Lending Works – 12 Month Results

12 Month Results

The first full year of lending through the Lending Works platform are as follows –

Expected ROI 6.00%
Actual ROI 5.36%

The ‘Expected ROI’ for Lending Works is taken from the stated return for a 5 year deposit, which has remained at 6.00% for this period. The ‘Actual ROI’ for these results has seen a slight upward revision, from 5.24% ROI to 5.36% ROI. This upward trend was expected as the 5 year rate was increased in month 4 as discussed in the previous results. Even so i would have expected the ‘Actual ROI’ to be a little closer to the ‘Expected ROI’ after this period. So it leads me to believe that were probably late payments or even defaults on the loans i’m assigned to. Of course Lending Works being an entirely ‘Black Box’ platform there is no way of knowing this as you are given no specifics on where your money is actually lent, other than UK loans.

Total loans on the Lending Works platform have increased in the 12 months by 53% from £85 million to £130 million, making it a substantial player in the P2P personal loan type sector. This year is shaping up to be Lending Works lowest bad debt rate since its inception which is impressive for a company of this type and scale. Rate currently 0.1% however we are only 9 months in to this year so this figure might rise when more defaults are written off by the end of the year. Interestingly the borrower APR has increased in 2018 by 2.00% to 11.2% meaning borrowing is more expensive, although it doesn’t seem to have slowed demand.

 

Conclusion

I am perfectly happy with the Lending Works platform at this time and the rate of return I am reviving. I do not intend to withdraw any funds in the short term, in fact quite the opposite, I will continue to grow my deposit over the next 6 months.

Growth Street – An Introduction

Introduction

Growth Street Exchange Limited (full name) is a UK based, business focused P2P lender launched in 2015. The minimum deposit and minimum loan part for Growth Street is £10, made via bank transfer only. Current advertised annual return is 5.3%.

How Growth Street works is interesting, once a deposit has cleared you place an order on the market for the deposit to be assigned to a loan (Growth Street is ‘black box’ in nature so it chose the loans for you although you can view more detail on a loan once it’s been assigned) . All loans however are on one month rolling contracts. This means your deposit plus interest is redeposited back to your account balance at the end of the month, to be re-instructed for lending on new loan. This effectively means a total account closure/withdrawal could be performed in as little as a one month. This potentially makes Growth Street one of the most liquid P2P offerings on the market to date. Worth noting this is excluding the effects of defaults, which would be ‘unsellable’.

Growth Street does not offer a secondary market place so you are tied in for at least the month of the contract.

Growth Street Summary Page

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Summary Page for Growth Street

Money On Loan – shows the total balance currently assigned to loans.

Money On Market – shows the any open orders awaiting loan part assignment.

Holding Account Balance – shows any funds not yet on loan or queued for lending, with a minimum loan part of £10, cash drag is a factor with Growth Street. These holding balance funds can be withdrawn at anytime.

Current Interest Accrued (Unpaid) – is the outstanding interest on live loan part that should be expected with-in the next four weeks.

Interest paid to date – is the total interest paid on the deposited balance excluding accrued interest.

To perform a total account withdrawal you will first need to turn off the ‘Reinvestment’ instruction, accessible from the top right dropdown menu on the main website.

Collateral UK – Administration Update

 

A replacement of administrator

Collateral UK voluntarily entered administration on the 26th of February 2018 initially appointing an administrator by the name of Refresh Recovery. This appointment was quickly contested by the regulator (FCA) which paused the administration just a few weeks in to the process. After a court hearing on the 27th April 2018 Refresh Recovery (RR) were indeed removed from the administration of Collateral UK and were replaced by administrators BDO. The official reason given for the challenge in the appointment of the administrator, was that an appointment had to be authorised by the regulator (FCA), in this case the appointment was not authorised, therefore invalid. Refresh Recovery have subsequently filled for administration their-selfs on the 18th of July 2018.

