Growth Street Review
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 fairly 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 4% – a one-off, not annual amount.
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.
When a loan goes bad, Growth Street has typically recovered over half the amount back from the borrower. That is pretty good and compares well to personal loans or unsecured business loans, but for Growth Street' type of loans we would like and expect to see that, over time, Growth Street recovers more bad debt to help top up the reserve fund further.
Delays through much of 2018 in getting Growth Street's data mean that in early 2019 we have just now had a chance to review its detailed loan book after a long delay. It shows that Growth Street has approved multiple extremely large loans making the reserve fund weaker than it appears at first sight. That said, lenders would still need to be quite unlucky to suffer losses based on current interest rates and the reserve fund combined.
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 technically apt and agile, and it has a unique offer that could place 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*.
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