Peer-to-Business Lending

on the rebuildingsociety.com blog

28th Jan, 2019

Dashboard Changes – Lender Performance Charts

We’re making changes to the look and feel of the website. One of the areas that you’ve told us you want to see change, is the lender dashboard. You’ve told us that you would like a more visual representation of your investments and use of the platform. We’ve been listening and have started implementing some changes.

You may have noticed the recent addition of the ‘Net Worth’ Chart on your lender dashboard. This helps you quickly interpret your performance throughout your time on rebuildingsociety.com. Let’s review the new chart and see what it shows us…

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11th Jan, 2019

What is an ISA Account?

We know that many of you are already savvy investors and many savers know about ISAs. However, our lender base is made up of a variety of different people with varying levels of experience and understanding, so we thought we’d write a short informative piece on ISAs to help answer any questions our lenders might have.

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10th Dec, 2018

Lender’s Review of rebuildingsociety.com

Why Invest in Peer to Peer Lending?

Brian has chosen peer to peer lending as part of his investment portfolio as he enjoys the fact that crowdfunding and P2P lending directly connects lenders with the funders, cutting out the middleman.

Brian enjoys engaging with the business owners and seeing how he can have a direct impact on the success and growth of many small businesses.

Why rebuildingsociety.com?

Brian says that he enjoys lending via rebuildingsociety because of the platform’s ethos and dedication to supporting local businesses and developing local economies particularly outside of London, an ethos which he shares and which he has followed in his own business ventures.

Rebuildingsociety.com was founded with the intention of opening finance to businesses that had been excluded from traditional means of finance and to offer more than just a financial transaction, by ensuring that through the finance the business was also able to gain access to a wide range of lenders who are able to advise and support the business in the long term.

The ability for lenders to pick and choose their investments and continue to engage with the borrowers is a key reason Brian has continued to lend via rebuildingsociety.com, as opposed to other platforms that have become more ‘opaque’ in the way lenders invest.

As well as his rate of return, Brian also cites the openness and accessibility of the rebuildingsociety.com team as a factor for his continued investment via rebuildingsociety.com.

How does it compare to other platforms?

Investing across a number of crowdfunding and Peer-to-peer lending platforms, Brian, says as a ‘non-techie’ he has found the platform easy to use and understand.

He has found the blogs and information available to lenders on rebuildingsociety.com ‘excellent’ and very useful in helping him to understand how to use the platform, learn more about the businesses and get tips on lending in general.

Much of the information Brian refers to is available in our Lender Library.

Advice to new lenders?

Having been an active lender for over 4 years on rebuildingsociety.com. Brian says lenders should:

Read and Review

Brian says lenders should always make sure that they read up and carefully look into the platform that they are lending through.

Look at the trading history of the platform, how long have they been around, what is their net return, what is the ethos of the platform and what is the investment structure or the deals on the platform.

Knowing more about the platform and ensuring that you understand how it works is fundamental to ensuring the long-term success of your investments via P2P.

Do Your research

When investing manually, Brian says it’s crucial that lenders do the research on the businesses they are thinking of investing in. Reviewing the information provided by the platform as well as publicly available information is important to make good lending decisions.

Start small – Diversify

Brian says that lenders that are new to any platform should ‘start small’ and look to build a well-diversified portfolio, by lending across a range of sectors, regions and business types. As a lender gets more comfortable with the lending process and the platform then they can consider lending larger amounts according to the experience they have gained.
If in doubt ask

This applies to both asking questions of the borrowers as well as the platform’s team. On rebuildingsociety.com lenders are given the opportunity to directly ask questions of the borrower through the Discussion forums of each loan. This allows lenders to ensure they understand who and what they are lending for and allows them also to build a rapport with the borrower.

Brian also says that lenders should ask not to be shy to engage with the rebuildingsociety.com team, who he has found ‘very helpful and accessible’ and ‘has found the guidance that they give very easy to understand’.

 

rebuildingsociety.com is authorised and regulated by the Financial Conduct Authority and has been operating as a peer-to-peer lending platform for over six years, making it one of the longest standing P2P platforms in the UK. rebuildingsociety.com prides itself on the level of transparency offered to lenders and the wealth of information and educational material available to assist lenders and borrowers throughout their engagement with the platform. 

