Growth Street Review
I think Growth Street* is the most exciting new P2P lending site in our comparison tables this year and not only because on 12th April it made its entry at the very top of our accurate tables, displacing the very impressive Landbay* for the first time.
Comparison table snapshot
|P2P Lending Site||4thWay PLUS Rating||4thWay Risk Score||Interest Rate|
|(Nearest Competitor) Landbay*||2/10||3.75%|
Growth Street Quick Expert Review
Highly professional with superb defences against losses and very attractive interest rates.
Established in 2014 and having lent in the tens of millions, this innovative and professional P2P lending company has demonstrated great selection of business borrowers while offering secured loans that are just 40% of the size of the business borrowers’ assets, plus an already large reserve fund to cover expected losses that is currently being boosted to huge by founding investors, if the need arises.
Growth Street* has an experienced banking team that also uses technology to be able to regularly assess borrowers’ finances to ensure they are continually able to repay. It is therefore able to take quick action before a borrower gets too weak. It has also successfully recovered almost every penny of the few bad debts that have occurred – a strong sign of solid bad-debt recovery processes.
As a result of the above, no lenders have come close to losing any money.
Growth Street is exceedingly transparent, giving us access to its key people, and also to its data, which enables us to assess every detail of its business using risk modelling and investing techniques.
We believe interest rates are truly excellent for the risks involved, with a large safety margin in the event of severe economic disasters.
We have little information as to Growth Street’s own financial health. It had a slightly positive financial position as of end 2015, but there is limited up-to-date information publicly available for businesses as small as Growth Street. That said, we think it is one of the more professional outfits in all aspects of its business and it has a unique offer that places it well for continued success.
Lenders’ money is automatically spread across all outstanding loans, which greatly reduces the risks even further.
In summer 2017, we noticed some lenders complaining on P2P lending sites that they are struggling to get their money lent out as quickly as they like, because lenders appear to currently outnumber borrowers. Having unlent money lowers the interest you earn (although it also lowers the risks since your unlent money at Growth Street is then held in a separate high-street bank account that is protected by the Financial Services Compensation Scheme).
Back to me and my own Growth Street review …
We've poked and prodded Growth Street as we do all P2P lending sites. We've collected over 100 data points, meeting their main credit risk expert in person, conducted telephone interviews and initiated many Q&A sessions by email.
It appears to be, in my view, an almost flawless investment opportunity paying very attractive interest rates for the low risks involved.
It's very reminiscent of RateSetter* in that it is professional, it allows you to easily spread your money across large numbers of borrowers at once, and it has a large reserve fund to cover any excess losses.
However, there are some important differences. Instead of RateSetter's mix of mostly personal loans as well as business loans and property development loans, Growth Street focuses on secured business loans. Its reserve fund is already large, but when adding on the contributions promised by founding investors, it is vastly larger than RateSetter's at over 9% of outstanding loans. (That's unnecessarily massive, but please don't tell Growth Street that.) Plus its interest rates are higher.
Growth Street offers a blend of two types of loan to business borrowers. The first is a business overdraft secured on the business borrowers' assets (e.g. its cash, equipment and machinery). The second type of loan is secured against businesses' customer invoices. In other words, the business borrower is owed money by a customer and that money owed to it is the security.
On average, the value of those assets and invoices is far more than double the loan amount. The bottom line is that, in the event the borrower is unable to pay, Growth Street can therefore much more easily recover the bad debt by staking its claim on those assets and invoices.
It also has the full gamut of auto-lending options: you can deposit new money regularly (with a standing order) and re-lend repayments and/or interest you receive automatically, or you can have your repayments and/or interest paid to your bank account if, for example, you want to use Growth Street for a second income.
In short, at last we have an easy-to-use business lending platform with a reserve fund that targets the lower-risk end.
Visit Growth Street*.
The opinions expressed are those of the author and not held by 4thWay. 4thWay is not regulated by the FSMA 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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*Commission and impartial research: our service is free to you. We already show dozens of P2P lending companies in our accurate comparison tables and we keep adding more as soon as they provide us with enough details. We receive compensation from Growth Street, Landbay and RateSetter, and other P2P lending companies not mentioned above when you click through from our website and open accounts with them. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.