Growth Street Review

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By on 31 March, 2018 | Read more by this author

Here's the Growth Street Review from one of our experts. (You can see all their Quick Expert Reviews in our comparison tables.

Growth Street Quick Expert Review

A professional company with solid defences against losses.

Established in 2014 and having lent tens of millions, this innovative P2P lending company has demonstrated pretty good selection of business borrowers and it has a large reserve fund to cover expected losses.

Growth Street* loans are rather like overdrafts to businesses. Revolving facilities like these can flatter the bad-debt figures, but adjusting for that bad debts are still low at around 2%-3%, with more recoveries likely to come.

These bad debts have been paid for by the reserve fund, almost entirely out of borrower contributions to the fund. This leaves a large amount of additional founder money still in the fund.

As a result of the above, no lenders have come close to losing any money, although we would like to see the reserve fund recover more bad debts and we would like to see that, over time, Growth Street recovers some of the bad debts to help top up the reserve fund further.

Growth Street is very 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.

Lenders’ money is automatically spread across all outstanding loans, which greatly reduces the risks.

We believe interest rates are very good for the risks involved, with a large safety margin in the event of severe economic disasters.

Growth Street, like most P2P lending sites in this new industry, is not yet profitable. 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. It also has plans and funds in place for a smooth wind-down in the event that it does close its doors.

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.

Journalists, bloggers and specialists writing for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.

*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.

7 responses to “Growth Street Review”

  1. Chris says:

    I mostly agree with this review.
    However, I am seeing 2-4 days lag between a loan order and the actual loan being taken up.
    As this happens for every loan, every month, this lag looks like it will reduce returns by 7-15% to approx 5.5% to 6%, still not too bad, but not the advertised 6.5%.

    • Neil Faulkner says:

      Thanks for pointing this out, Chris, because it would mean that, with the money being at risk for about 11 months a year, over that yearly period you would earn, as you say, approx 6% as opposed to 6.5%.

      During the (cumulative) month of the year when the money is not on loan and earning interest it is also not at risk. So while the annual return on your money is around 6% the annualised lending return when your money is at risk remains 6.5%.

      We have been wondering since 4thWay was founded in 2014 how on the website (in our comparison tables and reports) to clearly show the impact of idle money on both decreasing returns and eliminating risks. (We’re open to suggestions on that.)

      • Neil Faulkner says:

        …In our detailed comparison tables (you get to that by going to our Compare page, checking the boxes on the right next to the P2P lending opportunities that interest you, and then clicking the “Get more details” button at the top of the page), you can open up details about “idle money” under the section “Costs and Account Management > Receiving interest and payments”. According to Growth Street, on average just 3% of investor money is idle, on average, at any one time. This would indicate that the average lag is significantly less than 2-4 days.

        However, I will ask Growth Street to clarify whether money that is sitting between a loan order and the actual loan being taken up is included in this idle money figure. If it is, and if your average lag is typical across the board, idle money should be approx 10%.

        I would also like to clarify with them that it works the way you say. It would be very strange if the overdraft facilities that roll into the next month stop paying you interest for 2-4 days every month.

  2. Chris says:

    I’ve discovered a second issue – early repayment of loans.
    Of my first batch of loans only 1 ran for the full 30 days, the average term, taking into account early re-payment is just 19 days, which when adding the lending lag means returns could be much lower still.
    Disappointed, and hoping that this is the exception, else will have to look elsewhere.

  3. Shady Dave says:

    My experience with Growth Street has been very good so far – my loan orders have all been matched on the same day or at least within 24 hours – much quicker than with Zopa for example where it has taken anything up to 12 days to be lent out on some occasions. I agree though that it would be better to be able to see what the demand from borrowers is, what the queue for investors is and where your loan offer is in that queue at any given time so that investors can make an informed decision about when is the best time to deposit money. RateSetter does this and I find that very helpful!

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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.

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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

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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

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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

×
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