Pre-funding for Loans .. a poll

I too have used this service in the past, but now that it has been widely advertised I suspect it will become unsustainable for the Things. MT have the opportunity to take advantage of SS's learning curve and implement the things that work and avoid their mistakes. The lesson from SS is prefunding with a minimum limit to avoid unwanted shrapnel and of course no INPL and a time limit on selling to avoid gaming.

The other lesson from SS is prefunding with pro rata allocations causes problems. (INPL exacerbated the problems, but I think that its absence wouldn't eliminate them entirely.) One possible partial answer is to reduce a persons prefunding to their current cash balance at loan release time, rather than truncating the allocation to the available cash after it has been calculated - i.e. if they asked for a £1000, but only had £400 available and the pro rate allocation was 40% they'd get £160 rather than £400). But bottom up in general seems better - it avoids shrapnel, and gives more people a slice of the cake. But from the platforms viewpoint the fact that a relatively small number of lenders provide a disproportionate proportion of the funds could make bottom up problematical.

I think this is true of SS and FS but not for MT. Ed's present system would give the same results as prefunding bottom up if he got his calculation of the max bid exactly right. Prefunding would be a one off IT cost and would save him time on every loan, and would avoid the occasions where he mis-guesses the demand. And would be much fairer to lenders, as well as making life easier.

On the topic of prefunding, there are two aspects of several P2P sites that are unfair to many (perhaps most) investors (although maybe not to people who can spend all their times on discussion forums).

Few people have access to superfast broadband and/or bots that can snap up loans at half a second (or less) past when bidding opens, and some people have to work. They cannot be at their computers at 4pm. In fairness to all, any system that produces a more even spread of investment opportunity might be welcomed by the majority.

The other generic question is that lenders are rushing in increasing numbers to these 'high gain' platforms (MT, SS for example) but the number of quality borrowers is not keeping pace. hence the scrabble for loans when they are made available.

The solution seems obvious - get more business in by reducing rates charged to borrowers and offered to lenders. This would be unfair only to the few computer-savvy people who write bots and have access to superfast broadband at all times of the day, and who are able now to dominate the whole process.

When loans don't fill in the first 24 hours, offer a second tranche again limited to £X per lender.

Then open it to all at unlimited amounts

Strange that market forces don't do this automatically. p2p seems an example of market failure generally, possibly because it is new, but there are the first signs of basic economics starting to apply eg SS introducing variable rates.

Would you accept that from your surgeon in the middle of a heart op?