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Post by jevans4949 on Jan 22, 2014 22:52:46 GMT
I was chatting this afternoon with a friend who works in business lending. He made the point that many people who come to "alternative" lenders have already been to banks and been turned down, and often that was for a good reason.
I emailed to AC something I found on the internet about somebody with the same name as the fish farmer; if it was the same guy then the loan would have become (IMHO) a complete non-starter anyway.
It's unlikely that AC will give us the full story behind why these loans have been pulled; there could be risks of legal action if they did. And of course it's possible that the mega-loan may be resurrected when punters' questions are answered.
Meanwhile, it's fastest finger first for the boiler man tomorrow!
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Post by chris on Jan 23, 2014 8:09:43 GMT
I was chatting this afternoon with a friend who works in business lending. He made the point that many people who come to "alternative" lenders have already been to banks and been turned down, and often that was for a good reason. Meanwhile, it's fastest finger first for the boiler man tomorrow! Whilst true for many of the alternative lenders who use the same credit reference agencies, we look at the credit scores as part of a range of tools for underwriting. Certain competitors really do little more than look at the Equifax / Experian credit score, check a couple of very basic criteria, and then stick their borrowers into a certain risk category. I hope most would agree that credit scores are mostly just an indicator of past performance, and not always a very good one at that, are always slightly out of date as they rely on lenders to submit data, and they are not always a great measure of future performance. At the moment banks don't always have strong enough balance sheets to lend to all those who apply, and so lending criteria are tightened. Someone from Assetz will visit every single business, every development opportunity, etc. prior to them being listed on the site. We then take a considered view that takes into account the businesses / developers historic performance, what they are borrowing the money for, the opportunity this creates, the likely risks vs the likely returns, and the quality of the security that offsets those risks. This opens up a whole class of borrower for whom the computer says "no" but who are actually worth lending to once you take the actual opportunity into account and the security on offer should the loan turn sour. We're not always going to get it right, as with any P2P platform there will be defaults further down the road. We strongly believe that the security we're taking will protect our lenders from those defaults, and we believe this to be the better approach than to put a provision fund in place which is basically how the banks operate (and often with greater capital reserves than those boasted by P2P platforms, but we know how that worked out when the economy faltered). With us you know the exact security you are getting on each and every loan, and you get to see the full credit report with our assessment of the risks and rewards, and can take a decision on whether that is acceptable or not. Finally we have our own lenders acting as gatekeepers of sorts. You always keep us honest in terms of whether or not a borrower is good to list on the site and when digging by our lenders have raised further questions that borrowers haven't answered to our satisfaction we haven't been afraid to pull the loan, despite often having sufficient volume of lenders to fund the loan anyway. Our reputation is far more important to us than doing one more deal. Being the computer geek I'm a little bit removed from the day to day operational side of the business, so all the above is only my opinion. There will be plenty of official communication over the next few weeks detailing changes to our process and systems to improve our lender offering. We're all working incredibly hard build Assetz into the best P2P service for our lenders, and I'd like to think we're amongst the best services when it comes to actually listening to our lenders, engaging with them, and then actually doing something to improve things for all. We've heard what our lenders have said on drawdown delays and we're working on making them a thing of the past. The borrower process often starts a couple of months before they even appear on the site so making these changes takes time and has led to delays in getting new loans on to the site. Pre-bidding is one piece of the puzzle but there are several more to come. Finally the boiler installer auction starting today hopefully won't be fastest finger first as lenders are limited to £1,500 each. So at least 114 lenders will be able to participate. That said there have been prebids from nearly 250 lenders on the Kidderminster auction so today's auction will still fill pretty quickly.
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Post by stevegrice on Jan 23, 2014 9:14:49 GMT
I'd like to second what Chris says about underwriting. I am a sponsor for Thincats, Assetz and other P2P platforms and a former bank manager. Just because a bank turns down a proposition doesn't automatically make it a poor credit. It just means that it doesn't fit the banks' criteria as they are written at that point in time. I have seen many solid, well secured propositions across P2P platforms that should have been bank funded but aren't because of the mess the banks are in. In my opinion, the better P2P platforms are those that due the proper due diligence and importantly, visit the client, rather those that simply rely on credit scores, and the last set of accounts. At the risk of being shot down, credit scores are generally very low importance on the list of tools to assess a business.
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Post by easteregg on Jan 23, 2014 13:06:13 GMT
I'd like to second what Chris says about underwriting. I am a sponsor for Thincats, Assetz and other P2P platforms and a former bank manager. Just because a bank turns down a proposition doesn't automatically make it a poor credit. It just means that it doesn't fit the banks' criteria as they are written at that point in time. I have seen many solid, well secured propositions across P2P platforms that should have been bank funded but aren't because of the mess the banks are in. In my opinion, the better P2P platforms are those that due the proper due diligence and importantly, visit the client, rather those that simply rely on credit scores, and the last set of accounts. At the risk of being shot down, credit scores are generally very low importance on the list of tools to assess a business. Conversely we've also seen companies on another platform with A or A+ ratings fall quite early on. My father in-law is a bank manager and sometimes he finds the head office will say no because a loan does not fall into one of their nice categories, even though he believes it is a secure investment.
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