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Post by dazp70 on Apr 17, 2020 9:15:15 GMT
We have paused new lending and are currently not accepting new lenders
We will only be offering loans to businesses through the Government’s Coronavirus Business Interruption Loan Scheme (CBILS). At this stage retail investors are not able to participate in these loans, so we are not accepting new funds. This is a temporary measure. Existing investors can still log in and see their account as usual.
You can read more about this change on our blog.
If you are a business looking for funding, we will be offering CBILS loans soon. Please check our site for more information over the coming days.
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Post by elpasi on Apr 17, 2020 10:34:16 GMT
I don't understand the combination of last week's announcement with this week's announcement.
If the marketplace is closed for new loan origination, why is the secondary market not reopened? If people still want to invest in P2P with FC (which I assume some people do), why not continue to give them the option to get a larger share of the existing loanbook, and revert the decision from a week ago that people who wanted to get out can't get out?
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ceejay
Posts: 970
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Post by ceejay on Apr 17, 2020 11:40:56 GMT
I don't understand the combination of last week's announcement with this week's announcement. If the marketplace is closed for new loan origination, why is the secondary market not reopened? If people still want to invest in P2P with FC (which I assume some people do), why not continue to give them the option to get a larger share of the existing loanbook, and revert the decision from a week ago that people who wanted to get out can't get out? One possibility is that FC are concerned that the quality of their loan book is now essentially unknowable, so allowing one retail investor to sell it to another might be considered misselling, since neither party can make a fair assessment of the trade.
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Post by shanghaiscouse on Apr 17, 2020 16:19:57 GMT
OK so they are not allowing us to sell existing loans since last week, and now they are not allowing us to make loans either. Basically, "normal" loans have become too risky. This government scheme is too good to e true with an 80% treasury-backed guarantee, much better than the guarantees they got from directors. This is probably an unintended consequence of the government scheme. In economics we call it crowding out, the public sector steps in and the private sector can't compete.
So they have basically stopped normal business and are no longer writing new loans, hopefully hunkering down to sort out existing loans. Hopefully they now realise that unless they get a grip they are finished, in fact the whole sector will be finished as they have the strongest balance sheet and should be a consolidator. Without them to roll up the others, all that will happen is vulture funds will buy the loan books for pennies.
I guess the stock price up as people can see that under their old model the more business they did, the more money they lost. Now they have finally faced reality and the equity value can at least exceed the cash on the balance sheet.
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dorset
Member of DD Central
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Post by dorset on Apr 17, 2020 17:00:48 GMT
Vulture funds cannot buy up the FC loan book – we own the FC loan book. They can however take the defaulted loans at say 5p in the £. Make me an offer please on my defaults.
FC lose money because the small profit margins model requires that they issue massive loan numbers to make any money. If they operate on high fixed costs and a low variable cost per loan written then stopping making loans does not help.
There may some high volume business with CBIL but as yet we do not know how much loan finance is coming their way. It would need to be £500m plus to have any impact.
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Post by shanghaiscouse on Apr 17, 2020 23:00:15 GMT
Well, based on my experience around 30% of the loans default so that can all be sold, and a large chunk of the remainder must also be on the way to defaulting, so that's nice pickings for some vultures. All losses land on us, of course.
They should be considering massive cost-cutting to get down fixed costs (they should move to Brighton, Bournemouth or Southend or Sunderland like every other unsecured lender, not central London) and they need to regain credibility by getting defaults under control. But looks like this is a last roll of the dice for them, they are going all in on these loans and will give them away like candy as they have an 80% treasury guarantee.
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dorset
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Post by dorset on Apr 18, 2020 10:55:40 GMT
There cannot be an 80% guarantee as per the banks. The government will own the loans as FC is simply the facilitator and hence the government carries 100% of the risk.
As a consequence FC will throw the money at anyone who asks. Perhaps the government don't care as they are getting hammered for not lending fast enough.
The potential for fraud is enormous and will happen on a large scale.
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Post by angel19 on Apr 18, 2020 14:20:24 GMT
Under CBILs the government is the loan guarantor, not the lender, and the guarantee is the same for all lenders. With FC I guess they will want their institutional investors to throw money in on a grand scale, so FC can lend it out quickly to SMEs. The first 12 months interest and any up front fees are paid by the government under CBILs, so that gives FC an immediate cash flow boost and income in the bank. The institutional investors and the government take the hit when loans go pear shaped. Definitely snout in trough time for FC.
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chris1200
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Post by chris1200 on Apr 18, 2020 14:29:11 GMT
Under CBILs the government is the loan guarantor, not the lender, and the guarantee is the same for all lenders. With FC I guess they will want their institutional investors to throw money in on a grand scale, so FC can lend it out quickly to SMEs. The first 12 months interest and any up front fees are paid by the government under CBILs, so that gives FC an immediate cash flow boost and income in the bank. The institutional investors and the government take the hit when loans go pear shaped. Definitely snout in trough time for FC. Depending on how many existing borrowers are able to refinance onto such loans (or, at least, be supported by them in addition to their existing FC borrowing), this could also be quite beneficial for our repayments.
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Post by GSV3MIaC on Apr 18, 2020 17:39:41 GMT
So should the fc subforum move to the 'platforms not open for new investment' area, along with mt, fs etc??
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Post by stan88 on Apr 18, 2020 19:04:25 GMT
So should the fc subforum move to the 'platforms not open for new investment' area, along with mt, fs etc??
Do you know I a have feeling if you asked them they wouldn't know.
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Post by df on Apr 18, 2020 20:21:06 GMT
There cannot be an 80% guarantee as per the banks. The government will own the loans as FC is simply the facilitator and hence the government carries 100% of the risk. As a consequence FC will throw the money at anyone who asks. Perhaps the government don't care as they are getting hammered for not lending fast enough. The potential for fraud is enormous and will happen on a large scale. This is what FC was doing for some years anyway, hence a very high default rate. Or have they recently changed their loan origination strategy?
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adrian77
Member of DD Central
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Post by adrian77 on Apr 25, 2020 12:37:49 GMT
never a truer word spoken - FC is finished and this will only delay the inevitable and be paid by we taxpayers
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coogaruk
Hello everyone! Anyone remember me?
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Post by coogaruk on Apr 25, 2020 17:52:37 GMT
The abandonment of their small retail investors is complete.
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Post by shanghaiscouse on Apr 26, 2020 14:48:43 GMT
It had been coming for a long time, ever since their first 'securitisation'. We are way too much trouble to service.
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