sl75
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Post by sl75 on Dec 1, 2014 15:33:22 GMT
To be fair, the blog post doesn't say £500k is the largest loan P2P lenders have funded, but the largest loan RS has made. RS received a dollop of funds from the British Business Bank, it may well be that these larger loans are not P2P loans but wholly funded from BBB money. For sake of transparency, the full answer, which @zopamat chose to hide all but the first sentence, was: The answer to this is £0.5m, which is one of the commercial loans we've created at RateSetter. Business lending is an area that has grown organically for us - we naturally started lending to sole traders and other individuals borrowing for business purposes and that is now beginning to develop into a stream of enquiries for commercial borrowing, exactly the type of lending the British Business Bank has partnered with us to deliver.
We see the future of RateSetter as a multi-asset platform - it is our role to generate loans that deliver you, our lenders, safe returns (please remember capital is at risk). We've hired experienced staff to ensure we only lend into areas we understand. I don't recall Zopa having provided us with full details of all their agreements with their commercial partners, so why are they demanding RateSetter do so? (Lovely as it might be to have full disclosure about all details of every P2P business, I'm sure they'll all consider some information to be "commercially sensitive"... given that no maximum loan size is stated in the T&Cs, this does not form part of the agreement with lenders or borrowers - unlike Zopa which explicitly states a £25,000 maximum in the Zopa Principles ... as such this would presumably be a term in the contract with the third party introducer(s) where relevant - in particular I very much doubt that giffgaff borrowers can borrow up to the same £25k maximum as those who go direct through the RateSetter website!)
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Post by p2plender on Dec 11, 2014 7:06:56 GMT
we need 3 x 500k loans in the 5 year at present. Looks grim.
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Post by p2plender on Dec 23, 2014 11:29:26 GMT
Borrower Offers
----Rate --------On Offer---Orders---- Cumulative
----5.5%------ £80,975.00---- 1----- £80,975.00
whose this Santa???
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Post by Deleted on Dec 23, 2014 14:31:02 GMT
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oldgrumpy
Member of DD Central
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Post by oldgrumpy on Dec 23, 2014 16:33:35 GMT
I am beginning to think that Ratesetter should inform us exactly when we are or are not lending to a business. My lending on RS is specifically there because it has been to individuals, not companies. I do lend to businesses, but not at <6% on 5 year deals or 4% at 3 year or 3.3% on 1 year. (Even on FC A+ business loans I aim at well over 8% after fees and default estimates).
Room for separation of the two loan types on the website I think, eh Kevin?
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Post by p2plender on Dec 23, 2014 17:18:25 GMT
Have to agree above. I sold out at FC because of constant defaults. After 3 years my return after bad debts and FC commission was 2.5%. Could get a better return on a one arm bandit. I too do not want to lend to a business circa 5.8% provision fund or not. This is actually quite alarming the more I think about it. What type of businesses am I lending to?
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Post by davee39 on Dec 23, 2014 19:12:51 GMT
Any pointers to 'elsewhere' then, where high rates available with 100% safety?
Thought not.
Well, you can have RS, where the £10m provision fund could stand a hit from a £500k loan without too much pain, and fast investment at around 5.8%, 6% in the new year
Or Zopa, down to 5% , ex growth, a lower protection fund ration and a failed sole trader lending experience
FC, not bad if you can take some risk AND DIVERSIFY, go all in on a well sold crooked tale and all bets are off
Wellesley - dropped rates twice, and you still get the property risk
Assetz - A polite no comment - does not appeal
Funding Secure - you might get killed in the scrum whenever a new loan appears
Saving Stream - Property and some shaky looking deals with DD apparently done by contributors to their forum
The Estonians - I am saying nothing, they might know where I live
And the also-rans, limited growth, few loans, more smoke than fire.
So none are perfect, but RS seem to have fewer visible warts!
