Funding Circle

MarkFromCornwall

Babycakes wrote: »

Oh dear. One of my loan parts is due its first repayment but shows up as retry? is this bad news?

It could be, but I've often seen worrying messages like this and they usually change to 'paid' after a day or two.

easteregg_2

bobbyj wrote: »

just been reading about this in moneyweek.
I presume whatever you lend you get back monthly plus interest?

Yes that is correct, the money you have lent will be repaid monthly with interest, provided the company is able to meet its commitments.

bobbyj wrote: »

Anyone looked at THINCATS.COM as well?

I have publised some comparisons on P2P Money where you can see the difference between each of the providers. ThinCats requires a minimum £1000 loan per company, and therefore you need to have at least £20,000 invested to achieve only the most basic diversification (you don't want your eggs in the same basket !).

http://www.p2pmoney.co.uk/companies.htm

Deanevans

I signed up to Funding Circle in June and have a few thousands invested at the moment. I am also signed up to Zopa and Rate Setter. I did not like Zopa as much as the others and am slowly withdrawing my initial investment. I like Funding Circle because I can see, and choose, where my money is being invested and have, at least, a feeling that i am making a positive contribution to UK PLC. FC seems at least as safe as buying shares. I do have a doubt over FC's business model, in that the risk of default by the less safe investments seems to be shared by all. I use Rate Setter as a monthly haven for cash at a better return than an easy access account. Again there isn't the safeguard of FSA compensation but at least I believe that my money is being lent out and not being hoarded by the bankers towards their Christmas bubbly.

aok617

I would advise you not to put your money into funding circle at the moment for the simple reason that I have lost faith in their due diligence process. The user has to rely on this when making an investment. In my view they are assessing risky businesses as low level risk which is leading to low returns.

By way of illustration I'll give you my own statistics. I have been a member for just over a year now At the most I have had about 95 loan parts and a total value of a few thousand pounds invested. During this time:

- 4 of my loan parts have been repaid in full
- 4 of my loan parts are currently late on payment and are unlikely to be repaid or recovered as some have ceased trading
- Of these four 2 are in the very low (A+) and 2 are in the low (A) risk categories.

Assuming these loan parts are not recovered the total losses will effectively wipe out my entire interest earnings for the year.

My main problem is that I cannot ascertain the level of risk in each loan part. Their own statistics indicate a higher combined rate of default in their low risk categories than in the higher risk ones which shouldn't happen. The user has to rely on Funding Circle to verify the raw business data and at the moment this doesn't appear to have been done so well. The result is an inherent risk that the business you invest in may be far riskier than you know. For example for one of their loans they awarded a loss making non-profit business an A+ rating with no asset security given. Needless to say they have since defaulted.

I'm sure they could fix these issues with more rigorous checks but until then I cannot be sure of having a balanced portfolio so I'm taking my money elsewhere.

Jegersmart

aok617 wrote: »

I would advise you not to put your money into funding circle at the moment for the simple reason that I have lost faith in their due diligence process. The user has to rely on this when making an investment. In my view they are assessing risky businesses as low level risk which is leading to low returns.

By way of illustration I'll give you my own statistics. I have been a member for just over a year now At the most I have had about 95 loan parts and a total value of a few thousand pounds invested. During this time:

- 4 of my loan parts have been repaid in full
- 4 of my loan parts are currently late on payment and are unlikely to be repaid or recovered as some have ceased trading
- Of these four 2 are in the very low (A+) and 2 are in the low (A) risk categories.

Assuming these loan parts are not recovered the total losses will effectively wipe out my entire interest earnings for the year.

My main problem is that I cannot ascertain the level of risk in each loan part. Their own statistics indicate a higher combined rate of default in their low risk categories than in the higher risk ones which shouldn't happen. The user has to rely on Funding Circle to verify the raw business data and at the moment this doesn't appear to have been done so well. The result is an inherent risk that the business you invest in may be far riskier than you know. For example for one of their loans they awarded a loss making non-profit business an A+ rating with no asset security given. Needless to say they have since defaulted.

I'm sure they could fix these issues with more rigorous checks but until then I cannot be sure of having a balanced portfolio so I'm taking my money elsewhere.

As a lender you have to be able to do your own rigorous checks on who your counterparty is. If you cannot do this then the risk associated with the transaction is unknown and I would therefore avoid like the plague.

imho

J

Jegersmart

p.s. I should add that which is obvious: you cannot trust ratings from a party that has an interest in making you lend........

J

Jumbocruiser

Zopa actually pointed me to the Funding Circle as I wanted to invest my business's money and Zopa only deal with individuals.

Jonbvn wrote: »

From what I can see, a lot of ZOPA lenders have opened an account on FC.

Regarding what the ZOPA comment in the FT - "well they would say that wouldn't they!" IMPO It is difficult to gauge whether lending to businesses is any riskier than lending to individuals.

I do like the fact that you can sell your loans on FC, potentially allowing you to get all your money back quickly. Something that ZOPA does not have (yet).

bobbyj_2

good points jegers. Fundingcircle/zopa not for me especially after reading your comments. Palladium/copper/silver in physical form will suffice for me.