The Funding Circle
Discussion
Mike Oxlong said:
As per the title does anyone have any experience of the Funding Circle.
Either borrowing or lending.
I got a tip-off from my IFA (however neither he nor a high-up neighbour will recommend it as they say it's an unknown risk.Either borrowing or lending.
Seems to be 'Zopa for businesses', filling in where the banks won't, so I suppose higher risk. I'm interested but can't help thinking it will do well for six months, OK for another six months and then go phut.
http://www.fundingcircle.com/
Simpo Two said:
Seems to be 'Zopa for businesses', filling in where the banks won't, so I suppose higher risk. I'm interested but can't help thinking it will do well for six months, OK for another six months and then go phut.
http://www.fundingcircle.com/
Appears to be still going. Someone recommended it to me so searched to see if there was a thread on it.http://www.fundingcircle.com/
They have just updated their app. Not for the better IMHO.
I have invested small amounts in over 300 companies to minimise risk. To date (2.5 years) 14 companies have folded. Recoveries are below 5%. To me, this seems their biggest weakness, they generally state that the loans are secured. Unfortunately it seems to be on very thin air. A lot of their current offerings with A+ ratings are for property developments in the SE.
My current ROR is about 6.3% so much better than anywhere else and more interesting than Sudoku. Hopefully, I am also doing my bit to help UK PLC.
I have invested small amounts in over 300 companies to minimise risk. To date (2.5 years) 14 companies have folded. Recoveries are below 5%. To me, this seems their biggest weakness, they generally state that the loans are secured. Unfortunately it seems to be on very thin air. A lot of their current offerings with A+ ratings are for property developments in the SE.
My current ROR is about 6.3% so much better than anywhere else and more interesting than Sudoku. Hopefully, I am also doing my bit to help UK PLC.
Edited by rdjohn on Friday 12th August 17:54
rdjohn said:
A lot of their current offerings with A+ ratings are for property developments in the SE.
Isn't property a good investment? rdjohn said:
My current ROR is about 6.3% so much better than anywhere else and more interesting than Sudoku. Hopefully, I am also doing my bit to help UK PLC.
I kind of like that aspect as wellCotty said:
rdjohn said:
A lot of their current offerings with A+ ratings are for property developments in the SE.
Isn't property a good investment? There seems to be a general consensus that the SE property market is cooling down, so where does that put the LTV, particularly if unforeseen problems arise during construction. So I am not so sure they are worth their A+ credit rating, the risk could be somewhat higher.
rdjohn said:
You are not investing in property, you are lending to a property developer who has wrapped his development in a Ltd company and so has no apparent track record. Only an unrealised asset.
Yes I got that, but there should be a good chance of selling the property at the end.I have only put a couple of hundred in to see how it goes and its spread pretty thinly.
Their biggest cost must be direct mailing judging by the fact I seem to receive a pre-approved offer every week!
I have never read the blerb so no idea if it is a 'good deal' for the borrower.
There will be more peer-to-peer lending in the future if interest rates continue to be so low.
A friend was astonished to find that his £900k would only produce £20/month income on an instant availability deposit!!!
I have never read the blerb so no idea if it is a 'good deal' for the borrower.
There will be more peer-to-peer lending in the future if interest rates continue to be so low.
A friend was astonished to find that his £900k would only produce £20/month income on an instant availability deposit!!!
rdjohn said:
They have just updated their app. Not for the better IMHO.
I have invested small amounts in over 300 companies to minimise risk. To date (2.5 years) 14 companies have folded. Recoveries are below 5%. To me, this seems their biggest weakness, they generally state that the loans are secured. Unfortunately it seems to be on very thin air. A lot of their current offerings with A+ ratings are for property developments in the SE.
My current ROR is about 6.3% so much better than anywhere else and more interesting than Sudoku. Hopefully, I am also doing my bit to help UK PLC.
John is that before or after the unrecoverable defaults are taken into account? If it's after then you're not doing too bad imho.I have invested small amounts in over 300 companies to minimise risk. To date (2.5 years) 14 companies have folded. Recoveries are below 5%. To me, this seems their biggest weakness, they generally state that the loans are secured. Unfortunately it seems to be on very thin air. A lot of their current offerings with A+ ratings are for property developments in the SE.
My current ROR is about 6.3% so much better than anywhere else and more interesting than Sudoku. Hopefully, I am also doing my bit to help UK PLC.
All that jazz said:
John is that before or after the unrecoverable defaults are taken into account? If it's after then you're not doing too bad imho.
