Which P2P Lending Sites Are Profitable?
This page was last updated on 20 December, 2020
For many years, 4thWay has had a small, steady stream of requests from our readers to find out which P2P lending companies are profitable – which of them are making money. That's why we have this guide, which we update kind of regularly.
Lenders' concern is that if these websites are not profitable then they will go bust. Or, rather, the concern is that if they go bust it will take much longer to get your money back or that you might even get less money back.
After all, P2P lending websites not only find the borrowers for us individual lenders, they also collect loan repayments and chase bad debts.
Certainly, in the event one of these companies goes out of business, there's a substantial risk that you'll face delays in getting all your money back.
Luckily, history has shown so far that most people lending through P2P sites don't suffer additional losses as a result of the closure. (Although, as usual, you can suffer losses from bad debts – just like if the P2P site was profitable.)
How much are the P2P lending sites making?
Alas, profitability figures are hard to come by because the P2P lending sites are private businesses. This means they don't provide much public information about their own financial situation, unlike companies that are listed on the stock market.
In addition, many of these P2P lending companies are still small enough that they are allowed to file highly uninformative mini accounts. Worse, these accounts might be one to two year's old, which is a huge amount of time for new businesses.
What we know about their profits
However, here's the latest information we have on profitability.
Bear in mind that this information is largely taken from spokespeople comments or from company reports that have not been externally audited by independent accountants. That increases the chances that there are some inaccuracies and sometimes even whoppers. (And even independently audited accounts are not immune from error and deception.)
ArchOver* lost £1.4 million in the calendar year 2019 off of total revenue of £1.6 million, according to its latest, independently audited accounts. The auditors are CBW Audit Limited.
Revenue and losses were both pretty steady compared to the year earlier, i.e. no improvement.
ArchOver still boosted its balance sheet by issuing new shares, so its substantial and profitable parent, Hampden Holdings, appears to be continuing to support it with real cash – at least up to the end 2019.
Assetz * first reported its profits in its filed accounts in its March 2019 accounts, filed in March 2020. The group of interconnected companies that makes up Assetz made a loss of around £1.4 million in 2019, for which you do need to read the footnotes in the accounts to get the total loss figure.
Both revenue and costs increased substantially in 2019, matching Assetz's extremely ambitious policy of rapid growth. It increased its headcount from 78 to 98 in the year, which was probably the main factor in its loss, contributing to a rise in administrative costs of £4 million.
Revenue was up to £17 million from £14 million in 2019. Assetzis still in its growth phase, so don't expect consistent profits.
Assetz's 2019 accounts were the first to be subject to independent audit. The firm is unknown to us, being Kay Johnson Gee Limited. It's based in Manchester where Assetz is also headquartered.
Assetz's March 2019 accounts show a total profit for the prior year – up to March 2018 – of £150,000. (Again, that's after taking footnotes into account.) We had previously been told of a £1.5 million profit in 2018 and £1 million in 2017.
The earlier filed accounts don't contain enough data to verify the £1 million profit figure and I think there's a good chance that it's extremely flattering. It would not surprise me if losses had actually been made in those years, based on the limited information in the earlier filed accounts. They certainly seem to indicate cumulative losses each year from at least 2016 onwards.
BLEND Network appeared to make a five-figure loss in 2019, but this is a very small, new P2P lending site. I expect its losses to grow for several years as it scales up its business. Its owner appears to have injected enough money into the business to work on the growth it needs.
SoMo appears to be profitable. Its accounts are not audited and they don't contain a profit and loss statement. However, from other figures we roughly estimated that SoMo made around £5 million in the year to March 2019 and £2 million the prior year. This was then more or less backed up by SoMo, as it published a £3.5 million profit for 2019 on its website and £2 million for 2018.
SoMo says that it's made a profit since it launched in 2015, when it was called BridgeCrowd.
SoMo's CEO and majority shareholder owes the company over £1 million, but I don't believe this is a big deal if the profit estimates are reasonable.
