More defaults - The hardcore facts

I do not invest on this platform. The rates on offer indicate that the borrowers are very much 'sub-prime', equivalent to the 'E' grade on FC which predicts losses of 8%. Any business paying close to 20% for a loan has been rejected by the banks and is likely to be desperate. A translation of 'working capital for expansion' should be read as 'borrowing to stave off CCJ's'. I doubt that businesses operating at this stress level can be diligently checked, which is why the Banks have cut small business lending after getting burned.


 

If you read through some of the other threads on this subforum, you'll see the huge steps we've taken to improve our processes.  Your dashboard figures have got worse because we're acting more swiftly on the troublesome loans and have moved them to the default/recovery section.

In the past 6 weeks or so (I don't have the exact number of weeks to hand) there have been no new loans entering troublesome periods, it's just the same set of underperformers.  There are a handful of regular late payers but they do pay.  Several loans have been refinanced elsewhere after pressure from us for the borrower to redeem and take their business elsewhere and there are more of those to come.

If you look at the secondary market there are only a few loans where all the ML's are for sale at the maximum discount i.e. people are trying to offload.  Many of the loans are priced at a premium, i.e. people are happy to sell at a premium, but happy to hold them for the good return.

However to take rounded figures let me give you an example:
Invest £10,000 at the start of a year at 20% return (across lots of loans to spread your risk) if exactly 10% go bad with zero recovery then you've earnt £2000 interest, but lost £1k of capital. So a net return of 10% which is still good.
That 10% return improves if you reinvest your interest every month in new loans i.e compounding your return and assuming we recover some of the loans in debt recovery process, some of which we have done already.
That 10% also improves by the promotional credits we pay and if you sell ML's off at a premium and buy at a discount which also spreads your risk further.

Unfortunately SME Debt recovery takes time, the processes we have to follow are often long and laborious and in some cases can take years.  That's the nature of the industry, if you read Michaels Wednesday updates on any recovery process loans you'll get a very good feel for these processes.

Also as detailed on other threads we have new features/products in the pipeline which will attract loans with more security, but they need to go through a compliance checking process before we can release them.

Thanks for getting back so quickly Rebs rep. I had 3 loans that were put in the 'default category' this week, so there has recently been loans moved into the 'default' category. Before they were in trouble, but this wasn't reflected on the dashboard. I know that you've taken a more robust attitude to businesses that have fallen behind on payments, which is fair enough, businesses fail after all. Hence, the big increase in defaults this year. What worries me is that some businesses/individuals that have defaulted seem to have committed outright fraud! 

Also, you're right that a 10% increase on your investment is great, if you have the opportunity to diversify, but it costs a substantial amount of money to buy the good loans on the SM (if they're even available). It seems that the new loans on offer at the time I was buying weren't great, even though they seemed attractive on paper.

What about offering the option to buy a little bit of every loan?

That being said, I knew the risks when I started, which is why I diversified over over different p2p platforms, bonds, index EFT's, property etc... The most important rule in the investment world is: don't lose money

I started investing in March 15 and decided to exit early in 2016.

I bought little or nothing on the SM but did sell (sometimes at a profit) (parts of) some loans.

Buying on the PM resulted in significant dead money waiting for loans to complete (sometimes with extensions) and/or drawdown.

I have now withdrawn just over (100.7%) the sum that I deposited.

All that remains are three distressed loans amounting to about 3% of the total sum that I deposited.

I am pleased to have got my money back.

Similar timeline and return for me, managed to divest from Rebs earlier this year through SM sales.

I'm sorry to have to say this, but I warned you.

Like all of you, I was 'nudged' into risky lending by the suppression of interest rates. It's no fun when tens of thousands of pounds of the income you rely on to survive gets withheld by the central bank flooding commercial banks with 0.5% interest money in order to make life easier for the wastrel cuckservative government's £100b+ a year debt habit.

But I realised soon enough that the borrowers on the platform included lots of government contractors. There's no way these people can pay us back: they get what they get from the taxpayers so there's no way they can borrow to deliver this year's contract and have enough left over next year to pay us back. It's as simple as that. People try to dress it up as something more subtle and complex but it really isn't.

The overwhelming majority of the lenders on this platform are ill-equipped to determine (from afar!) the viability of these loans and the platform itself has every incentive to keep on handing out other people's money because their cut doesn't depend on the loans staying good. As long as business is booming they're happy bunnies, so of course they're not going to bend over backwards chasing these people.

It's actually rather humiliating seeing the comments threads with multiple persons virtually BEGGING for an update on where their hard-earned money went, with the occasional (often wildly inaccurate) scrap of mostly feel-good information coming back at them.

Quite why anyone would want to further expand credit in the current bubble economy is a mystery, but we all fell for it.

We're no better and no worse than the muppets who poured their money into housing only to be hit by regulation after regulation until the whole thing's loss-making even *before* the inevitable correction, or the sheep who bought stocks in a FTSE with a CAPE of 30!!!!

It's time to face facts guys: the ruling élite in the 21st century is violently opposed to savers and conservatives and there is nothing they won't do to you. Take precautions accordingly: get some spare clothing, some tinned food, some tools, skills and whatever else you're going to need, because you're about to get a whole lot poorer.

Your hypothesis being that nobody who does government work makes a profit, is that it?