Out for now

This is an extract from a message I wrote to a lender yesterday explaining the basic operation of the various different investment options we have from the point of view of someone who has used other P2P sites:

You have multiple "bank accounts" within the system, starting with a cash account, with each account having its own statement. This is just a holding account for deposited funds and all withdrawals must travel back through that cash account. You can freely shuffle funds from any other account into the cash account and vice versa.

You then have one account for each of the methods of investing. The manual loan investment account is our analog to the primary / secondary markets on platforms like FC or SS, so to start picking and choosing loans to invest in you'll need to deposit funds into the MLIA account. You can do this by depositing funds in the cash account and then transferring those funds into the MLIA, with the details for doing so on the "Manage Funds" page. Once you've invested in the MLIA (or any other investment account) you then get an additional option on the manage funds page that allows you to transfer funds directly into that account without it touching the cash account.

To browse for loans to invest in there are two main options of interest in the top menu bar under Loan Book. Browse Loans gives you a list of all loans that have already drawn down, with estimates of the amount you could instantly invest in those loans in the units available column, with the other option of interest being the "Upcoming Loans" option. This shows loans that will be drawing down imminently, usually giving 2 - 5 days notice although as we're dependent on lawyers and a legal process sometimes those dates do slip by a further week or two.

You can browse each loan that superficially interests you to see more details including all the supporting documentation such as valuations, accounts, and credit reports as applicable. At the bottom right of the loan details screen you have the option to add your own notes against the loan that are then visible both on the detail page and the main list view.

Manual investments are made via buy and sell orders. You can create one of these at a time using the right hand panel on the loan details screen. It should be self evident but buy orders are used to invest in a loan, sell orders to exit a loan. There's no concept of fixed loan unit sizes where you can only buy and sell in those chunks, if you want to buy £50 and then later sell £27.50 of your holdings then that is perfectly valid and the system handles the details for you, splitting and merging your loan units behind the scenes so that in general you end up with one loan unit per loan that encompasses all of your investment.

There's also no need to fund buy orders - they'll operate as your cash allows so you could set up buy orders across multiple loans for, say, £20k and then only invest £10k in the MLIA. The system will execute each order as loan units become available until it has either exhausted your funds or your buy orders, and as new funds become available from either new investment or repayments then it will start trying to execute your buy orders again. Likewise there do not need to be loan units currently available to place a buy order, if someone decides to sell your existing buy order will then activate if you have available funds.

So the general concept is to set up your buy orders across all the loans you're interested in, setting the maximum holdings you want in each, fund the account to some degree and then the system will take care of the details from there on in to invest your funds. There's no fastest finger first, no competing with an autobid system, no competing with bots, etc. When demand outstrips supply then sold loan units are distributed fairly amongst all those looking to buy, making sure all lenders get an equal portion up to their investment limit, with no weightings based on size of order etc. So there's no gaming of the system by setting amounts higher than you want to invest.

After the MLIA there are then the Great British Business Account and Green Energy Income Account. The former should have fairly good deal flow this month and there's a process change being put into place to try and make sure there's always a reasonable level of loan units always available to buy in short order. The green account is somewhat more starved of loans at the moment. I'm promised there are more on the horizon and we're in the final stages of on boarding a couple of new sources of loans to try and help, but that's likely a couple of months away at best. So whilst there is some supply at the moment it is harder to deploy your funds.

With both accounts you simply transfer funds in from the cash account and leave the system to invest for you. They have a set of rules that selects which loans to invest in, effectively placing buy orders for you which are then processed in the same way as with the MLIA. To reduce your holdings you use the withdraw request option which then tries to sell some of your holdings to fulfil that request.

Currently the final investment account is the Quick Access Account. This account is designed to give instant access (or as close to it as possible) to your funds without penalty whilst still paying a fair interest rate. To directly invest in this account, up to the £50k personal limit, you simply transfer funds in from the cash account as you would with any other account. It's a little more black box in its operation as it does some clever things in the background that our competitors would love to copy, but we're hopefully going to bring some more transparency to the account over the next few months. In general though it holds something in the region of one third to one half of the invested funds in cash to facilitate the instant withdrawal (although that can fluctuate) with the rest of the funds being invested in loans in order to earn interest to pay the 3.75% and fund the provision fund.

There is also the option to automatically invest idle funds in the QAA (bottom left of the QAA detail box on the dashboard) up to a separate limit of £25k. When enabled this automatically sweeps any uninvested funds from your other accounts into the QAA, instantly withdrawing them as they're needed. So if you had £500 looking for a home in the MLIA waiting for loan units to become available then you could earn 3.75% on those funds until the instant loan units are listed for sale at which point the system will automatically withdraw the required funds from the QAA and used to buy those loan units. A mistake some people have made is transferring cash manually into the QAA expecting it to be withdrawn automatically back to the MLIA - if you want to take advantage of this function it's important to move funds to where they need to be and then let the system move them to the QAA.

So there are a few options to get your head around, and the site works quite differently to the other P2P platforms which some seem to equate with being complex, although in isolation I think they're all relatively straight forward and simple.

Well, I've trimmed a few lines here or there and it does cover three (and a half) different methods of investing!

Happy for the mods to do so

But it really should be on your website chris.

It has been sent to marketing.

Flow chart?  <wanders of to marketing to get some paper and crayons>