Little information is available in CapitalRise‘s unaudited, published accounts, with the latest dated 31st July, 2019. It looks like it might have made a £1.5 million loss, which is not unusual at this stage in a P2P lending company's life. Its owners appear to put their money where their mouths are and they appear to be successfully growing the business at a rapid rate.
CapitalStackers* has been making very small profits every year up to its financial year end in September 2020, after turning profitable in approximately 2017.
Crowd2Fund* hasn't made a profit yet. It might have lost about £1.5 million in 2019 on an unknown turnover, but its unaudited accounts don't contain enough details. Crowd2Fund's CEO has owed Crowd2Fund over £100,000 for at least three years.
Up to March 2019, the date of CrowdProperty‘s last filed accounts, it appears to be making six-figure annual losses, but there's some guesswork here, because the accounts are unaudited and contain little information.
Downing Crowd is a unit of a larger business, Downing LLP. We can't see the results of the Downing Crowd unit, but the overall business is nicely profitable, making at least seven-figure profits over the past five years off around £25 million revenue. It's been profitable for at least the past 12 years.
Folk2Folk made its first profit in 2019 after seven years. £200,000 profit off the back of £3.2 million in revenue, according to audited accounts filed at Companies House. Profits came after a cut in costs of over half a million, and a small increase in revenue.
Funding Circle was profitable in its UK arm in 2019, making £3 million profit off of more than £100 million in revenue. Funding Circle is still making a loss overall, but it claims its US arm is on the same trajectory towards profit as the UK.
Its accounts filed to 31st December, 2019, show a global loss if £92 million, up from £47 million. Income was £170 million, up from £140 million.
Funding Circle has sufficient scale and, I think, efficiencies in its, that it will find a way to be profitable overall in the coming years.
HNW Lending* stated in 2019 that it has been profitable every year.
It's a very small business that is exempt from filing detailed information at Companies House. From the limited information available in its unaudited accounts, I would estimate it's making about £1 million profit per year, off of an unknown total revenue.
Kuflink Ltd is over six months late in filing its company accounts and its parent is nine months late. Kuflink explains that the accounts are under audit. Kuflink* told 4thWay that in its pre-audited numbers, its P2P arm made a loss of £460 million in its financial year to June 2019 and a profit of £560 million to June 2020.
Kuflink's older accounts show 2017 was a loss and so was 2018, with a loss of £250,000 on £1 million in revenue, although Kuflink's other bridging-loan business, its older brother so to speak, has mostly been profitable and growing since 2011.
Information in its unaudited accounts is limited. Loanpad* is probably making six-figure losses, but it's early days and Loanpad is growing, so these losses superficially appear to be quite reasonable.
Octopus Choice made a profit of £2 million in the 12 months up to April 2019, off the back of £8 million in revenue. This is an improvement on £1 million profit from £5 million revenue the year earlier.
More importantly, its direct parent made a profit too, of £800,000. Octopus Choice grew a lot in the year, which enabled it to turn this profit after a loss of £1 million the year before.
The overall group company is financially very sound and generates a lot of cash. It has been profitable every year but one since 2008.
Zopa‘s* business was profitable in the calendar years 2017 and 2018, according to its audited accounts. In 2017 it earned £1.5 million on £46 million in revenue, which rose by 40%. In 2018 it earned £1 million on sales of £38 million, although it would have made a loss if it was not for some one-off events. We have no more recent information.
It's likely that Zopa could convert its P2P lending business results into a steady, sustainable profit as soon as it chooses to consolidate its activities. If it decides to pursue rapid growth or new ventures, it will probably return to a loss, but it has sufficient scale now for stability.
Zopa's auditors are PwC.
Other ways to measure P2P lending site stability
At this stage, profits aren't key for many of these fast growing startups, so you need to look at other ways to measure stability and strength. To that end, read Who Owns The P2P Lending Sites?
*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 Assetz How we earn money fairly with your help., CapitalStackers, Crowd2Fund, HNW Lending, Kuflink and Loanpad, 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