 

The new administration

Once BDO were confirmed as administrator they set up an investor/borrower porthole for the release of relevant information. This includes any major progress in the administration process as well as periodic general FAQ’s, this information is publicly available to anybody who wishes to view it via the links above. On the 25th July 2018 it was decided the best way forward for the interest of lenders was to set up a Creditors Committee. This is a committee of at least three but no more than five individuals involved in the administrated company from a creditors perspective (in this case lenders). Thirteen nominations were received meaning a voting round had to be carried out to choose the maximum of five representatives. The five selected members of the Creditors committee were confirmed on the 23rd August 2018. There has been no further official update since.

 

The talk about town

Much of anything else released in the public domain about this administration at this time is potentially tinged with personal spin and interpretation. So I’m going highlight some of these rumours and attempt to put them in some kind of perspective.

Firstly there is the proposed administration cost, RR quoted an initial upfront fee of £48’000, sounds reasonable. BDO have quoted circa £550’000, now before you cause yourself an injury by falling off your chair, think about it. Collateral UK had quite an extensive loan book stretching across much of the country, now one might reasonably expect each of these developments would require at least one if not more site visits to ascertain the validity and state of the security to the attached loan. The work hours and travel expenses alone in performing this task would probably eat up much of the original RR quote. Then there are to name a few : lender communication expenses ; borrower communication expenses ; costs of maintaining the communication porthole ; costs of conducting potential sales of loans and parts of the business as a going concern ; costs of enforcing a security to gain a recovery ; compliance costs ; other legal costs. I could go on but when you actually consider the shear complexity of the Collateral UK loan book and the company as a whole, you could as lender start to think maybe you had a lucky escape from RR with a grossly underestimated administration cost.

The initial £48’000 quoted by RR for the administration was paid upfront before the legal challenge to the appointment. It has been rumoured but not confirmed in an official capacity that this fee was reimbursed back in to the administrated Collateral UK company. I’m inclined to believe this is probably the case as the appointment was found to be invalid by court process and a condition of the court ruling would likely have been the reversion of any fees paid.

There is another rumour around an approximate sum of £300’000 being removed from the company accounts at the directors discretion in the weeks leading up to the collapse of the company. This is by the far the most salacious rumour as it could well be considered embezzlement.

Definition of embezzlement

ɛmˈbɛzlm(ə)nt/
noun
  1. theft or misappropriation of funds placed in one’s trust or belonging to one’s employer.

If, and it’s a big if, this was the case then embezzlement is of course a criminal offence. That in itself could well be leverage enough to return the funds if this has indeed taken place.

I have seen a figure banded about referring to a deficit between the loan book assets and lender/creditor/administration liabilities. With the loan book being valued at approximately £17.5 million and liabilities approximately £18.5 million leaving a deficit of approximately £1 million. Now i have no where near enough information to even attempt to explore this claim and I recall this was a claim voiced early on based on the initial release of preliminary figures. All I would say if that was indeed the case, it would equate to a potential 94.6% recovery, could be a down site worse.

 

Conclusion

Finally, where I stand personally on the state of the administration as an investor (lender). Yes its frustratingly slow and as investor I have ‘dead’ money tied up in the administration. Looking at it from the administrators side, this is undoubtedly a learning experience for them, all previous P2P company collapses have been tiny in comparison. If a traditional retail company with 2’000 employees collapses the administration is performed using well tested and a known legal processes and principles. The employees will then be compensated against liabilities evenly with what ever assets remain beyond the settlement of priority creditors (usually no more than a few dozen). This process can usually be wrapped up in 6 to 12 months.

With Collateral UK that equation is turned on its head, the company it’s self has a few employees but 2’000 (can’t recall the exact number but i think its broadly right) creditors/lenders. In the retail situation employees would tend to disproportionately loose out compared to creditors. In this situation maths would dictate that creditors would lose out somewhat because they are more exposed (there are more of them). Employees could stand to loose close to everything.

