Lending Crowd
Based in the west end of Edinburgh, LendingCrowd casts its net far and wide throughout the UK. It was launched in October 2014 and has achieved a total loan capacity of £9.5M (to Sept 2016), 116 small business loans and 2700 investors signed up. They are authorised by the Financial Conduct Authority and even have their own app (in the appstore anyway).
The Product
They have on the investor side three main types of account. The Growth account employs the expertise of the LendingCrowd staff to allocate funds amongst the available loans on the platform. Likewise with The IFISA (Innovative Finance ISA) except the matured loans are rolled over into other loans. The Self Select Account is the most interesting and fun, allowing the punter to bid to fill available unfilled loans or accept offers from those who have already financed a share of a loan. While the first two require a minimum investment of £1000, a Self Select Account can be opened with only £20. If need be you can list the loans you have made on the secondary market to get at the cash (less fees). Interest rates are variable around 6% for IFISA and Growth accounts and higher for Self Select, with greater risk of course. Repayments to investors are on a month by month basis.
On the borrowing side, the application is assessed by the LendingCrowd team and then offered up to their marketplace. The lowest bids at the end of the process are chosen to be accepted. Borrowing is from £5,000 to £250,000 with repayments up to 5 years. Conditions apply: you must have been trading for 2 years, be a Ltd. Company, Partnership or Sole Trader and have a £100,000 turnover.
User Interface
This website is simpler than, at first glance, it looks. Apart from the educational and explaining pages it amounts to the users dashboard where the account holder can see loans entered into, and the marketplace where you bid on applied for loans or apply to take a position in already filled loans. It’s actually very simple.
Conclusion
As a peer to peer lending site this works well. There is a range of risk/returns for the punter and the fact that you can get involved with £20 gives you the confidence to jump in and get acquainted with the environment. The fact that there is quality control in selection is another confidence booster. Getting involved in business lending is a cool way to risk money for a reserved return or a more attractive return for more risk, and monthly repayments offers at least a way to see results fast. It is also, in my opinion, less risky than leaving money in the bank to receive a barely visible interest rate while inflation picks up momentum. In the LendingCrowd blog one of their loan investors mentions that he was attracted to the super safe 5% return in preference to the 0.05% return offered by his RBS account. With rates like that we may as well have negative interest rates.
