Funding Circle

theshortstack

Afternoon all,

I was just wondering whether anyone had any experience of using Funding Circle? It's essentially a peer-to-peer lending platform that allows individual investors to offer loans to specific businesses.

What has got me intrigued though is that apparently investors are seeing an average return of over 6% on the money that they lend.

It would be good to get people's thoughts on this. Is this a viable investment vehicle or something that is far too risky. Does anyone know whether FC is backed by the FSA for example?

Thanks for your help

mathsmaster

Just above your post there is a link that says
Peer-to-Peer Lending Can you really get 6% returns?

It's quite comprehensive and might answer a lot of your questions

N1AK

theshortstack wrote: »

Afternoon all,

I was just wondering whether anyone had any experience of using Funding Circle? It's essentially a peer-to-peer lending platform that allows individual investors to offer loans to specific businesses.

What has got me intrigued though is that apparently investors are seeing an average return of over 6% on the money that they lend.

It would be good to get people's thoughts on this. Is this a viable investment vehicle or something that is far too risky. Does anyone know whether FC is backed by the FSA for example?

Thanks for your help

Mathsmaster has pointed you in the right direction for more information.

As to individual experiences. I use Funding Circle and am seeing decent returns however my investment their is a small part of my overall portfolio as there are various risks.

theshortstack

Great - thanks for the help guys.

DoctorW

Shortstack,

Same as the poster above, I've delved into Funding Circle over the last 6 months and currently looking at a gross yield of about 9.1% with a predicted 7.1% after fees and bad debts. That's also only lending to A and A+ rated companies on the site.

Only chucked 2k into it to test the water (have also got some in Rate Setter). Would summarise by saying it's less protected than Rate Setter (though with sufficient diversification by lending small amounts to many businesses this balances it) but the opportunity for higher rates is a lot bigger.

Definitely has it's place in a diversified portfolio and once you have completely filled your tax-free saving accounts I'd give it a go. Personally recommend against using the "Auto-Lend" facility tool on Funding Circle and would try to take the time to do what little reading you can on the company and it's financials before lending, but that's just me.

The trade-off between the extra time waiting in your account and not earning interest is worth the bit of extra security I think you get by not just lending scattershot.

D

ManofLeisure_2

DoctorW wrote: »

Shortstack,

Same as the poster above, I've delved into Funding Circle over the last 6 months and currently looking at a gross yield of about 9.1% with a predicted 7.1% after fees and bad debts. That's also only lending to A and A+ rated companies on the site.

Only chucked 2k into it to test the water (have also got some in Rate Setter). Would summarise by saying it's less protected than Rate Setter (though with sufficient diversification by lending small amounts to many businesses this balances it) but the opportunity for higher rates is a lot bigger.

Definitely has it's place in a diversified portfolio and once you have completely filled your tax-free saving accounts I'd give it a go. Personally recommend against using the "Auto-Lend" facility tool on Funding Circle and would try to take the time to do what little reading you can on the company and it's financials before lending, but that's just me.

The trade-off between the extra time waiting in your account and not earning interest is worth the bit of extra security I think you get by not just lending scattershot.

D

Thank you for this useful post - this is something I most certainly will now investigate .

N1AK

DoctorW wrote: »

Personally recommend against using the "Auto-Lend" facility tool on Funding Circle and would try to take the time to do what little reading you can on the company and it's financials before lending, but that's just me.

I'll second that, with the caveat that I use auto-lend. Auto-lend is inferior to doing due diligence and bidding manually. However, I wouldn't be investing in FC if I had to do that for 250+ companies, so I accept the negative influence that will have on my returns.

The biggest single flaw with auto-lend isn't even the due diligence. It is that people doing due diligence on loans they have already bought may notice something that concerns them and offer them back to the market, and us chumps will pick them up via auto-lend. There's no way to stop auto-lend from buying it, which stops me suggesting FC to anyone and really annoys me but didn't quite stop me from investing (though it has limited the amount I have put in).

adamhross

I use fundinfg circle personally a long with a number of other peer to peer sites (Zopa, Ratesetter, Abundance Generation to name a few) and have had good results. I am a professional investment manager so select all the companies myself. I am actually about to launch a research platform for IFAs and private investors to help them navigate the various platforms and provide some easy to read independnet due dilligence so that might be of use for some.

colalba

You might like to look at this forum. Covers a number of different p2p sites including FC.


http://p2pindependentforum.com/


On funding circle defaults can make a bit dent in your returns.


I'd suggest you use a number of different platforms to spread your risk and see which approach suits you best as they are all different.

agent69

The biggest problem with FC is that they have very few secured loans and a relatively high default rate. The PG's are almost worthless so if you are a higher rate tax payer beware.

As an example look at the C- loans with a minimum rate of 11.5% and an estimated default rate of 5%.

• 11.5% - fee equals 10.5%
• deduct 40% tax equals 6.3%
• deduct 5% default equals 1.3% after fee, tax and losses.

give me 6% on ratesetter any day