Flender* is a new peer-to-peer lending website that has recently provided us enough information to be listed in 4thWay's peer-to-peer lending comparison service. This takes place after our experts' usual exhaustive questioning and data gathering.
One of them has written a brief summary of their key findings and an own opinion in this Flender Review:
4thWay's Quick Expert Flender Review
Lots of time needed to prove itself
Temporary note: Flender is potentially on the verge of a large shift in the types of loans that it approves, which will impact the profile of this investment. We'll update this review once details of that change emerge and we have had another chance to interview key people at Flender.
Established in 2017, lenders using Flender have lent over one million euros to Irish borrowers, with a focus on business borrowers. The loans are in euros, so UK-based lenders who normally use pounds face currency risk if the pound falls in value.
Flender requires that borrowers first borrow at least 25% from their “own crowd”, meaning friends, family, suppliers and other contacts, before other lenders can take part. The own crowd might charge low interest or no interest, making it easier for the borrowers to afford the overall loan.
Flender has a lot to prove and not just because it’s brand new. Details are still sketchy on its team, so we are unclear if they have the specific banking skills and experience we would expect to see for these kinds of loans.
Flender approves approximately one-fifth of loan applicants. This is not high in broad risk terms, but it is higher than we'd expect for a brand new P2P lending site doing these kinds of loans. Smaller, newer P2P sites can be much more selective of their borrowers since there is less money available to lend, so we like to see them being able to take advantage of that.
However, if Flender pulls off its ambitious 2018/19 plans for attracting a large number of borrowers and lenders very quickly, this approval rate could quickly become acceptable and in line with similar-sized lending operations.
One-sixth of all applicants have so far gone on to raise enough money from their contacts, so that they are allowed to get the rest from ordinary lenders on the Flender website.
It will take some years to see whether having an “own crowd” reduces the risks for all lenders, and I'll be watching with interest to see how it does.
No loans have gone bad and lenders have lost no money, but it is very early days. We won’t know for a while if the interest rates for lenders – typically 10% – will turn out to be sufficient for the risks involved.
Flender* is mostly transparent with us. In addition, we would like access to their detailed loan data over the coming months, as well as evidence of their relevant banking training and experience.
Flender’s latest accounts and investor presentations show it is not yet profitable and at this early stage in its life I am assuming it will be some years before that happens. Flender has no known major backers.
Unless you are a preferred lender (lending at least €100,000) you choose individual loans for yourself. Preferred lenders have their money automatically lent out. You will need to spread your money across other P2P lending sites to lower your risks and to ensure you are lending in enough loans.
Read more Quick Expert Reviews in our comparison tables.
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