4thWay's LendingCrowd Review: with business loans P2P site LendingCrowd*, you can select loans yourself to earn higher interest or spread your money automatically across many loans.
4thWay's Quick Expert LendingCrowd Review
Good results from a unique opportunity, provided you spread your money across lots of loans
LendingCrowd Review: their best-rated product
This account has been paying 7.30% interest after bad debts.
When did LendingCrowd start?
LendingCrowd has been growing slow but steady since 2014 and has done £86 million in loans.
What interesting or unique points does LendingCrowd have?
For those looking totheir risks by lending in different kinds of loans and different parts of the country, LendingCrowd has a number of unique points. It is the only website to focus on lending to small businesses in Scotland, it's the only business lending site that provides the full details necessary for a detailed analysis of its performance, and it is the only business lending site that allows you to choose individual loans for yourself, if you want to.
LendingCrowd during COVID-19
LendingCrowd has paused new lending in order to offer borrowers Coronavirus Business Interruption Loan Scheme loans. These are government-backed loans that cannot be funded as P2P loans.
LendingCrowd is not currently revealing the impact of COVID-19 on existing P2P loans through its data submissions to 4thWay. Although we know that bad debt on loans issued in 2020 so far have reached 2%, while at the same time last year no loans for the year had turned bad. Nevertheless, the increase in bad debt is expected and so far still well within tolerance, based on LendingCrowd's interest rates. We'll keep you updated as we can.
LendingCrowd itself told 4thWay that the number of loans with forebearance (such as payment holidays) due to COVID-19 are “low”, but it doesn't define what “low” means.
How good are its loans?
LendingCrowd’s results in terms of late loans and bad debts are in line with typical small business lending. It still needs a bit more time to mature, but its interest rates currently look good to us for the risks involved.
Its lending accounts all have the second top. If we rated the loans that LendingCrowd grades as A+ and A separately from the rest, those loans would receive the top of 3/3. In the current economic environment, I would particularly want to put more money in the lower-risk, lower-rate loans over its other loans.
How much experience do LendingCrowd's key people have?
I believe the key people behind LendingCrowd have a lot of directly relevant experience in the key area of approving small business loans. The lead decision maker in particular has had a directly relevant senior role at a major bank.
LendingCrowd review: lending processes
I am pleased to see that a major focus in selecting business borrowers is to try to ensure that borrowers have plenty of cash coming in to cover the loan repayments, which is highly appropriate for these kinds of loans.
Specifically, businesses borrowing through LendingCrowd can typically cover the monthly loan repayments at least 1.5 times over, going up to nine times over for LendingCrowd's A+ loans. In addition, we know that LendingCrowd conducts at least some of the risk modelling that we really like to see for business loans.
Has LendingCrowd provided enough information to assess the risks?
LendingCrowd* has been transparent and upfront. It provides access to its people, answers almost all of our questions and gives 4thWay a lot of detailed data to back it up.
However, this has not fully been the case since the pandemic started. In contrast to most P2P lending companies who are transparent with us, it's decided to keep data related to pandemic-hit loans to itself.
While I'm still not deeply concerned at this stage, it's something to watch, especially as LendingCrowd does not have the top 4thWay’s 10 P2P Investing Principles:, reflecting higher risk when recessions have occurred. I'd like to remind you of principle three of
“Treat buried information as if there's a reason, missing or ambiguous information as if it contains bad news, and decreased information as if it contains worse news. Demand more verifiable information the less that is provided freely.”
Is LendingCrowd profitable?
LendingCrowd is not yet profitable, but, in early 2019, LendingCrowd received £6 million in investment, up from an initial investment of £2 million in 2018. This is highly reassuring and greatly extends LendingCrowd's runway to aid its growth.
What is LendingCrowd's minimum lending amount and how many loans can I lend in?
For these kinds of business loans, you normally need to lend in around 180 or more loans to contain the risks. LendingCrowd is approving around 20 loans a month, so you could build a decent loan portfolio by dripping your money in over a year or by re-lending the monthly repayments in new loans.
The minimum you can lend is £20 if you choose loans yourself, meaning you need to lend perhaps £3,600 to spread the risks across 180 loans.
If you use automated lending accounts, the minimum you can lend is £1,000, which you can expect to be spread across just 50 loans to begin with, although this will rise rapidly if you re-lend repayments you receive.
If you lend £2,000 in an automated account, you're spread across 100+ loans, and for £5,000 you get 200+ loans.
Does LendingCrowd have an?
Visit LendingCrowd* and read our . Guide
Independent opinion: the opinions expressed are those of the author(s) 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.
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The 4thWay® PLUS Ratings are calculations developed by professional risk modellers (someone who models risks for the banks), experienced investors and a debt specialist from one of the major consultancy firms. They measure the interest you earn against the risk of suffering losses from borrowers being unable to repay their loans in scenarios up to a serious recession and a major property crash. They assume you spread your money across hundreds or thousands of loans, and continue lending until all your loans are repaid. They assume you lend across 6-12 rated P2P lending accounts or, and measure your overall performance across all of them, not against individual performances.
*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 LendingCrowd 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.