Transparency helps lenders assess the risk and make better-informed decisions if you would like to find out more about the risks involved in lending on our platform, visit our risks page.


03rd Dec, 2018

Scale Up Programme to Accelerate Growth of rebuildingsociety.com

Rebuildingsociety.com is proud to have been selected to be part of the 2019 Barclays Scale Up programme, run by Barclays in collaboration with Cambridge Judge Business School. The innovative programme aims to enhance the performance and competitiveness of high-potential businesses with growth appetite as well as growth potential that are deemed to be engines of growth in the UK. (more…)


26th Nov, 2018

Advice to Borrowers – From a Lender

Tips for Raising P2P Finance

Brian Johnson has been a regular lender on rebuildingsociety.com since 2014, supporting many UK SMEs in their growth aspirations along the way. Brian also has many years’ experience of managing and running his own businesses, so understands the difficulties businesses encounter in raising finance and has seen how businesses can use P2P finance to their advantage and how rebuildingsociety.com facilitates more than just a business loan.

We met up with Brian to find out what tips he would give businesses who are looking to get a business loan through rebuildingsociety.com.
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29th Oct, 2018

Changes to Our Auto Bidding Tool – BidPal

We’re excited to announce the most recent changes to our auto bidding tool, BidPal.For years lenders have used BidPal to help them manage their Rebs lending portfolio, helping them invest in a wide range of loans whilst saving them valuable time, and now we’ve improved it to make managing your lending account even easier and to allow you to make more tailored auto lending decisions.

What is BidPal?

BidPal is our automated lending tool, that auto applies bids on behalf of lenders as and when a new loan is listed that meets their pre-set lending criteria. This means lenders that have set up BidPal do not need to log in each time a new loan is listed to make a bid.

What’s New?

 

 

Inclusion and Exclusion Options

Previously the preferences available for lenders to set were limited to industry sector and risk rating. We’ve now extended the options available to lenders, allowing you to make more defined bidding preferences to suit your lending appetite.

You will now be able to choose to include or exclude certain regions that you do or do not want to lend to.

Bid or Buy

The new BidPal will also include an option to auto-buy loans on the Secondary Marketplace as well as bid on the Primary Marketplace. Lenders may choose to set one or the other or both auto-bidding options.

Where a lender chooses to buy micro loans from the Secondary Marketplace, they will be buying micro loans that other lenders are selling on. These are loans that have already been funded via the Primary Marketplace. When loan parts become available that match your buying preferences and where you have sufficient Available Balance, these micro loans will be automatically bought and added to your loan portfolio.

We’ve also introduced new rules that  allows users more flexibility over their BidPal criteria. Over time, we hope to further expand on the data options that a lender can set for their lending rules.

Currently lenders can configure the settings such as:

  • Whether you want to exclude / include loans where the loan is behind on repayments
  • Targeting the purchase of micro loans in a specific business
  • Whether you want to exclude / include loans being sold at certain premiums / discounts by other lenders
  • Choosing the risk ratings you want to buy or avoid.

The buy logic is triggered when a user sells their microloan(s), there is now a ‘clearing process’ to check if the microloan meets the buy requirements of another user and where it does, the purchase will occur instantly. This feature allows lenders to grow a diversified portfolio quickly while simultaneously bringing an increase in liquidity to the platform. When selling microloans, you may notice a message “1 of 1 microloans sold.” When you see this, another lender’s BidPal Buy function has purchased your microloan automatically.

 

 

What BidPal Does Not Do…

BidPal does not guarantee that all your funds will always be lent out, that you will never encounter a default or that your account will deliver a set interest rate.

Available funds are only lent out to a pre-set proportion of your lending portfolio, you can alter all this in the settings.

If your funds are auto bid on a loan, there is no guarantee that you will not be outbid, if you are outbid you will be alerted (according to your notification settings), and will be able to login and rebid should you choose.

Lending to businesses carries the risk of default. If a business fails to repay a loan you could lose all or part of your capital. Therefore you should carefully consider how best to mitigate these risks, consider perhaps divesting via the secondary market or reviewing the performance of the various loan risk ratings and reviewing your Bidpal settings regularly.