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Post by westonkevRS on Dec 23, 2014 19:54:40 GMT
I'm fed up with this closed shop of fake transparency. Driven by a single vision to crush all competitors through better returns, diversified portfolio, lending speed, queue position, excellent customer service, better football players and larger/safer (original) provision funds. I've realised I'm becomming a bad person. I also want to be the Edward Snowden of P2P lending. I'm going to apply to work with ZopaMat ( www.zopa.com/working-at-zopa/jobs/press-officer ) and make this a safer place for one and all. Merry Christmas. Kevin. |
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Post by mrclondon on Dec 23, 2014 20:49:28 GMT
I am beginning to think that Ratesetter should inform us exactly when we are or are not lending to a business. My lending on RS is specifically there because it has been to individuals, not companies. I do lend to businesses , but not at <6% on 5 year deals or 4% at 3 year or 3.3% on 1 year. (Even on FC A+ business loans I aim at well over 8% after fees and default estimates).
Room for separation of the two loan types on the website I think, eh Kevin? Whilst I can see where you are coming from with the individual vs business criteria, I think the more relevant criteria is secured vs unsecured vs unsecured with provision fund. My main focus is secured lending, with my biggest positions on p2p platforms being AC/FS/SS/TC/W&Co (alphabetical order, not size ordered !). By comparison I have only dabbled in unsecured lending and have relatively small positions on FC/FE/FK/RS and previously on YS/ZP. The default rates on unsecured lending without a provision fund are (for now at least) painful for higher rate and above tax payers. I'm winding down FC mainly for personal reasons and will never lend on new loans with them, but have no regrets about this action given the high default rate and the time consuming nature of doing DD and bidding on lots of loans. I'm continuing to play with FK as these are essentially fixed rate loans 0.01% below the institutional investor who provides most of the liquidy on the platform at the reserve rate, and the low deal flow should mean better platform DD. But the "default rate" (aka non-performing loans in FK parlance) is eye wateringly high, and as a result it is essential to have only a trivial amount in each loan. I've liked RS from the day they launched (well apart from the horrible 2014 web site  and would have a much bigger position with them apart from the fact I feel I can get a better long term yield on the secured lending platforms. I've felt for a long time that unsecured lending ONLY makes sense when backed with a provision fund, and I think a provision fund will still be necessary (and probably essential for business loans) even when capital losses are allowable against p2p income for tax purposes. In the absense of any alternative, RS is the only platform I would be comfortable lending more than a trivial amount on an unsecured business loan. In one fell swoop this reduces the risk, and removes the need for me to do DD on a per loan basis. Edited to add: AIUI each loan makes a contribution to the provision fund based on the risk profile of that loan. So riskier buiness loans should make a bigger contribution that A* individuals.
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oldgrumpy
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Post by oldgrumpy on Dec 23, 2014 20:50:11 GMT
And a Merry Christmas etc to you KA! For the record I have 10X as much in RS as Z now. RS is still on the up, Z is on the down.  My suggestion still stands. Has RS ever thought about having dedicated separate personal and business loan sections. If RS can make one work so effectively, I'm sure they could operate the other. Or maybe IIAB-DFI applies.  (If It Ain't Broke- Don't Fix It!)  (cross posted with mrclondon ... happy Christmas I'll read your bit now) |
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Post by westonkevRS on Dec 23, 2014 21:01:41 GMT
And a Merry Christmas etc to you KA! For the record I have 10X as much in RS as Z now. RS is still on the up, Z is on the down. My suggestion still stands. Has RS ever thought about having dedicated separate personal and business loan sections. If RS can make one work so effectively, I'm sure they could operate the other. Or maybe IIAB-DFI applies. (If It Ain't Broke- Don't Fix It!) (cross posted with mrclondon ... happy Christmas I'll read your bit now) Merry Christmas Old Grumpy, I hope this post doesn't out you off RS, but we will probably never provide a choice on if your money is lent to consumer, business, secured or unsecured. We want to provide a market driven return protected by a strong Provision Fund that will withstand all economic weather and defaults through its sheer size and cover related to a high quality risk diversified set of assets. Simple, safe, easy and quick lending.