So I’m at least expecting a minimum of two years before anything close to a resolution (spring 2020). In terms of recovery, it’s a guess at this stage, like everybody else, but I would expect at least a small trim, anything better would be welcome news.

Unbolted – An Introduction

Introduction

Unbolted is a P2P platform established in 2013. Unbolted is a trading name for Open Access Finance Ltd . The platform offers borrowers four types of loan : a personal asset bridge loan ; a sales advance loan ; a bid now, pay later loan and a small business loan. From the lender perspective these loans fall in to three different protection levels : ‘Gold Trust’ insures lenders against a drop in gold price for loans secured against jewellery and watches ; ‘Provision trust’ used against most other loans types designed to be used in the event of a short fall in repayments to a lender (at the discretion of Unbolted) ; occasionally Unbolted offer unsecured loans usually to know and trusted borrowers.

For the most part Unbolted is an Auto-Invest platform. You pick which of the three loan types you want to invest in, deposit a minimum of £100 and diversify for as little as £5 per loan, click confirm and Unbolted will do the rest. Interest is accrued daily with an advertised annual return rate of around 7.2%.

The main account page

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Main account page for Unbolted 

The account page is basic and I like basic.

Loans On Sale box – if you click the buy now button you will see any loans you can manually buy in to now. However these tend to be quite rare as most will opt for the ‘Auto Invest’ function which fill loans very fast. Be careful though as the available loans may well be ‘Unsecured’ loans that are less popular for ‘Auto Invest’. I’m not suggesting these loans are of any less quality but they will require reading on your part to work out if you are personally comfortable with the risk/reward on offer. The ‘Auto Invest’ button allows you to adjust your ‘Auto Invest’ preferences at any time as discussed previously.

Add or Withdraw Funds box – deposits via bank transfer, usually 2 working days to clear, minimum of £100. Withdrawal of ‘idle’ funds is immediate (24 hour bank processing) but withdrawal of assigned funds will require your loan parts to be sold/transferred first. Make sure you pause ‘Auto Invest’ first otherwise your funds will just go round in circles. Selling of loan parts is conditional to market availability of buyers, generally allow a few days per £1000 being sold.

My Portfolio box – shows your live headline figures. ‘Cash balance’ is idle funds and withdrawal-able at any time. Investment balance is the total you have assigned to live loan parts. ‘Total Portfolio Value’ is the two figures combine. You can also ‘View Portfolio’ and this will list every loan you are currently invested in. It includes details like loan type: start date; due date; last repayment date; loan status and loan part size.

My Returns box – shows you total platform deposits against your total interest earned to date.

My Recent Investments box – gives you a snapshot of your last five loans you invested in. You can view the full list by clicking ‘View Portfolio’.

We Lend Us – An Introduction

Introduction

We Lend Us specialises in short term, unsecured personal loans. Some may call it a payday loan company but unfortunately these days that term is so toxic it might not be helpful describing them in that way (but thats essentially what they do). The difference with We Lend Us is they utilise P2P investment and provide a potential return.

We Lend Us are fully regulated by the FCA through parent company PTP Funding Limited. We Lend Us only launched at the end of 2017 so its a very new company. They performed a number of successful Seeders campaigns pre-launch to fund the business venture. They are also a member of Level 39, Europes biggest Fintech accelerator. Unfortunately We Lend Us are so new there are no full year financials as of yet. Advertised rates of return vary from 5-15% based on risk appetite. Loans are borrowed to £500 maximum, with a repayment time of 1-3 months, however interest can be as high as 250% APR. This may be a lower rate than many competitors in the same space, but it’s still a very high cost of borrowing.

