Where do the unhappy loans end up.

I'm obviously not sure either, because that info isn't public, but I know why I didn't/don't like them.  These are non-amortising 10% loans with a LTV of 74.1%.  The security consists of debentures from the borrower over debtors, stock, and 'other business assets'.  (There's also a PG, but it's limited to just 2.5% of the amount borrowed, so I don't consider that to provide much security.)  The problem I have with those is that they may be degraded severely if the company gets into difficulty.  (Look what happened to the plumber!)

And those who have been at AC long enough know that there was a London retailer who took a £1M loan at 9% secured with 'designer' stock and debtors and PGs.  Not to mention that the prior charges on those assets were 68% LTV.  The LTV was 80% with the £1M AC loan.  The underwriters were stuck with a lot of that loan for the year before it was repaid.

Now is that because the business is going really well so they want to expand or because they'll fold if they have to repay the first big loan?   I have no idea, but I exited my position at 1% discount so that I don't have to care.

That's the main reason I don't particularly like non-amortising loans.

I suspect there are many lenders who don't understand the concept of invoice discounting. Then there will be others who understand the basic concept but are unfamiliar with some of the terminology. Then there will be others who take the view that if it goes badly wrong, there is the potential for a 100% loss, because there is no physical asset backing up the loan.

Personally, I'm still waiting for the educational document.
see p2pindependentforum.com/post/20329

Presumably, if nothing else happens, once loan #1 matures (assuming that it is repaid!) there will be circa0.5m looking for a home. All of which was held by people who liked or were OK with this concept. So, in this scenario, I would guess that loans #1-4 would then have their remaining parts snapped up by that cash.

This is encouraging, presuming they can wind down their business without completely destroying it. 

I'll admit that I haven't gone back to the original Credit Report recently.  Does anyone know roughly how long it might take to run off the loan book?  Are we talking about short-term (60-90 day) invoice factoring?  Or are their loans longer term than that, which would mean any winding down would take longer as a result?

I don't think it matters. Their current loanbook is at (I presume) an acceptable margin. When it repays, they can either re-lend it at an acceptable margin, or they can make a capital repayment to AC. (If they were with FC, where you have to pay off the whole loan, if would be a different matter.) The risk would be losses due to bad debts perhaps on the backs of a narrowing margin.

It's not quite that simple as they have fixed overheads in addition to the cost of sales, so there's a negative feedback in that lowered volume results in an increase to the rates they have to achieve to make a profit. It seems to me that there are 3 scenarios.

1) They refinance at a lower rate. (We are talking of a hypothetical situation of generally falling interest rates.)
2) They run the business down in an orderly fashion, reducing overheads as it goes.
3) They attempt to keep trading in the hopes that interest rates would reverse.

It's the last scenario which raises the spectre of default.

It's liquidity as much as anything else that's kept me out of these loans. (A self-fulfilling prophecy.)