kermie
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Post by kermie on Apr 13, 2016 21:48:57 GMT
New upcoming loan - due to drawdown 14/4/16.
12% pa, 18 months, residential loan for commercial purposes - business turnaround.
Any thoughts?
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Post by profunder on Apr 13, 2016 21:59:21 GMT
New upcoming loan - due to drawdown 14/4/16. 12% pa, 18 months, residential loan for commercial purposes - business turnaround. Any thoughts? Yes, I wouldn't touch the business with a barge pole. However really this is a loan on a residential property and the director is holding the counter party risk to the business. Therefore we must look at the security, and for 12% it looks absolutely rock solid. The risk with this one in my opinion is that the loan is likely to go late and/or into default. However I would expect full recovery if it went into default, and you may even benefit from default interest! If/When this defaults you will need to allow 2 years to evict the owners and sell. So don't enter this loan if you looking for keeping your money liquid, but enter it if you want a solid long term return.
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KoR_Wraith
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Post by KoR_Wraith on Apr 13, 2016 22:02:42 GMT
Ditto - no way would I lend to this business without the security, with the security it looks reasonable enough.
Edit: Partially retaining the interest also acts to reduce the true LTV.
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oldgrumpy
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Post by oldgrumpy on Apr 13, 2016 22:50:39 GMT
They haven't got the wherewithal to pay the outstanding Fiery Curry repayment instalment. They say it will be brought up to date "next week".
Huh! With £733K of AC cash in the bag by then I should b****y well think so.
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Post by Butch Cassidy on Apr 14, 2016 6:55:25 GMT
New upcoming loan - due to drawdown 14/4/16. 12% pa, 18 months, residential loan for commercial purposes - business turnaround. Any thoughts? Yes, I wouldn't touch the business with a barge pole. However really this is a loan on a residential property and the director is holding the counter party risk to the business. Therefore we must look at the security, and for 12% it looks absolutely rock solid. The risk with this one in my opinion is that the loan is likely to go late and/or into default. However I would expect full recovery if it went into default, and you may even benefit from default interest! If/When this defaults you will need to allow 2 years to evict the owners and sell. So don't enter this loan if you looking for keeping your money liquid, but enter it if you want a solid long term return. I concur with your analysis, however I lend through p2p to help SME's & not to evict hard working people from their home; The fact they already have a loan with FC (that they can't service), they are now desperate enough to gamble the family home & the business is in a notoriously fickle sector - I must agree that this proposition looks a failure waiting to happen & I want nothing to do with it at any price & am rather surprised it has made it onto AC at all.
If this is an indication of the type of loans AC judge to be of the quality that merit double figure returns I fear MLIA lenders may well be a dying breed, as single figure returns or basket cases is no choice at all. I hope that we are wrong & all goes well but for that level of risk I would want much more than 12%.
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Post by lynnanthony on Apr 14, 2016 9:26:25 GMT
I concur with your analysis, however I lend through p2p to help SME's & not to evict hard working people from their home; The fact they already have a loan with FC (that they can't service), they are now desperate enough to gamble the family home & the business is in a notoriously fickle sector - I must agree that this proposition looks a failure waiting to happen & I want nothing to do with it at any price & am rather surprised it has made it onto AC at all.
If this is an indication of the type of loans AC judge to be of the quality that merit double figure returns I fear MLIA lenders may well be a dying breed, as single figure returns or basket cases is no choice at all. I hope that we are wrong & all goes well but for that level of risk I would want much more than 12%.
Fully agree. I do not loan where I expect to have to rely on the security. As with animals, sometimes it is kind to let a business die or even to help it on its way.
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Post by crabbyoldgit on Apr 14, 2016 9:47:10 GMT
Agreed smacks of carpet bagging, not in the ethos of what i want p to p to be.
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Post by profunder on Apr 14, 2016 15:53:19 GMT
I concur with your analysis, however I lend through p2p to help SME's & not to evict hard working people from their home; The fact they already have a loan with FC (that they can't service), they are now desperate enough to gamble the family home & the business is in a notoriously fickle sector - I must agree that this proposition looks a failure waiting to happen & I want nothing to do with it at any price & am rather surprised it has made it onto AC at all.
If this is an indication of the type of loans AC judge to be of the quality that merit double figure returns I fear MLIA lenders may well be a dying breed, as single figure returns or basket cases is no choice at all. I hope that we are wrong & all goes well but for that level of risk I would want much more than 12%.
Fully agree. I do not loan where I expect to have to rely on the security. As with animals, sometimes it is kind to let a business die or even to help it on its way. I didn't post along those lines, but tried to stick with the facts of if the loan was good/bad without judgement of ethics. Although I agree, the directors know the business best. Maybe they really understand the risks and want to take the gamble. Are we here to tell them what they can or cannot do? It's a tough question. In fact I have been refused credit lines before in businesses I ran. In one recent example the bank refused a £200,000 loan, but the business was sold less than 12 months later for £8m Without substantial change and a negative P/L. The business had plenty of value, fortunately I just funded through the director loan account. Also if I was the other owner I would be cautious of allowing the introduction of this loan. There is a serious risk that our borrower recalls his loan facility to force HoH into liquidation where he can buy back the profitable assets and dump unsecured liabilities and bad contracts. Your ethical lending policy is for each person to decide, but any secured loan could be considered unethical. This though I admit seems to be pushing the boundaries- but without meeting the company I don't know. if you believe the projections then everything is fine.
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trevor
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Post by trevor on Apr 14, 2016 20:39:05 GMT
2 CCJ's against the business has caused a drawdown delay. I'm out of this one.
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am
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Post by am on Apr 15, 2016 11:20:00 GMT
Also if I was the other owner I would be cautious of allowing the introduction of this loan. There is a serious risk that our borrower recalls his loan facility to force HoH into liquidation where he can buy back the profitable assets and dump unsecured liabilities and bad contracts. There are about a dozen other shareholders with between 15 and 188 shares (compared to the 460 shares of each director) each. I suspect that the initial capital was partly provided by a variety of friends and family members.
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Post by lynnanthony on Apr 15, 2016 13:35:55 GMT
Your ethical lending policy is for each person to decide, .... .... and ain't that the beauty of P2P? (At least, ain't that the beauty of "proper" (in my view) P2P, like the MLIA and all sites where one chooses which individual loans to support?)
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agent69
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Post by agent69 on Apr 15, 2016 16:07:56 GMT
Appears to have drawn down, but only £140k on the SM.
Me thinks somebody is playing games.
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jonah
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Post by jonah on Apr 15, 2016 18:14:26 GMT
Appears to have drawn down, but only £140k on the SM. Me thinks somebody is playing games. Sorry... I don't follow?
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Post by profunder on Apr 15, 2016 19:38:38 GMT
I released all my underwriting to the SM, I also released £97k in loan #201 to release some funds (the first time any significant money has been available in the SM)
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