4thWay's LendingCrowd Review: with Business loans P2P site LendingCrowd*, you can select loans yourself to earn higher interest.
Alternatively, you can split your money automatically between at least 20 loans – and no more than 5% of your money in any loan.
Target interest rates are currently around 6% with automatic diversification or above 7% if you select loans yourself, although in practice lenders have been earning around 8% in all LendingCrowd's lending accounts.
4thWay's Quick Expert LendingCrowd Review
Good results from a unique opportunity
LendingCrowd has been growing slow but steady since 2014 and has done tens of millions of pounds of loans.
For those looking to diversify their 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 peer-to-peer lending website to focus on lending to small businesses in Scotland, it's the only unsecured business lending site that provides the full details necessary for a detailed analysis of its performance, and it is the only unsecured business lending site that allows you to choose individual loans for yourself, if you want to.
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.
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 is currently on course to see its Excellent 4thWay PLUS Rating on all its lending accounts and IFISAs go up to the top Exceptional 4thWay PLUS Rating, provided its record continues for a while longer.
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.
LendingCrowd* is transparent and upfront, providing answers to almost all of our questions and a lot of detailed data to back it up.
In early 2018, LendingCrowd received £2 million in investment, which is reassuring and also extends LendingCrowd's runway to aid its growth.
For these kinds of business loans, you normally look to lend in at least 100 and probably more like 200 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, making it easy to choose enough loans to spread the risks. The minimum is £1,000 if you choose for your money to be automatically spread across loans. In this case, you can expect to be spread across just 20 loans to begin with, although this will rise rapidly if you re-lend repayments you receive.
LendingCrowd's lending products are available as IFISAs.
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.
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The 4thWay® PLUS Ratings are calculations that were 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 risks and rewards of losing money in scenarios up to a serious recession and a major property crash, and they assume you spread your money across lots of loans and rated P2P lending accounts or IFISAs. The rating is calculated using objective criteria that can be measured and improved on over time, although no rating system is perfect. Read more about the 4thWay® PLUS Ratings.
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