Compare P2P lending accounts and IFISAs now

Downing Crowd Review

Click "Learn" to get help

By on 30 September, 2020 | Read more by this author

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:

Downing Crowd Logo, used in 4thWay's Downing Crowd review4thWay'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 5.36%.

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 £140 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 5.36% 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
4thWay Unrated
Interest rate after bad debt
5.36%

Here we show the P2P lending site's own estimate
(or 4thWay's if theirs are not appropriate)

4thWay Risk Score
N/A

Description: £140 m since 2016 in secured short-term loans to trading businesses with property, property development loans & loans to renewable energy providers. Available in an IFISA

Minimum lending amount
£100
Exit fees - if you sell loans before borrowers fully repay
N/A - no early exit possible

Early exit is not guaranteed. Usually, other lenders need to buy your loans

Do you get all your money back if you exit early?

N/A

Loan size compared to security value
No info on avg; 75% (max); developments 75% (max) of future sale value
Reserve fund size as % of outstanding loans
Company/directors lend alongside you/first loss
No
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.

All the specialists and researchers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.

Our service is free to you. We don't receive commission from the above-mentioned companies. We receive commission from some other P2P lending companies when you click through from our website and open accounts with them. This doesn't affect our editorial independence. Read How we earn money fairly with your help.

Comments are closed.

Today’s average interest rates

What is the “4thWay”?

There's the savings way, the property way, the stock-market way, and now there's the peer-to-peer lending way. The 4thWay® to save and invest.
Learn more.

What does 4thWay do?

We help people save and make more money, more safely when they cut out the banks and lend directly to other people and to businesses.

Why use 4thWay?

4thWay® is shaped by investors, bank risk modellers and a senior debt specialist, and we're governed by our users to ensure our comparison services and research are trustworthy and complete.

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Orchard’s interest rates different?

Orchard’s lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Orchard’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×
Back to top