We Lend Us works in two stages, firstly you have to set how you want your deposit to be lent out. Clicking the modify button shown on the page below will open the ‘Investment Criteria’ window. The Auto-Mach setting will allow you to choose loans between 5-15% return, the higher the return the higher the risk. The Auto-Diversify setting allows you to stipulate the maximum (minimum being £10) you want to invest in a single loan, forcing funds to be diversified across multiple loans, potentially reducing risk of losses. The third setting is the Provision Fund setting, allowing you to define your tolerance of a late payment, from 7-30 days before We Lend Us step in and utilise the provision fund to reimburse the invested principle. Any expected interest is defaulted in this instance. (see below for more detail on the provision fund).

You can also assign any unassigned moneys to an investment fund. One quirk with We Lend Us is you can actually set up multiple funds based on different criteria with in the same account.  So once you have all the settings decided you click save and move on to the second part of the process, essentially sitting back and waiting for your funds to be assigned and start earning you a return. If you make a further deposit in to you account you will have to manually assign it to which ever fund and criteria you want to lend through.

Manage Investments page

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We Lend Us investment page 

The main page for We Lend Us is the Investment page and it’s as basic as it gets –

Balance – shows the total amount of monies on the We Lend Us Platform.

Total Earned – shows interest earned from successfully resolved loans.

Queued – any monies assigned to a fund but awaiting a loan.

Lent Out – shows the total of funds currently on loan.

Investment Portfolio –  summarises the chosen settings for the investment fund (the settings displayed on this example should not be viewed as a personal recommendation of what you should set your fund to for desired results. It is up to you to play around with settings and find what works for you).

Withdrawal History – shows any withdrawals made from the platform.

The Provision Fund

We Lend Us do operate a provision fund which as explained earlier with reimburse the invested principle when a loan passes your defined late payment tolerance period. Now in normal conditions any interest on that loan part would not be reimbursed to the lender, however We Lend Us are currently using a short term month by month rolling promotion while in soft launch which does in fact reimburse the otherwise forfeited interest. But it should be assumed that this will not last for ever. So the example shown is a £100 deposit but the further £1.37 is actually the reimbursement via the promotion which is why its not shown as earnings (this is highlighted on a further page on the platform, but the rest of the information is identical to what is show in the example).

 

MoneyThing – An Introduction

Introduction

Moneything is a family owned , self funded, P2P business launched in 2015. Moneything are fully authorised under the FCA as a P2P lender. They provide a mix of loans across multiple sectors, but all loans are asset backed. Moneything offer risk based returns from 10-18% per annum. There is a £1 minimum deposit/minimum investment on the platform, all investments must be made in whole pounds. Moneything also operates a secondary market place should investors wish to exit a loan early, subject to buying demand. There are no charges for selling or buying on the secondary market.

Moneything has seen significant and sustained, year on year growth since its launch. Cumulative lending for 2016 was £99M, 2017 £269M, growth in every quarter. Interest earned has increased £141,874 in Q1 2016 to £886,005 in Q4 2017, an increase in all but one quarter. Moneything experienced it’s first defaults in 2017 (7.7% of total loan value) and is expecting further defaults in 2018. Defaults are part of P2P lending and should be expected in small amounts on any platform.

Moneything Loan Page

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Moneything loan page

Asset Details – a brief description of loan on offer.

Loan Value – total value of the loan being requested.

Asset Value – total value of the asset being loaned against.

LTV – loan to value of the asset being loan against.

Rate – the annualised investor return being offered on the loan.

Bidding Start – the date the loan opens for bids.

End Date – the date the loan term is due to end.

Available – the amount of remaining loan available for investment. If it’s highlighted in yellow there is an amount available on the primary market, if it’s highlighted in green, there is an amount available on the secondary market place.

Invested – is the current amount you have invested it that loan.

Drawn Down – the loan has been drawn down and is being utilised by the borrower.

 

Funding Secure – 6 Month Results

6 Month Results

The first 6 month results for lending through the Funding Secure platform are as follows –

Expected ROI 12.08%
Actual ROI 0.00%

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.