Frazer’s Blog- Are we continuing to offer individual investment opportunities?
There have over the past 3 months been fewer loan investments on the site than usual. Some people have questioned whether we are moving away from allowing individual investments on the site and focusing on auto-invest / ISA fundraising. This is not the case. Whilst we are delighted with the success of our new products, we still plan on offering and, in fact, increasing the output of our individual investment opportunities over the course of the year.
This week, in fact, we launched our latest peer to peer loan Globe Industrial Estate, located in Grays, Essex. Offering investors a 1st legal charge and 8.5% p.a ( 9% if over £25,000) it’s a great investment opportunity for our members across the board. Interest calculations are starting from the 18th of May!
Shameless plugs aside, the main reasons for the fall in number of loans are, firstly, is that we have tightened up our lending criteria – especially in London where prices are falling – and, secondly, the fact there has been a glut of poor quality loan applications, and two that have fallen out of bed at the last minute due to due diligence issues. In line with tightening our criteria, we have also taken a step to make our rates more competitive.
A rigorous process
To give you an idea of what’s involved in bringing a loan to the platform, in very general broad terms:
We receive about 80 enquiries a month, of which around half actually fit our lending criteria. After reviewing the applications, we can usually dismiss around 15 of these. After all, we only want the best. We make offers on the rest, subject to a RICs valuation substantiating the value the borrower has given us. A fair number either fall off the radar at this stage or the valuation rules them out. We have by now whittled the original 70-80 applications down to about 14 that then undergo our comprehensive due diligence process.
Typically, that process will discover un-resolvable issues in about half of those remaining. We are, therefore, left in a typical month with around 8 deals. In that last few months the amount that we have received at the top of the funnel have been of poorer quality than usual and therefore reduced the number that we are able to offer, but we are taking action to counteract this. Firstly, we are increasing our marketing activity and expanding our introducer network to bring in more enquiries. Secondly, after researching the market thoroughly to find solicitors and valuers, we are comfortable working with, we can now announce that we have started operating in Scotland which has already led to a sharp increase in enquiries.
Thirdly, we are also putting processes and personnel in place so that we can expand our offering to select 3rd party SME developers and manage the drawdowns of funds. We anticipate this being ready by July. Watch this space for even more updates.
If you would like to find out more, or you have any questions or queries please contact our team at [email protected] or call us on 0161 667 4264
If you would like to inquire about our bridging opportunities, please contact [email protected]