Hi all
@gsv3miac - Thanks ablrate .. so what determines whether a new loan turns a 3-loan DPL into a 4-loan DPL (as per the example) or starts a new 1-loan DPL? Is is really-really like AC, and we'll have business DPL, property DPL, wind turbine DPL, and so on .. if so, do you have a list yet of what categories you are considering?
Ablrate - The amount of loans within a DPL is determined by the amount of funds raised and deployed at any one time in that DPL. It will be cash or loan. If the funds are unable to be deployed within a sutable time the capital will be returned to holders on repayment dates.
I am not familiar with the AC operations in detail but I understand that it is similar in concept as we will be looking a various sector DPLs or asset specific DPLs. We are working on a few, but for now we will keep that to ourselves..... suggestions are, of course, welcome.
The first PL will be a SCPL which is already lined up, more info to follow.
elliotn - The more choice, the better - as long as the risk/reward holds up - and hopefully this doesn't impair the recent uptick on individual loans we have enjoyed recently too
Ablrate - This is very much in addition to our core self select product.
andy1 - Doesn't that mean that every loan within a DPL needs to be exactly the same value to work? Seems a little impractical or am I missing something?
Ablrate - we used that as an example. Basically whatever the total amount of the portfolio loan is will be in a number of loans (3,4,5 etc) and you will have an amount of each pro-rated to your allocated amount.
ladywhitenap - I'd like to see some clear statements of how these portfolio loans will be reported to both lenders and prospective lenders. Whilst these proposals can be a seen as a relatively simple wrapper, the underlying detail could be come quite complex.
I have formed the opinion over the last couple of years that ABL and somewhere in the middle of the "openness" scale of reporting and that they could do with being rather more open when it comes to reporting and I hope these portfolio loans will lead to more clarity from ABL rather than obfuscation in the guise of simplification.
Ablrate - Each loan will have its own borrowing proposal detailing the purposed loan either a SCPL or a DPL. The SCPL is fairly simple but the DPL could get get complex, so it is fair to ask for better reporting, which is what we intend to do. We have a number of initiatives we are working on to help with that and existing loans and new self-select loans.
@maccq - is this only for lump sums or is there a facility for regular monthly lump sums as well?
Ablrate - We have created a solution where you can set up a regular amount to be invested. We are just working out the most efficient way of applying the regular payments to your account.
Would be interested to know if this would be a popular addition. The facilty can be offered now by DDM, we just have not implemented yet.
eeyore - May I follow on from GSV3MIaC's query above, specifically the sentence immediately after which says: "When a fourth loan is made you will have £250 in each, etc." How does that work from the borrowers' perspective? Where do the funds come from to pay the fourth loan? I'm guessing this is what the "new tranches" are all about, but what if there's no take-up of the tranche and no new money is invested?
And the sentence that follows on from that "In each case, new security will be take on a stand alone basis for each loan securing each portion of your allocated DPL loan." makes no sense to me! I assume there's a typo in there somewhere...
Ablrate - Lets say there is £500k in the first tranche, that will be deployed across a number of loans, for sake of argument 5 x £100k (it could be 3 x £150k and 1 x £50k etc etc). If no new money is allocated the loans within the DPL will be run to term and capital returned re-loaned as it is repaid (or returned to lenders if it cannot be deployed into loans).
Should be 'taken' (changed - thanks). Basically what we are saying is that each loan allocated to you in a DPL will have stand alone security as if you had loaned it directly. The important thing here is that it is not a 'fund'. Each loan is bilateral, stand alone, and one loan does not affect another.
oldtimer - ablrate can you hold these portfolio loans within an IFISA?
Yep - as above these are the same legal basis as self-select loans so OK for IFISA.
jfm - why does the SCPL have a capped rate? What are the risks or costs the surplus is intended to cover?
Does the borrower have any guarantee that future tranches will be funded?
Ablrate - The cap is more appropriate to a DPL as surplus can be used to offset defaults etc. The SCPL is better described as 'fixed'. Overage on these loans are our fees, as they are on self-select.
There is no guarantee that further tranches will be raised, so when assessing each project each tranche must be secured within its own right. I.e the success of tranche one cannot be reliant on the success of tranche 5.
blender - Good point. For projects such as property development the whole required amount will need to be guaranteed when the first tranche is drawn down. Subject to progress and security of course. Otherwise no developer would accept. FC had to do this and at times had to use a subsidiary lender business to make up the difference, when a tranche could not be funded. This is a different funding process, but the principle remains.
Ablrate - as above, there cannot be a guarantee for obvious reasons (unless you are using other lenders as you describe with FC), so when loans are written they have to stand on their own. The ideal would be to present a solution, either from the platform as a whole loan, or as a part of a package of lenders which we do have access to. If we were to create such a package we would declare that in the borrowing proposal.
keith - I think this is a great initiative. I quite like the approach that as the loan book grows diversity automatically increases. Of course, the converse applies so after, say, a year or so, you need to watch that the loan book at least remains constant.
Ablrate - Thank you. Yes, as intimated above, reporting will be an important part of the DPL product.