higher risk platforms on the market, as general noise in the community is littered with bad experiences. Funding Secure also do not perform any credit checks on borrowers as all loans are asset backed so they claim they do not need to. So I remain nervous and apprehensive about what my experience in reality with Funding Secure will actually be. I will hold my investment as is, until I have further results to go on. Finally I would not recommend Funding Secure as a beginner platform for the reasons stated above, plus for a beginner waiting so for a return may find it disheartening and frustrating. Watch this space for a more comprehensive review in the near future.
Funding Secure started life in 2012 as a pawnbroking P2P platform. To date it has issued £175 million worth of loans and advertises an investor base 3,500. Although it started life as a pawnbroking platform, for the last 3 years it has taken on property backed loans also. Funding Secure loans are usually for 6 month terms and unlike some platforms who pay a monthly return, loans accrue interest daily but is not paid until the end of the term and only if the loan is settled.
Minimum deposit for Funding Secure is £100 made by bank transfer, with a £25 minimum loan part purchase. Rates of return on offer range from 12.00% to 16.00% per annum. There are no charges for lenders and Funding Secure offers a secondary market for early sell out dependant on a buyer being available.
The Secondary Market
Funding Secure’s secondary market place is a little more complicated than some of it’s competitors. When it comes to tax liabilities the individual left holding the investment at term is liable for the entire term. For example if you snap up a 3 month old loan hold it for the remaining 3 months you are liable for the tax on profit for the full 6 months. This is because the interest for the whole term is paid to whoever holding the loan part at maturity. To reflect this you can pick up secondary loans for as much as 1% discount (or a 1% premium if demand for a particular loan is high, or is closer to maturity) .
On the flip side of this if you are selling primary loans, and effectively passing on the tax liability, or selling for a premium (up to 1%) you can make a tidy profit (with a significant volume) when it comes to tax liabilities at the end of the financial year. I would seriously suggest holding off from getting involved in the secondary market if you are either new to P2P or the Funding Secure platform for at least the first year because if you are not too savvy you may end picking up problematic loans with tax liabilities you ratter wouldn’t have. Some loans get dumped for a reason.
The Funding Secure dash board
Available funds – is the in-active balance on your account. This can either be invested (£25 minimum) or withdrawn.
My current investments – shows the total principle you currently have invested in loan parts. These funds can only be released on term and repayment of the loan, or a successful sale on the secondary market place.
Allocated funds – shows any funds you have put to a loan part that have not yet been accepted (interest will still accrue before the borrower accepts your offer of funds). It can take a little a while for offers to be accepted ( I’ve experienced as long as 4 weeks ).
Available investments – lists the investments currently available on the platform for investment. Information includes –
Reference – the loan ID.
Title – a brief description.
Amount – total size of the loan.
Rate – Anual ROI.
LTV – is the Loan to value of the security (capped at 70%).
Progress – shows how much of the loan has been funded so far.
Updated (scroll right) – shows any recent material changes to the loan.
Invest (scroll right) – shows the button to invest.