Peer-to-peer lending is not a regulated phrase. By 4thWay’s definition, any online lending company is peer-to-peer if it structures itself and its loans to offer the same level of protection as direct lending, in order to protect lenders in the event that the lending company…
P2P lending costs money for both borrowers and lenders. Because there’s no such thing as a free lunch! You can find out true costs of lending through various P2P lending companies elsewhere on 4thWay and we’ll show you where further below. But, firstly, here’s how…
Update on 12th August 2023: Crowd2Fund’s accounts have now been filed and the strike-off action discontinued. Details of its accounts here. You’ve not heard anything from us on Crowd2Fund for a while. Crowd2Fund hasn’t been in a position to provide detailed data to us to…
We talk to 4thWay users a lot directly, and we get your emails and survey results from you. What we find is that lenders are making the same mistakes over and over again – and frankly it’s worrying us. While the P2P lending sites really…
In China, the number of websites offering lending platforms reached more than 2,000. For a long time, after that, 80 of them were being closed down every month due to peer-to-peer lending fraud or incompetence. The UK is far from China in more ways than…
Falls in house prices in seven of the past 10 months (according to both Halifax and Nationwide) have not perceptibly impacted overall annualised lending results at P2P lending platforms. While price changes can have delayed effects, the future also looks very healthy for lenders using…
We’ve had to temporarily take Lande’s 4thWay PLUS Rating down. Unfortunately, due to illness, Lande’s not been able to provide us with the data we need to keep assessing it on anything like the regular basis that we require. I’ve been informed that Lande will…
I just have time for two brief updates on Proplend, which is truly one of the most remarkable P2P lending and IFISA providers for lowering your risks while paying attractive interest rates. Instant diversification in extremely safe loans available now At time of writing, Proplend*…
P2P lending companies are run by people, so lenders rely on them for getting satisfactory lending results. Their character is always going to be of interest, especially in terms of personality traits that can increase or decrease the risks to you. By “good character”, I’m…
Property lending dominates the P2P lending industry and for good reason. It’s because banks have historically had less of a grip on some parts of this market, and because high-quality borrowers have often struggled to get the loans and conditions that they need, with the…
Probably the task that we spend the most time on at 4thWay is trying to identify whether what we’ve just been told by a P2P lending provider is truth or fiction. All the processes we’ve built up over the years – from the initial, weeks-long…
At present, there are no cashback deals of note available.
Housemartin* shares a name with Assetz Capital, which recently announced it’s winding down its P2P lending side to focus on lending that is funded by financial institutions. While Assetz Capital expects lenders to continue to lend profitably as the loans are repaid, it did shock…
I don’t want to stretch this out too long, but a 4thWay user did request we publish the results of our recent survey and I think four of the key findings might be interesting or maybe even educational for you. Most people are taking efforts…
A great question from a 4thWay reader gives me a chance to explain about ways P2P lending companies can hide problem debts and how we go about finding them anyway – which 4thWay has always succeeded in doing up to this point. At the end,…
I looked at the most recent data provided to us by Assetz Capital to estimate when lenders in its Quick Access Account, 30-Day Account and 90-Day Account might expect to get their money back. I also interviewed Simon Atkinson, Head of Capital Markets at Assetz…
Nationwide says we’ve just had four months in a row of falling property prices. To some people, that means there are more falls to come. My colleague has expressed his views on that in a separate piece. But some peer-to-peer lending accounts seem…
Swedish P2P lending provider SaveLend, part of the stock-market listed SaveLend Group AB, has now received a 4thWay PLUS Rating, after an extensive assessment of its detailed loan data. Lenders have been earning 8% to 9% after bad debts and fees over the past two…
Assetz Capital’s 90-Day Access Account continues to earn an Exceptional 3/3 4thWay PLUS Rating. After bad debts, which are usually paid for by a reserve fund, Assetz Capital is targeting for lenders. Visit Assetz Capital or keep reading the Assetz Capital Review.
ArchOver’s Mostly Secured Business Loans are unrated, due to lack of information. We estimate these loans have been paying lenders around interest after bad debts. Visit ArchOver or keep reading the ArchOver Review.
ArchOver primarily does UK business loans that are largely secured on whatever business assets are available, with a preference for the business’s outstanding customer invoices.
It also does unsecured loans to give businesses an advance on tax credits, grants and tax reliefs, such as the research and development tax relief.
Loans are from £100,000 and up to £5 million. The average loan is around £250,000, although many borrowers have lots of ArchOver loans simultaneously.
Its secured loans can last up to two years and unsecured loans for up to one year. Loans can be repaid at the end, with interest paid regularly. Or they can be repaid monthly. A hybrid is common too, where some of the loan is repaid with interest every month, but a large final lump sum is repaid at the end.
Established in 2014, lenders using ArchOver have technically lent £160 million to business borrowers. This figure is possibly overstated due to a substantial proportion of loans being effectively extended by being renewed, but 4thWay is not provided with the full data.
