Don't invest unless you're prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 minutes to learn more.

The Assetz Capital platform is no longer open to investment from individual investors. No new investments into peer-to-peer loans are possible and, as a result, no new funds should be deposited. The existing loan book relating to the Retail platform is now in run-off and this will, over time, deliver the return of capital to investors. Full information can be found here . Existing Retail lenders can still log in, view information regarding their account and loan holdings and operate their account in accordance with the information regarding the run-off provided on the link above. Please see this important message regarding the currency of the information on the pages on this website.

Choosing a lending platform

Choosing a lending platform

As Nesta research shows, the P2P lending market is rapidly expanding, with a 161% increase in lending platforms per year. In this increasingly saturated market, it can be difficult for someone new to the alternative finance industry to go about selecting a provider.

Our post on the key things you need to know about investing in peer-to-peer lending touched upon this subject and has proven useful to new investors, so we’ve put together our five most important factors to consider when choosing a lending platform.

1) Research the different lending sites

Research and preparation are key in saving you from potential problems down the line. Look into what’s really being said about the platforms both on forums and in the press. Listen to others’ experiences and read through reviews for each lending platform, but do your own homework too:

Look at the numbers

Peer-to-peer lending is the most transparent financial services offering; review the figures of how each company has grown, how money is handled, and the specific loans going through each platform.

Talk directly to the lending platforms

Speak with someone at each platform about what they can offer to lenders. It’s a great way to see if they can match your expectations and provide what you need.

Consider loan diversification

You may well be looking to spread your investment across many loans within one platform, but consider distributing your risk even further by diversifying across various platforms too.

2) Consider the type of investment you want

The terms crowdfunding and peer-to-peer are thrown around quite regularly but they mean very different things.  Within crowdfunding for example, there are two different types of investment, which couldn’t be more different – reward based and equity based.

Reward based crowdfunding is where you gain a ‘reward’ for supporting a project with your money, whilst equity crowdfunding is an investment whereby you own a small portion of a business in return for money.

It’s similarly challenging in the peer-to-peer industry. Generally, it’s now accepted that peer-to-peer is considered person-to-person (P2P) lending, and peer-to-business (P2B) refers to individuals lending money to SMEs.

There’s then the decision to make on which type of peer-to-business platform you invest through. Each one has a different way of working, and that’s where your research comes in.

3) Focus on the security offered by peer-to-peer lending platforms

We’ve regularly discussed the importance of loan security because choosing a platform that takes security seriously is of the utmost importance to your business interests.

At Assetz Capital we assess:

  • Historic and current finances
  • Affordability of the proposed loan,
  • History and the background of founders as well as key people within the business.

We also ‘kick the tyres’ of every business by personally visiting them, meeting the key people and assessing the state of their current business sales activity to give investors increased peace of mind.

4) Understand the difference between default and loss

Any soon-to-be investor should fully understand the difference between a default and a loss.

A default occurs when the borrower fails to return payment owed to investors. The lending platform will then discuss payment options with the borrower, to try and ensure investors get their money back. This is why gaining tangible assets is so important, as these can be sold to repay investors in the event of a default.

A loss occurs when a business cannot pay investors back and any assets sold come to less than the investors originally paid. At Assetz Capital, our belief in taking security on every loan has helped us to maintain a loss rate of less than 1% per annum thus far, a figure below the industry average.

5) Assess the experience of the whole team

The last, but certainly not least, factor to consider is the experience of team behind the platform.

Technical talent needs to be combined with the knowledge and expertise of working in the lending industry and managing risk. The sector is full of extremely talented people, with many different skills but few have the background to manage risk as those at Assetz Capital, with over 100 years’ worth of professional lending experience in our senior team alone.

You can find out everything you need about peer-to-peer lending with our key investor information.

When you’ve done all your research and you’re ready to take your lending to the next level, get in touch with us to discuss your specific requirements and our expert team will be more than happy to help.  

 

 As with most forms of investment, peer-to-peer lending carries a degree of risk to your capital; in this case if the borrower is unable to repay their loan. At Assetz Capital, we seek to reduce this risk to our investors by taking asset security on every loan.

- October 30, 2015

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