Downing Crowd Review
One of 4thWay's specialists has written a Downing Crowd Review, summarising the key points, so that you can read it in under five minutes:
4thWay's Quick Expert Downing Crowd Review
Downing Crowd could make a nice addition to your lending portfolio.
What is Downing Crowd?
Downing Crowd does loans to UK businesses that own property or energy projects, including businesses developing property. It's looking at typical interest rates for lenders of 5.37%.
When did Downing Crowd start?
Downing has been lending investors' money since 2010. Its peer-to-peer lending branch opened in 2016, where individuals have lent £160 million.
What interesting or unique points does it have?
Downing Crowd's loans are to such trading businesses as pubs and care homes, typically for renovation and expansion, or to renewable energy businesses with working installations that receive taxpayer-funded subsidies.
Downing Crowd review: how good are its loans?
Borrowers usually have a profitable history and earn an income already, which can lower the risk of a loan falling into trouble. The income isn't necessarily high enough to get a bank loan the size that Downing offers, so Downing caps the loan at 75% of its internal valuation of the property or renewable plant, which is reasonable. Valuations here aren't always easy; property or plant sales could reduce losses on a bad debt, but not always eliminate them entirely.
Downing cherry picks the loans that it funnels to its P2P arm from its wider business to contain the risk for lenders. Based on data and supporting evidence we have seen from Downing Crowd, it's likely that its loans are high quality.
They have not, and most likely will not, suffer a high proportion of loans that turn bad, leading to pursuit by repossessing and selling the borrowers' property and plant. This is a stark – and positive – contrast to many competitors doing similar lending.
How much experience do Downing Crowd's key people have?
Downing Crowd is convincing about its experience. It has approved the same kinds of loans for a decade and its people have complementary skills, including property loan approvals, development lending and renewable energy. Its head of crowdfunding is very impressive, having picked up a detailed knowledge of its products extremely quickly. She is backed up by a large team to find suitable deals and assess them appropriately.
Downing Crowd review: lending processes
We have talked to Downing Crowd about many of its processes in lending, loan-monitoring and bad-debt collection, and we have information and data to back it up. We think it has in place some capable and professional lending operations.
It has also outlined its credit-risk modelling, which is a technique for containing risks that's not always applied – and harder to do – for many of its loans, but good to see. Its interest in numbers as well as qualitatitve factors is reassuring.
How good are Downing Crowd's interest rates, bad debts and margin of safety?
We know that Downing's record between 2010 and 2018 (with its P2P platform launched in 2016) had seen just seven out of every 100 borrowers suffer problems and less than 4% of debt being written off. (That's the write-offs over the full life of its loans, not every year, so annual interest rates for the life of the loans easily cover this). This was highly satisfactory compared to similar competitors.
Downing Crowd – the P2P lending division itself – is focused on the safest loans in Downing group's market. We know lenders usings its P2P platform have not seen any of their loan amounts written off.
Downing Crowd doesn't provide 4thWay or the general public with regular, detailed updates on the ongoing performance of its loans. We don't know how many loans are late or in trouble, with recovery procedures happening.
Lending interest rates are low at Downing Crowd compared to similar competitors, having paid approximately 5.37% up to this point. But with its record so far, I believe interest rates are satisfactory for the risks involved. There is a low risk of bad debts even during a recession similar to 2008, provided you spread your money across lots of loans.
Has Downing Crowd provided enough information to assess the risks?
Downing Crowd was extremely open with 4thWay for our initial detailed assessment of it, providing all the data, information and interviews we requested.
While we initially received a great deal of information from Downing Crowd, we have not had a detailed data update since 2018. What we really would like to see is more information showing the repayment history and profile of all its loans and a breakdown by the different types of businesses it lends to, as well as a separate breakdown for its development lending.
Downing Crowd needs to provide more information about its record to the public and falls short of enough information for a 4thWay PLUS Rating. Information for lenders on individual loans is good enough – and it deserves credit for its efforts to explain complex investments. But it could use less jargon and answer a few deeper questions in its literature for lenders. Lenders are allowed to ask Downing Crowd questions about any lending opportunity, which is great, although it's of limited use unless you know the right questions to ask.
We have next to no information at all about the impact of the COVID-19 pandemic on Downing Crowd's performance.
Is Downing Crowd profitable?
Downing Crowd is owned by Downing LLP, an investment manager that has made annual profits of £3-£12 million in recent years and has been profitable for all or most of the past 12 years at least. This provides lenders good safety in the event Downing Crowd needs to be wound down.
Is Downing Crowd a good investment?
Despite some missing information, I see no major weak points in terms of the quality of Downing Crowd's loans.
What is Downing Crowd's minimum lending amount and how many loans can I lend in?
The minimum loan is £100. You need to choose your own loans and there aren't a huge number to choose from, but over the course of a year I expect you could spread sufficiently across one or two dozen borrowers.
Does Downing Crowd have an IFISA?
Downing Crowd's loans are available in an IFISA.
Can I sell Downing Crowd loans to exit early?
Not easily. There's no online market for buying and selling.
You would need to find another Downing Crowd lender who wants to buy and ask Downing Crowd to trade the loan manually, for a £25 fee. The amount that the buyer pays for your loan parts is agreed between you (e.g. if the buyer wants to pay less as the loan is now considered more risky.)
What more do I need to know?
Downing Crowd also has a product that blends lending with part-ownership in property. Plus, it might still sell fixed-rate bonds that involve lending to other Downing group companies or to businesses it owns. These are not always peer-to-peer lending and are outside 4thWay's scope. Consider lending in just one loan where Downing is the borrower.
Visit Downing Crowd.
Downing Crowd review: key details of its Senior Property & Renewable Loans
4thWay PLUS Rating
Interest rate after bad debt
Here we show the P2P lending site's own estimate
4thWay Risk Score
Lower Risk Scores are better. How is this different to the 4thWay PLUS Rating?
Downing Crowd Quick Expert Review: could make a nice addition to your lending portfolio
Downing Crowd does loans to UK businesses that own property or energy projects, including businesses…Read the full review here
Independent opinion: the opinions expressed are those of the author(s) and not held by 4thWay. 4thWay is not regulated by the ESMA or the FCA, and does not provide personalised advice. The material is for general information and education purposes only and not intended to incite you to lend.
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