ArchOver’s owner, Hampden Group, has lent millions of pounds through the ArchOver lending platform, which I previously wrote is one of the most promising signals.
However, while that was the case as late as summer 2021, we have no recent information on how much the Hampden Group continues to put into the loans.
The types of business loans ArchOver approves require a lot of individual, human analysis, so the P2P lending platform can’t rely to a big extent on credit reports and automated checks, to approve large numbers of loans to provide safety for lenders.
What we know about the quality of the loans is limited. We know that ArchOver wants to see that the borrower is likely to be able to meet the monthly loan payments.
Borrowers need to provide company accounts for the past two years as well as up-to-date management accounts (that’s ongoing accounting reports used by management), which is good.
The latest information we have is that secured loans must be for less than 90% of the value of security (e.g. less than 90% of the outstanding amounts on customer invoices), which is reasonably standard for loans that are secured in this way.
The type of security usually seen on ArchOver loans is not as strong as real property security usually is, so lenders should certainly be prepared for some losses on a good proportion of the loans that turn bad, until ArchOver proves it can do better.
ArchOver appears to allow borrowers to keep borrowing, sometimes to repay previous loans. Many borrowers borrow 5, 10, 15, 20 or more times through ArchOver.
While such repeat borrowing can be perfectly reasonable, it can also be the primary means, and easiest route, for a P2P lending company to hide problem debts. The problem is, we have next to no information on any of this.
Recognised bad debts tend to arise in very large lumps – far, far larger than the average loan size. I think the most probable reason for this is that borrowers have borrowed repeatedly before getting into trouble.
Without sufficient openness from ArchOver in terms of detailed data, results and explanations, this is a huge gap in our knowledge of this platform. The rate of repeat borrowing or refinancing is so high that 4thWay – and lenders – really require a lot of information on it.
I noted in the last ArchOver Review update that it had shown signs of consolidating its loan types and removing features of its lending accounts that didn’t work so well, which could improve the overall quality of the loans – and make them easier for lenders to understand.
There’s some circumstantial evidence the improvements continued through 2022, as you’d expect after roughly eight years of operating. This includes arranging more loans where borrowers repay part of the loan as they go, rather than at the end. It also has fewer loans where all the loan and all the interest is repaid in one go at the end, which makes it easier to spot problems with a borrower earlier on and reduce losses.
However, with the limited information available, I’m not able to form a strong opinion on loan quality.
ArchOver arranges loans with firms that it itself does business with, which is not ideal. As far as I’m able to see, it doesn’t always reveal this to lenders.
ArchOver’s lending practices are driven by viewing prospective borrowers from an accounting perspective, for which it has significant experience and training.
Its people have some prior experience in credit analysis or similar, although this is limited and not at a senior level. I would like to see more.
Its key decision maker was promoted this year. With eight years at ArchOver in relevant roles, it must be meaningful experience that he has acquired. While we have previously met and interviewed some of the ArchOver team on several occasions, we haven’t had a chance to interview him.
In a previous version of the ArchOver Review, I noted that ArchOver had not made it clear to us whether it uses credit reports in its processes. We now know that it does, although its provider, Wiserfunding, is a new one. As such, we have not yet had the chance to assess the quality Wiserfunding’s scoring system.
Over the years, ArchOver has added to the tools and processes it uses to assess borrowers, and so we have seen it mature.
Personally, I’d prefer that ArchOver begins its research from a quantitative, analytical and impersonal approach from a distance.
But, the way they have described it, they get into personalities and a qualitative assessment first.
In my view, this can lead to errors from personal bias, and it also gives the borrowers more opportunity to use their charm and interpersonal skills to influence what ArchOver’s people later see in hard numbers and facts.
That aside, ArchOver’s processes on the whole sound reasonable and competent. Experienced underwriters, accountants and credit-committee members should be able to make good decisions if applying their skills to those processes and maintaining their discipline.
There are a lot of repeat themes in terms of the types of businesses ArchOver approves, indicating that it sticks to businesses it believes it understands.
ArchOver puts a great emphasis on monitoring borrower’s cash flow, their accounts and security, on a monthly basis, with the cash being diverted to flow to an ArchOver-controlled bank account in the first instance.
ArchOver’s focus on the borrowers’ ability to meet monthly payments and repay the loan is reassuring; for these kinds of loans, it should not be relying heavily on the borrowers’ security.
Nevertheless, ArchOver is big on borrower covenants, such as keeping enough cash on hand to meet the next loan payments, plus a little extra. It also uses negative pledges, which reinforces lenders’ security by making it harder for businesses to borrow substantially elsewhere using its assets as security.
These legal clauses, combined with strong monthly loan monitoring, reduce the risk of eventual losses from bad debts. They also reduce – but certainly don’t eliminate – the risk that ArchOver is rolling over poorly-performing debt into new loans.
Total paid to lenders in interest has reached £13.1 million.
Superficially, it appears that loan amounts that have turned bad – which is at least £9.4 million – are outweighed by interest that has already been paid to lenders – and that’s even before taking into account any recoveries that ArchOver has made on those loans.
