Revisiting Institutional Lending

Six years ago (I can’t believe it’s that long!) I wrote two pieces on institutional lending:

Is Institutional Lending In Peer-To-Peer Good For You?

Which Peer-To-Peer Lending Sites Have Institutional Lending?

You can read those for an explanation of what it is and how institutions take part in P2P lending.

Today, I just want to revisit the question of whether all the P2P lending companies (and other online lending companies) named in those two pieces generally did well or not compared to the rest of the market.

That helps you to see how useful institutional lending is as an indicator of quality or of risk.

I’m not giving you a complete list of all providers that have ever had institutions on their side. I’m looking exclusively at the ones that I pulled together for those two research pieces in 2020, so we can see how it all turned out for them.

I’ve put all the providers mentioned in those research pieces into loose lists below that are roughly based on lending results.

Please don’t contact me to nitpick about the exact list they are placed in and whether they should be bumped up or down a notch. Not only do lending results vary by lenders, but in some cases the returns are still not fully known.

Furthermore, I’m also just doing this broadly without looking at detailed annualised returns data. (Data in some cases is impossible to come by as the companies no longer share it or have closed down, for example.)

So it’s the loose picture that we’re trying to get here in order for us to get a feel for how good or bad providers that obtain institutional involvement turn out to be.

The great ones

Loanpad* (read Loanpad Review).

Proplend* (read Proplend Review).

AxiaFunder* (read AxiaFunder Review).

CapitalRise* (read CapitalRise Review).

FOLK2FOLK. (read FOLK2FOLK Review).

Relendex.

The fine ones

Octopus Choice (now closed).

RateSetter (now closed).

Growth Street (now closed).

Zopa (now closed to P2P Lending).

Funding Circle (now closed to P2P lending).

(In this category, while some might have left a sour taste in some lenders’ mouths and results will have varied a lot, I think the lending results for most lenders in the end were just about as promised or expected.)

The “meh” ones

Property Partner (now closed).

CrowdProperty.

Assetz Capital (now closed).

Propio (now closed).

The really bad ones

While you might personally argue for one or two in the previous list to be moved down to here, there are no others to mention that were among the companies I identified six years ago.

The catastrophes

Again, depending on your definition of catastrophe, individual results, and lending results not yet fully crystallised, you might pull some of those from above lists into this bottom category.

But none of the above have been convicted of severe fraud. Nor were they in the Lendy or FundingSecure kind of level along the lines of either incompetence or negligence leading to widescale massive losses for most lenders who used them.

What does this tell us?

4thWay’s specialists told me six years ago that institutional money is probably more attracted, on average, to better quality P2P lending sites. And by 2020, early results in the industry had backed that up.

I’d say that the results above, showing what happened over the past six years, also skew more towards the better end.

The biggest categories are the top two ones and none of the entrants made it into my catastrophe category.

That’s despite the fact that, glancing at 4thWay’s database of both live and now closed providers, there are probably dozens of them in the wider market that would be in the “meh” or “really bad” categories, and quite a few catastrophes too.

Even so, it’s never going to be as good as for you to get to understand the platforms that you’re lending in. Do check out our guides pages to learn better how to do that, read our reviews and do your own research!

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