Whilst BidPal will auto bid at the highest rate available on a loan, it does not guarantee a set return on any single loan or on your portfolio.

Managing your Lending Portfolio

As a lender, lending to businesses, you should be aware of the risks involved in lending. Understanding the risks is the first step to building a strong loan investment portfolio through careful management.

Whilst BidPal reduces the need to log in as regularly to ensure that your funds are working for you, lenders should still ensure that they are monitoring their lending account to ensure that it is performing to their expectations and to regularly review their investment strategy depending on the performance of their investments.

Find out more about managing your lending portfolio on our platform by reading our helpful articles in the Lender Library.
For more information on BidPal please look at our FAQs or email support@rebuildingsociety.com.

15th Oct, 2018

Investing money selectively is one of the best ways to invest

Many people don’t trust themselves to invest (or lend) so they leave it to others. Independent Financial Advisers can be helpful with advising on a range of customers about their options, relevant to their circumstances.

We believe, that with little study and research, anyone can learn the basic investment skills, to understand risk and reward. One of the things our lenders love is receiving interest payments each month. Many investments don’t pay interest monthly, but the borrowers using our platform repay their loan on a Direct Debit. So as you collect this repayment onto your online balance, you can re-lend them to other businesses. This is known as compounding. (Where you can earn interest on previous interest earnings).

Many other platforms will encourage you to be passive about investing, offering little information about the businesses. They sell their service on ease, but they also tend to pay out less. By making a little effort, you can earn considerably more. We’ll show you how, but before we do, have a look at the evidence.

Here is a histogram of Net Returns for lenders as at October 12th 2018. (a live version is on our stats page, under the Net Returns tab)

Net Returns histogram for rebuildingsociety.com

From this chart, you can see the green line peaks from the 3-4% segment and continues to be high until the 9-10% segment. This shows how most lenders are earning between 3% and 10%, but notice how 85 lenders are earning over 20% (on the far right). This article explains how they do it, so you can learn from their investment strategies.

Invest your money the savvy way

Read our 10 tips on peer to peer lending – This article covers some key guidance on strategies that have proven to work.

Understanding how your portfolio matures is important. With any platform, there’s a honeymoon period for newbies, but there’s also a hard phase around year’s 2-4 where you have sustained your first defaults but not had any recoveries. In this article, Kylie writes about various phases in the journey to mature investing. It’s a good read.

Many happy returns

When you see a business with a unique idea or product, take a minute to consider who their target customers are. If you know anyone suitable, why not buy them a gift or simply make a referral. Word of mouth marketing is so powerful. Sometimes a new customer can make the difference to a business surviving. This is especially true of seasonal businesses, where they may be vulnerable out of season. Like the facebook page, follow them on Twitter, share the videos, be an ambassador for your borrowers, they will love you for it.

Getting good at investing is addictive

Did you know one of our top lenders retired early to invest full time on our platform? Gross earnings are shown below, (from a peak capital employed of: £624,000). Being smart about peer-to-business lending allowed them to earn more in interest than most people’s salary!

  • 2013 – (the first year was a part-year) – £23,945.89
  • 2014 – £99,259.85
  • 2015 – £84,114.08
  • 2016 – £106,923.64
  • 2017 – £119,534.66
  • 2018 – £75,884.59 (part year until the 12th October)

It has not all been rosy, over the six years this lender has also had a £105,562.93 loss from bad and doubtful debt. So their profit is £509,662.71 – £105,562.93 = £404,099.78 before fees and taxes.

This lender has an average weighted Net Return of 12.74%, by being diligent about lending decisions, they can support a great standard of living from a few hours work each day.

Notice also how 33 lenders (on the far left) have a Net Return of < -20%. It is possible to lose money if you are not careful. Investing for higher returns carries some risks. For example, lending to inexperienced business people, a business you don’t understand, offering little security on the loan, is not a good idea. Notice that the red line (lenders who invest over £5,000) and the blue line (lenders with more than 10 loans).

Understand the Risks

The above figures are taken from actual lenders from rebuildingsociety.com during various stages of their investment history with the platform. Remember that past returns are not indicative of future returns and your own experience may vary.