If this is the case, the risk-reward balance has been good and is likely to remain so for the foreseeable future.
We have insufficient information to see whether problems are bubbling under the surface or to conduct an analysis of margin of safety. However, as the years go by, this risk is sinking somewhat. I had expected deep cracks to have become visible by now, if there any were going to appear on ArchOver’s opaque wall.
I had hoped that, by now, we’d have a lot more positive news about ArchOver’s transparency. However, by any objective measure, ArchOver doesn’t provide as much information as many other P2P lending companies to either 4thWay or the public.
We have next to no information on repeat borrowing, little information on bad debts and bad-debt recoveries, and zero data on late loans.
We have insufficient information to measure the effectiveness of security offered by borrowers, or of the mitigation of risk inherent in covenants and loan monitoring.
Information provided to the public directly is also thin. ArchOver describes its processes on its website quite well, but lacks important supporting information on its people and its results. It provides very limited aggregated figures to show the current status of its outstanding loans and borrowers.
We know that it also makes very substantial mistakes in its aggregated figures. For example, showing nearly a million in loans that turned bad during 2017, but years later amending it to just half-a-million that turned bad that year. (Most likely the amendment was an error – but how many of those has it made?)
However, for logged-in users, ArchOver does provide detailed reports into individual borrowers. I believe it also communicates well with lenders when there are any problem debts.
A lot of the gaps in information are inexplicable. Reviews by lenders left on TrustPilot (after stripping out reviews from borrowers) are mostly very positive. Not universally, but in the main.
Circumstantial evidence suggests that ArchOver is not deliberately trying to hide problems, but perhaps rather suffering from lack of resources. Yet some key, missing pieces of information would be easy to provide, so the reasons are unclear.
The bottom line is that I believe 4thWay doesn’t receive sufficient information to truly assess the results and the risks and, therefore, whether the interest rates sufficiently cover the risks. If we don’t get it, you can be sure that individual lenders don’t either.
ArchOver isn’t yet profitable. However, it’s owned by a much larger and profitable business, Hampden Group, which provides insurance services. ArchOver appears to still be well supported by its parent, both financially and with services.
After cost cutting in 2019, losses were halved in 2020 to half a million pounds rising again slightly in 2021, according to accounts published in 2022. Revenue is around £1 million. I expect ArchOver is still some years away from becoming profitable.
Nevertheless, financially, ArchOver is very sound.
It’s not possible to say with high confidence at this stage whether ArchOver is a good investment.
The minimum lending amount is fairly high at £1,000 per loan.
In a big change since I last updated the ArchOver Review, it’s now re-categorised its “Investment Plans” as legacy products, which puts it in a category of other types of loans or accounts that it has tested and moved on from.
Those plans were the only way to do automated lending with an automatic spread across loans. It also enabled smaller amounts to be lent in each loan.
It was a good idea; shame it’s offline, but I hope they replace it with something else.
You can reduce your risks by not lending to borrowers who borrow repeatedly, although that reduces the number of loans you can lend in.
In the past six months, 17 unique borrowers have borrowed through ArchOver.
You will probably need to drip your money in to lend to as many unique borrowers as possible over the course of more than one year to contain the possible risks.
ArchOver is therefore most suitable for people with deeper pockets.
ArchOver’s lending accounts are available as IFISAs.
No. But do remember that selling before borrowers naturally repay is a luxury item that doesn’t always work anyway. Good lending strategy is to assume that you’ll need to lend until the borrowers repay naturally.
Thank you for reading this ArchOver Review! Visit ArchOver.
3 PLUSes is best. What does the 4thWay PLUS Rating tell you about the risks and rewards?
Here we show the P2P lending site's own estimate (or 4thWay's if theirs are not appropriate)
Lower Risk Scores are better. How is this different to the 4thWay PLUS Rating?
£160 m in loans to profitable businesses since 2014, mostly secured, with some loans having insurance that might cover some losses, optional auto-lend & auto-diversification. Available in an IFISA
Early exit is not guaranteed. Usually, other lenders need to buy your loans
Independent opinion: 4thWay will help you to identify your options and narrow down your choices. We suggest what you could do, but we won't tell you what to do or where to lend; the decision is yours. We are responsible for the accuracy and quality of the information we provide, but not for any decision you make based on it. The material is for general information and education purposes only.
We are not financial, legal or tax advisors, which means that we don't offer advice or recommendations based on your circumstances and goals.
The opinions expressed are those of the author(s) and not held by 4thWay. 4thWay is not regulated by ESMA or the FCA. All the specialists and researchers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.
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. The ratings 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 IFISAs, and measure your overall performance across all of them, not against individual performances.
The 4thWay PLUS Ratings are 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.
Our service is free to you. We don't receive commission or fees from the above-mentioned companies. We receive compensation from some other P2P lending companies when you click through from our website and open accounts with them, or to cover the costs of conducting our calculated stress tests and ratings assessments. This doesn't affect our editorial independence. Read How we earn money fairly with your help.
