Is it worth a small investor bidding on any loan?

These are issues we've been working hard to resolve.  We have a very active aftermarket and some of the changes for the relaunch of the site, both front and back office, are aimed at addressing drawdown delays and dead money.  A great deal of effort has gone into speeding up the drawdown process, the positive effects of which should have started to become apparent in recent weeks.

As ar as I'm aware, normal bids are sat in the trust account, which doesn't earn any interest, so no-one else is gaining from the dead money.

Having a shadow account doesn't eliminate the need for some cash float.  I've now reached the limit of what I want to lend with AC but have still made a number of shadow bids. There are a number of loans that should be redeeming over the next month or so and the funds from these will ultimately be used to fund the new loans.  Yet I can't be sure when the loans will draw down, or if the old loans will redeem on time.  Hence I need to keep some cash (in a Santander 123 account - earning 3% so much less than AC but better than nothing) in case a shadow settlement is needed before a redemption happens.

I also sell units on the aftermarket to meet shadow requests, though some loans are a lot more liquid than others.  Those units that are easy to sell can then be difficult to buy back when there are spare funds.  Selling units might not work so well for those trying to build their portfolio.

It's always tricky to get a good return as a small investor.  At least P2P gives you more of a chance.  

Without a shadow account I would guess you'll get better returns from the aftermarket.  Although AC has suffered drawdown delays, at least they have a fee-free aftermarket that helps everyone adjust their portfolios to their taste without incurring charges.  

The problem comes if there is a particularly attractive loan, in which case it might be scarce on the aftermarket, and then you need to absorb the drawdown delays to be confident of getting in on the action.  

I found that if I topped up my account to the next £100 from time to time, then auto-invest would manage to find something to buy within a few days.  This has helped me build a fairly diversified portfolio without too much dead cash.  

I think some of this is the side-effect of a fee-free AM and our own calls for there to be no mark-up opportunity; there's little upside to bidding on PM, and a downside that depends on the (unknown) drawdown time vs the (known) maturity. I'm still in favour of no mark-up, since we know from other platforms whence that leads, but there might be an interesting argument for providing a "first-holder" bonus rate for primary bidders and turning everyone into a mini-underwriter. It only needs to under-cut the underwriters to be cost-effective for AC, and might bring more demand back to the PM.

I think it might take a bit more than pre-drawdown interest or an extra half point to tempt me to go there; it rather looks like AC's underwriter group might have the same thoughts.

I asked pretty much the same question a while ago and didn't really get an answer. Since then, FC have started doing property loans which draw down the same day as the auction ends, or even before the set end date if they fill beforehand, so what do they do differently? 

I can't really comment on FC as I don't invest there at all, but I guess it's got to do with how much work is done before an auction, and as AC don't fund loans themselves I guess they don't do very much. SS turns them round pretty quickly too (I'm talking property loans here), but they've already funded (or underwritten) them before they get on the platform, and the DD and paperwork is virtually complete. From an investors view point you could almost miss draw-down altogether on SS as interest is paid as soon as you fund as well. Perhaps if AC had confidence that they could get loans completely underwritten they could get closer to actual draw-down before they go to auction. Perhaps its also got something to do with the way their own fees and costs are charged / absorbed? Borrower interest penalties for slow draw-down is encouraging, but I wonder how much it will help in reality especially if it goes with the puff of smoke if the deal collapses. Anyway lets hope the veiled promises live up to expectations cause its no more bidding for me (even at increased interest rates) until they do.