Since the launch of Zopa in 2005, there have been over 100 lending platforms allowing individuals from the UK to become peer-to-peer lenders. A number of these platforms no longer exist, having ceased trading, and a number of others have merged. Looking at all of the peer-to-peer lending platforms that launched in or before 2012, the list includes some of the best known P2P brands.
- Funding Circle
This list also includes Euroepean lenders such as Bondora (who launched as isePankur), and Burnley Savings and Loans who actually operate a local peer-to-peer lending model. Only half of the platforms that launched in or before 2012 are still around today. The notable failures include some perhaps less well known brands.
While the causes of platform failure are varied, the ratio itself is perhaps representative of what could happen in the future. Given that 75% of platforms that launched operations within the UK after 2012, the number of platform failures could rise over the next year. The risks that platforms are experiencing are now perhaps greater than ever, given the uncertainty of FCA authorisation status, increased competition and falling rates.
Money&Co have announved that they will be offering bridging loans between 6 and 12 months, joining the growing number of peer-to-peer platforms offering these types of loans.
Here is the email sent to lenders:
We are writing to tell you about a new lending opportunity that we will be offering you shortly. We have already started lending in the property sector and have recently funded two loans for WeBuyAnyHome.com as you know. We are now looking to add property bridging loans. These loans will be short term (6-12 months) and will have a fixed interest rate. The first one that we are working on is likely to have an annualised yield of 10%. The minimum term of the loan will be 6 months and the maximum term will be 12 months. The money will be lent to a property developer, who is purchasing a piece of land with outline planning permission for housing. He will then proceed to get full planning permission and, when this has been received, he will then be able to refinance the debt with a bank. The loan to value will be 80% against the independent valuation of the land with outline planning permission and interest will be rolled up for the first six months. If the debt is not refinanced at that point, then the borrower will service the loan for the following months until the monies are repaid. This means that lenders will receive no payments for the first six months, but will then receive interest payments in subsequent months. At the point of repayment, they will get the original capital back plus interest accrued over the first six months.
As the interest rate will be at a fixed rate, the auction process will be different. Lenders will offer to take pieces of the loan at the fixed rate and as soon as the full amount has been offered, the auction will close. Given that this is a new departure for Money&Co., we will arrange a lender call in the coming weeks so that you can ask any questions about how this type of loan will work.
ArchOver has launched "Secured & Assigned" loans to complement their "Secured & Insured" loans.
Here is the full press release from ArchOver:
ArchOver, the premier P2P business lending platform, has launched ‘Secured & Assigned' business loans, expanding from its current ‘Secured & Insured' lending model.
ArchOver's first Secured & Assigned loan will be for Ergowealth, a firm of chartered financial planners based in Marlow, Buckinghamshire. Founded in 2013 by a group of experienced financial planning professionals, the firm requires the funding to accelerate its growth strategy and to help expand the newly-launched Mortgage Advisory services.
ArchOver's CEO, Angus Dent, commented: "We are continuously reviewing opportunities that benefit both our lenders and borrowers. Lender security has always been the back-bone of our business and we are delighted that we can find additional loan opportunities that align with our values and that are also attractive to our lenders. We are always striving to improve our services and provide multiple lending opportunities to our investors, which means we must continue to build our borrower pipeline. Most importantly, there are many established UK businesses that need help to grow, but cannot access the financing they require due to the endless red-tape and reduction in SME banking services."
ArchOver facilitates fixed term loans for growing UK businesses. Under its current model, loans are secured against a company's Accounts Receivable (ARs), where those ARs are covered against loss by credit insurance; this is referred to as Secured & Insured. This new lending opportunity matches ArchOver's primary principle of offering highly secure, asset-backed loans to investors. The only difference in the new model is loans will be secured against future contracted revenue, with ArchOver taking assignment of all recurring contracts; this is referred to as Secured and Assigned.
ArchOver will continue to take an all-asset charge over the company and have all revenues flow through a controlled bank account owned by ArchOver. All lenders will continue to enjoy the protection of having ArchOver closely monitor all borrowers, reviewing their aged summary of ARs and management accounts on a monthly basis throughout the entire loan period. This procedure has provided lenders with extra protection and is one of the main reasons ArchOver has had no borrower defaults, late payments, or losses to date.
Secured & Insured loans will remain a large part of the ArchOver offering, with new lending models continuously being reviewed.
Following several reductions in rates in 2016, Zopa have announced that they are dropping lending rates again by another 0.2%.
Here is the full email sent to lenders:
Since I last wrote to you about our lending rates, the personal loans market has become even more competitive. Nine of our competitors have dropped their rates by an average of 0.35% since the beginning of December, and we anticipate that these market conditions will remain in the coming months.
As our rates reflect the wider loans market, we’ve decided to adjust the target returns for each of our products. From 31 January the headline rates will be:
- Access: 2.9%
- Classic: 3.7%
- Plus: 6.1%
As the market conditions continue to evolve, these rates may change again. We carefully monitor and adjust our rates to deliver the reliable, risk-managed returns you’ve come to expect from Zopa. For us, this is the most important thing.
Remember, when you invest your money, your capital is at risk.
This is why we won’t compromise our prudent lending policies, but we are always looking at new ways of getting your money to more UK borrowers. Just recently we introduced more flexibility in loan terms for borrowers which will increase demand for Zopa loans and have a positive effect on your time to lend.
There’s more detailed information on how we calculate rates on our blog, or if you have any other questions please get in touch.
OFF3R, the marketplace for alternative investments, have just published their Q4 Index Report. The report analyses month-on-month performances of peer-to-peer (P2P) lending & Equity crowdfunding platforms on OFF3R the UK over the last year. Due to its success, OFF3R will now release an updated report monitoring the performance of the industry each month.