If you are unfamiliar with the risks of peer-to-peer lending, read more here.

Overall, our past performance has been good for most lenders, but that could change. For example in an economic downturn, not all businesses will survive.

The best way to learn is by doing, open an account today to get started, you can try lending from as little as £10 on each loan.

To learn more about lending visit our Lender Library.


31st Jul, 2018

Transparency Matters

Peer-to business lending started out with the ambition to be better than the banks, by being more open and transparent, more ethical, more dynamic and better for businesses and lenders alike. Since the early days of the industry, we’ve seen platforms come and go and there have been many changes to the way in which platforms operate.

Many platforms started off as marketplace lenders, arguably the most transparent of the P2P models, but over time many platforms have changed their models, today few platforms still offer real marketplace lending, and even fewer offer the level of transparency on which the industry built its foundations.

(more…)


27th Sep, 2017

Daniel Rajkumar to Speak at Crowdfunding Convention

rebuildingsociety.com founder and Managing Director, Daniel Rajkumar, will speak at next month’s 6th ECN Crowdfunding Convention in Lithuania. The event, which will focus on New Technologies for Accessing Finance, is scheduled to take place at the Sapiegos Tech Park in Vilnius on the 19th and 20th October.

Dan-RajkumarDaniel will talk about launching a P2P lending platform on a budget, citing his experience when he founded rebuildingsociety.com. He will be explaining some of the challenges a business can face, commenting on technical considerations and advising on how to devise and implement marketing strategies while on a budget. “I’m very much looking forward to the event, it will be my first trip to Lithuania and I’m always keen to connect with my ECN friends and find out about their successes and challenges,” Daniel commented. “Conventions like this are a great way of speaking to other industry players, hearing from experts and meeting likeminded professionals,” he continued.

The European Crowdfunding Network was founded in 2011 with the aim of creating a professional network that would work towards promoting adequate transparency, regulation and governance. Incorporated as an international not-for-profit organisation in 2013, the network facilitates a combined voice in policy discussion and public opinion building.

Find out more about the event on the official ECN Crowdfunding Convention website.


10th Mar, 2016

Crowdfunding and P2P are Booming in the UK, Nesta Report Confirms

Alternative finance claimed 12 percent of small business lending in 2015, a sizable share of a rapidly changing market.

That’s according to a report titled ‘Pushing Boundaries’ by Nesta in collaboration with the University of Cambridge. This report is part of an annual series from the institutions that analyzes the alternative finance industry, including P2P lending and crowdfunding. Another key takeaway is that the sector grew 84 percent in 2015 and facilited £3.2 billion in loans, investments and donations — nearly doubling over 2014. More than 1 million people invested via online platforms in 2015, and 254,721 individuals, projects, not-for- profits and businesses raised finance via online alternative finance models.

And that rapid growth seems poised to continue, especially as banks and other financial institutions get in on the action. Institutions are increasing their stake in alternative finance, as Nesta’s report demonstrates.

And, institutional investors are taking the online marketplace more seriously. About 45 percent of all platforms reported institutional involvement. Donation-based and equity-based crowdfunding grew exponentially in 2015.

Of the total market, peer-to-peer business lending comprises £1.49 billion, almost doubling the amount lent in 2014. £881 million of that is in non-real estate lending projects, like rebuildingsociety.com. The peer-to-peer business market experienced an increase in automated lending and in secured loans.

The report projects that the alternative finance sector will grow to more than £5 billion in 2016.

“With increasing public and business awareness and the introduction of the Innovative Finance ISA, opportunities are abundant for the alternative finance industry in 2016 as well as challenges. From the peer-to-peer lending side, the challenges for 2016 are likely to be deal origination, credit risk modelling and underwriting. For equity-based crowdfunding, the challenges are not too dissimilar. The focus is likely to be on deal flow, due diligence and dealing with business failures as much as successes.”

Nesta’s report concisely demonstrates the sharp growth of various sectors of the alternative finance sector. As these industries continue to grow, we’re thankful for institutions like Nesta that keep tabs on industry growth and trends so we can make the rebuildingsociety community even better.


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