P2P Lending Experiences of a British Expat Living in the Eurozone

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This is a guest post by British investor ‘JamesFrance‘.

Since retiring and leaving the UK to live in a warmer dryer part of Europe, I fortunately found myself able to live on less than my income, so had the problem of how to best manage these savings, which I wanted to protect from inflation and if possible achieve a positive return on by some type of short term investment. Unfortunately I never found a British savings account which would accept money from non residents, so I was obliged to accept a very low interest rate from my existing UK bank. I do have other long term investments so was prepared to take some risk to achieve a better return.

I had seen articles in the British press about Peer to Peer lending, which tended to refer to the big three, Zopa, Ratesetter and Funding Circle, none of which were prepared to allow a non resident to open an account, so I soon forgot about that as a possibility.   In August 2013 I read that another P2P business lending platform, Thincats, was joining the P2P finance association. I decided to look at their website and was surprised to learn that they could accept non resident investors.

Thincats is really for those with larger amounts to invest, having a minimum bid of 1000 GBP per loan, so it is difficult to achieve adequate diversification for relatively small sums without using their syndicates, which I didn’t find interesting, so I took the plunge and made 10 loans.   Needing 1000 GBP per loan meant that after that it took me some time to accumulate enough for my next bid, so I had the problem of uninvested money not earning until my next loan drew down.   I also found that some loans were repaid early which was reducing my returns because of the drawdown delays.   I think this would be an ideal platform for those with large amounts to invest, as they have a good flow of loans, there is plenty of information about the borrowing companies and once their new website is launched the process should be much easier.   A minimum 25 GBP fee for selling a loan on the secondary market makes it expensive to sell smaller amounts, which means that after several repayments a sale would not be economic.

By this time I was finding other possibilities with the help of websites such as P2P-Banking.com, where I read about isePankur in Estonia, which has an English language version and seemed ideal for any spare Euros languishing in my Euro account and only earning a secure 1% interest. isePankur now renamed Bondora, has been quite exciting to invest through as there have been many changes to the auto bidding system since I started there in September 2013, so just as I became used to the way my chioices were working out, it was all change so I had to start again to think of a good strategy.   They have been expanding rapidly and now issue personal loans in 4 European markets.   The defaut rates for their Spanish and Slovakian loans have been very high, so I have been avoiding those areas since that became apparent, which means time consuming manual investment because the auto bid system no longer allows choice of country.   I do not sell overdue loans on the secondary market, so my returns on the platform will be completely dependent on the eventual recovery of the defaulted loans, which will only become apparent after a few years.   The interest rates are high so I have accepted the level of risk involved. Continue reading →

Credit Suisse NEXT Investors Leads 165M US$ Investment Round in Prosper Marketplace

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Prosper Marketplace, Prosper Logowhich operates a privately held p2p lending marketplace, today announced a 165 million US$ Series D financing, led by Credit Suisse NEXT Investors, part of Credit Suisse Asset Management. Additional participants included J.P. Morgan Asset Management, SunTrust Banks, a subsidiary of USAA, BBVA Ventures (BBVA’s representative office in San Francisco), Neuberger Berman Private Equity Funds, Passport Capital, Breyer Capital, and others. The latest funding will support the company’s continued growth, expansion, and development of a national brand as it builds new products and services for the marketplace’s borrowers and investors. This round put the valuation of the company at roughly 1.87 billion US$.

The funding comes on the heels of a record quarter, with nearly 600 million US$ in loans originated through the Prosper platform, up 200% from the year ago quarter. The significant growth is a true indication of the increasing mainstream acceptance of marketplace lending.

“This investment is a testament to the efforts of our entire team in changing how people experience access to credit,” said Aaron Vermut, chief executive officer at Prosper Marketplace. “The explosion of interest in P2P lending demonstrates that a shift is in progress in the way that consumers borrow and lend. This new funding will help us scale the business to meet this growing awareness and demand.” Continue reading →

International P2P Lending Sites – Loan Volumes March 2015

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In March Lendinvest reported a surge in loan originations and had an exceptional month with more volume originated than Ratesetter or Funding Circle. I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.
Investors living in markets with no or limited choice of local p2p lending services can check this list of marketplaces open to international investors.

p2p-lending-volume-03-2015
Table: P2P Lending Volumes in March 2015. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month

Notice to p2p lending services not listed: Continue reading →

P2P Lending in Slovakia

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This is a guest post by Roman Feranec, CEO of Žltý melón (full bio at the end of the article)

Slovakia is an Eastern European country with 5.5 million inhabitants. The country borders with Poland, Czech Republic, Hungary and Ukraine. Regarding its real GDP per capita exceeding 10 thousand EUR, it is one of the most developed countries in eastern European region. Slovakia is a NATO and EU member and in 2009 the country joined Eurozone and started using EURO as its currency.

Peer to peer lending, also known as Marketplace lending, started in Slovakia at the end of 2012. In just two years of operation it proved that it could be an interesting financial alternative with valuable benefits for people in need of money, as well as for people looking for a stable and good appreciation of their savings. This all despite the fact that Slovaks are generally more conservative than their peers in western countries and banks in Slovakia were almost no hit by the recent financial crises.

Slovakia FlagThe Slovak market of unsecured consumer lending reaches a volume of approximately 150 million EUR in new loans every month. There is a big competition between 12 retail banks keeping the average interest rate at about 14 % p.a. P2P loans at the moment represent just a tiny fraction of the market with 0.1 % market share. This can also show a huge growth potential for this alternative.

The first and so far the only domestic P2P loans provider is called Žltý melón. The company was set up by a team of people with long-term experience in banking and financial industry. Žltý melón was launched at the end of 2012 and since then it has provided about 2 million EUR of loans with current volumes of 160 – 200 thousand EUR of new loans per month. It provides ordinary unsecured retail consumer loans – purpose or non-purpose. Recently it has also introduced loans for financing real estates with a guarantee for investors covered by real estate and also company guarantee of major development company. The new product is one of the outcomes of a bigger partnership between Žltý melón and local leading residential developer Cresco Group. Continue reading →

Funding Empire Now Offers Asset Backed Loans

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Funding Empire LogoFunding Empire entered a cooperation with the Business Lending Exchange (BLX) to offer asset backed loans on the marketplace. These new asset backed loan investments will be backed by realisable security and go through BLX’s proven and experienced credit assessment process – they will be available to Funding Empire investors from tomorrow.

Parag Patel is managing director of Funding Empire, a growing peer-to-peer business lending platform. Announcing the new product, he said: ‘This is the first step in an ambitious plan to deliver a number of different peer-to-peer investment products that we have designed to cater for all kinds of investors and their varying risk profiles. Asset finance offers funding for businesses and is a long established traditional finance product backed by tangible security. In this new model our lenders will receive monthly capital and interest repayments, unlike many other asset backed lending repayment structures that defer payment of capital and sometimes also interest, until the end of the loan term. We have had huge demand for a non-property based, asset backed product that provides monthly income – and we’ve responded to that demand.‘

Loans under this model will be for a maximum of 50,000 GBP over a maximum term of 3 years providing monthly capital and interest repayments to lenders. Loan requests will typically last between 5-7 days and will operate as fixed rate auctions. They will end either when the loan request is filled or it expires. Loan parts from this model can be traded as normal on our secondary loan market. Continue reading →