Mine is 6.4% after fees and bad debts and I only just started so they seem to calculate from the stat that not every loan will be paid in full but as you are invested so widely it not really much of an issueCotty said:
All that jazz said:
John is that before or after the unrecoverable defaults are taken into account? If it's after then you're not doing too bad imho.
Mine is 6.4% after fees and bad debts and I only just started so they seem to calculate from the stat that not every loan will be paid in full but as you are invested so widely it not really much of an issue
All that jazz said:
Was that with FC or one of the others? What risk level was it? The 'safe' levels were only returning about 5-5.5% last time I looked with the mid ranges 6-7ish and higher risk stuff 8%+. If you're getting 6.4% for low risk investments I definitely need to be moving some of my cash about!
It was Funding Circle mostly A and A+ level. I only started about a week ago and invested £300, so that is a projection.Regarding risk level they say there is a risk that a company may default on a loan so don’t invest with just one company as you could lose the lot. They suggest that if you lent £20 to 100 companies based on prior experience they estimate what percentage will default but you will still make a return on your overall investment. That’s my take on it.
Cotty said:
All that jazz said:
Was that with FC or one of the others? What risk level was it? The 'safe' levels were only returning about 5-5.5% last time I looked with the mid ranges 6-7ish and higher risk stuff 8%+. If you're getting 6.4% for low risk investments I definitely need to be moving some of my cash about!
It was Funding Circle mostly A and A+ level. I only started about a week ago and invested £300, so that is a projection.Regarding risk level they say there is a risk that a company may default on a loan so don’t invest with just one company as you could lose the lot. They suggest that if you lent £20 to 100 companies based on prior experience they estimate what percentage will default but you will still make a return on your overall investment. That’s my take on it.
6.4% for A and A+ has improved since I last invested in P2P. Need to get back into it I think!
All that jazz said:
rdjohn said:
They have just updated their app. Not for the better IMHO.
I have invested small amounts in over 300 companies to minimise risk. To date (2.5 years) 14 companies have folded. Recoveries are below 5%. To me, this seems their biggest weakness, they generally state that the loans are secured. Unfortunately it seems to be on very thin air. A lot of their current offerings with A+ ratings are for property developments in the SE.
My current ROR is about 6.3% so much better than anywhere else and more interesting than Sudoku. Hopefully, I am also doing my bit to help UK PLC.
John is that before or after the unrecoverable defaults are taken into account? If it's after then you're not doing too bad imho.I have invested small amounts in over 300 companies to minimise risk. To date (2.5 years) 14 companies have folded. Recoveries are below 5%. To me, this seems their biggest weakness, they generally state that the loans are secured. Unfortunately it seems to be on very thin air. A lot of their current offerings with A+ ratings are for property developments in the SE.
My current ROR is about 6.3% so much better than anywhere else and more interesting than Sudoku. Hopefully, I am also doing my bit to help UK PLC.
Clearly FC is not something to invest your life savings in, but a small percentage that you can afford to lose is actually quite good fun and interesting.
I'm on lending club in the US. I have $25 exposure to each loan and a spread across all credit ratings. My net return is over 10%. I was running at over 12% for a while but some have defaulted or are late. If everyone paid on time I'd be over 19%. I do call it my loan shark business.
2 downsides.......
1. I'm in for the duration of the loan. That either 3 or 5 years. It's possible to sell on a secondary market but not ideal.
2. The IRS understand irony because even though you are stuck in for at least 3 years, they charge you short term gains tax at ove 30%.
So, my returns are around 7% after tax.
Initial concerns about longevity were valid. But, in the US, the banks have jumped on peer 2 peel ending. They have invested so much that p2p is now majority funded institutionally. The CEO of Morgan Stanley left to be on the board at Lending club.
2 downsides.......
1. I'm in for the duration of the loan. That either 3 or 5 years. It's possible to sell on a secondary market but not ideal.
2. The IRS understand irony because even though you are stuck in for at least 3 years, they charge you short term gains tax at ove 30%.
So, my returns are around 7% after tax.
Initial concerns about longevity were valid. But, in the US, the banks have jumped on peer 2 peel ending. They have invested so much that p2p is now majority funded institutionally. The CEO of Morgan Stanley left to be on the board at Lending club.
2. The IRS understand irony because even though you are stuck in for at least 3 years, they charge you short term gains tax at ove 30%.
So, my returns are around 7% after tax.
This is what needs changing. If you are lending to a high risk business (that a bank is reluctant to lend to) you should receive a substantial tax break. Personally I would like to see a tax rate of 10-15%.
This would see a big increase in higher risk funding and help some 'off the wall' projects/companies get going.
Edited by Storer on Tuesday 16th August 20:38
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