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Post by bracknellboy on Dec 23, 2014 22:58:29 GMT
Merry Christmas Old Grumpy, I hope this post doesn't out you off RS, but we will probably never provide a choice on if your money is lent to consumer, business, secured or unsecured. We want to provide a market driven return protected by a strong Provision Fund that will withstand all economic weather and defaults through its sheer size and cover related to a high quality risk diversified set of assets. Simple, safe, easy and quick lending. A fine sentiment westonkev. but point of fact: lending to RS or any other p2p has no protection. There is no moral hazard presented as lenders are open right up to total loss. Therefore and quite rightly the onus is on lenders to assess the risk of lending through RS. Therefore each and every has to make an assessment of whether PF coverage and RSs statements on the expected losses they are attempting to cover through the PF is adequat or not. RSs reassurance in this matter will mean diddly in the event that they are not. Monkey is on lenders back, not RS's. '...withstand all economic weather and degfalts.....' are fancy words, but meaningless to lenders if they prove false. RS prepared to subject themselves to the same tests that the boe recently applied to the banks ? Lending to businesses represents a significantly different risk than lending to individuals. Lending on property presents another completely different risk. One thing that we can therefore be sure of is that any RS data on their bad debts cannot be a meaningful guide to bad debt rates in sectors they have not had substantive prior exposure. and hence by definition it has to throw significantly more uncertainty over RSs guess on whether the PF coverage rate is adequate. But perhaps more importantly to me - and maybe others - the risk of lending on property provides for a much greater 'binary' risk then lending to individuals or even businesses. A turn down in the property market represents a potential cliff edge risk. I want to know how much of that I'm holding and balance that with my exposure in other places. This to me represents a major uptick in my risk with lending via RS compared to what I had understood. And if I understand it the percentage is only going one way: north. Time for a rethink for me.
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pikestaff
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Post by pikestaff on Dec 23, 2014 23:26:43 GMT
I'm not terribly happy with the source of this story but it feels like a real issue to me. Like bracknellboy I now feel significantly less comfortable about the cover afforded by the provision fund. I have been happy to recommend RS to my non-expert friends and relatives, several of whom are now lenders with (I believe) an aggregate 6 figure exposure. As of now I no longer feel that I should do that. |
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oldgrumpy
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Post by oldgrumpy on Dec 24, 2014 9:25:58 GMT
In the current circumstances I think it would be fair for RS to place some new regularly updating statistics on the site, such as (for each term up to five years) 1. % of current loan book in private personal (unsecured) loans 2. % of current loan book in unsecured business (non property) loans 3. % of current loan book in asset secured business (non property) loans 4. % of current loan book in asset secured property building loans 5. % of current loan book in asset secured property bridging loans I now think the reason RS gives lender rates up to 1% higher* than Z is because of the business loan effect - but it is what it is - just think I ought to have known before. * We'd often wondered. Edit: I did know about RS and giff-gaff, which I had assumed to be many small short term loans, and that RS were looking into business/commercial loans, though I had assumed those would eventually be presented separately. edit: Looking at this page I see that sole traders can have loans for business. I was aware of that. Maybe westonkevRS can clarify, is this the extent of the business lending? Not lending to limited companies à la FC? What about the wind turbine? I'm happy with business lending to sole traders (no doubt carefully "limited" (not a joke!) by RS assessors). P2P is not the same as P2B
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Post by wibble on Dec 24, 2014 10:25:18 GMT
For me personally, it's a non-issue as it currently stands today. Presumably the risk has already been correctly assessed by RS and factored into that loan's particular contribution to the Provision Fund? There are so many other factors to this ... was loan actually a lower risk, were there funds secured against other business assets, etc etc Surely the key here is the PF, and our trust in RS to manage it correctly and adjust it's size according to the correct risk? I'm sure they wouldn't be lending large amounts of money to businesses at "preferential" rates if it wasn't for a sound business decision (but I do take the point that communication is key here - a step they've taken with the blog post).
I trust RateSetter, but like everyone here, I will continue to monitor their business direction and strategy.
Have to say, though, if nothing else, I find ZopaMat's thinly-veiled attacks very interesting and cements my decision to leave Zopa just over a year ago. If they were completely innocent and originated from a genuine personal curiosity, then why not post from a personal non-branded account? Treading on dangerous ground, IMHO.
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and would have a much bigger position with them apart from the fact I feel I can get a better long term yield on the secured lending platforms.
