Growth Street Review
Growth Street Review
A professional company with solid defences against losses
When did Growth Street start?
Established in 2014 with total lent of £48 million.
What interesting or unique points does Growth Street have?
Growth Street's loans are similar to bank overdrafts to businesses: flexible lending facilities that borrowers can draw more on or pay down, as needed. Unlike overdrafts, these facilities are also secured for lenders' protection, mostly against the money owed to the business borrowers by their customers.
Growth Street* is highly innovative. It integrates with its business borrowers' monthly accounting systems, so that it can rapidly see if the borrower's financial situation is starting to go downhill. It can then require the borrower to pay debt off much faster, before trouble hits and while the borrower can still afford to make large payments. It can also divert payments from the business borrowers' customers directly to Growth Street.
Growth Street has a large reserve fund to cover expected bad debts.
How good are its loans?
Beneath Growth Street's highly satisfactory results so far, 4thWay is waiting to talk to Growth Street's new key rainmaker in its lending (credit) team to see what its minimum standards are going to be in future, so that we can assess more closely how good its underlying loans are.
The data Growth Street has sent us on itsis now out-of-date, although we are expecting more regular updates to begin imminently. The last data on that we received shows that loans are typically for less than half of the value, which is good for these loans.
Growth Street's expectation is for around half of bad debts to be recovered, which is substantial and also highly plausible for these loans.
How much experience do Growth Street's key people have?
Growth Street has the key skills we'd expect to see. There's a new key lending decision maker who started in summer 2019. We're yet to interview him and conduct follow-up background research, although based on previous hires and Growth Street's cash pile for growth and hiring my expectation is that he'll have sufficient know-how.
Growth Street review: lending processes
Growth Street extensively uses predictive technology, fraud databases, integrated accounting, and financial and credit history checks in order to assess a borrower for a loan as well as to set interest rates.
The borrowers' situation is constantly monitored and Growth Street can amend borrower interest rates with just 30 days' notice.
It's begun to see results from its efforts to recover some of the modest amount of bad debt suffered so far, which is encouraging about its bad-debt recovery processes.
How good are Growth Street's interest rates, bad debts and margin of safety?
Growth Street* has demonstrated good selection of business borrowers. Its record compares well to both similar and dissimilar business lending, with just two-and-a-half loans out of 100 suffering trouble, before recoveries of bad debt. 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.
Growth Street approves some very large loans. If some of them when bad they could, in theory, overwhelm the reserve fund and even lead to losses. However, its ability to spot problems early and manage the size of the overdraft-like facility downwards, as well as other innovative and standard procedures, reassures that the likelihood of this happening is low.
I think interest rates are good for the risks involved, with a large safety margin in the event of severe economic disasters.
Has Growth Street provided enough information to assess the risks?
Growth Street has been slow to get data and information to us in recent times, but it's started taking major steps to rectify that. It is usually 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.
Is Growth Street profitable?
Growth Street, like most P2P lending sites in this new industry, is not yet profitable. That said, we think it is technically agile, and it has a unique offer that could place it well for continued success. It has plans and funds in place for a smooth wind-down in the event that it does close its doors. It received an additional £17.5 million from investors in 2019 so far.
What is Growth Street's minimum lending amount and how many loans can I lend in?
Lenders’ money is automatically spread across all outstanding loans, which greatly reduces the risks. The minimum lending amount is £10, which is spread across all live loans and redistributed daily as new loans are made. I believe lenders will be sufficiently diversified across enough loans almost immediately.
Does Growth Street have an?
Growth Street has an here.. Unusually, it is a different lending account, rather than the same one wrapped in ISA. You can read about it
What more do I need to know?
The previous version of this review incorrectly stated: “When a loan goes bad, Growth Street has typically recovered over half the amount back from the borrower.”
Correction: Growth Street has not yet achieved that, but expects to do so. The average bad debt has only been in recovery proceedings for about six months. Early results are promising and Growth Street's expectations are reasonable, but more time is needed to confirm them.
Growth Street has a cashback deal for new and existing lenders of up to £2,000 cashback. Read about it here.
Growth Street: key details of its Classic Account
3 PLUSes is best.What does the tell you about the risks and rewards?
Interest rate after bad debt
Here we show the P2P lending site's own estimate
Lower Risk Scores are better. How is this different to the ?
Growth Street Quick Expert Review: a professional company with solid defences against losses
Established in 2014 with total lent of £48 million. Growth Street's loans are similar to…Read the full review here
Independent opinion: the opinions expressed are those of the author 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 experts and journalists 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.
*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 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.