By Daniel Lanyon and Ryan Weeks on Friday 21 October 2016
In the first of a regular monthly series, we take a look at three offers thrown in by P2P platforms for investors at present.
Edinburgh-based Lending Crowd is a peer-to-peer/marketplace lender for small businesses in the UK. The platform functions in much the same way as the classic Funding Circle model, with risk banks ranging from A+ to C+, loan sizes of £25k-£250k, an auction based investment platform (Funding Circle has now switched to fixed pricing), a secondary market for loan parts, and so on.
The platform advertises from 5.95 per cent to 12.25 per cent to investors, depending on the level of risk in a given portfolio. Diversification can be achieved manually, or by making use of the platform’s auto-bid function. Lending Crowd charges a 1 per cent annual fee on the amount of money lent by an individual investor.
The platform has lent a little over £7m to date, around half of which has been originated in 2016.
All very interesting, but not earth-shatteringly dissimilar to the risk/return proposition on offer at market leader Funding Circle. So why should investors consider shifting some money over to Lending Crowd?
Well, seemingly aware of the need to incentivise, Lending Crowd has now launched a 2.5 per cent cashback for investors who lend more than £5k through the platform. The terms are simple enough, but there are a few points to be aware of:
The £125 reward compares favourably with other registration deals in the P2P space, although investors should take note of the year-long tie-up clause. Lending Crowd also offers a suite of referral deals – paying £50 per referred investor.
Lending Crowd investors earned an average of 8.1 per cent in 2015. While the platform’s track record is limited, the 2.5 per cent sweetener might just be enough to get new investors over the line.
Next up we take a look at Ratesetter, one of the best known platforms in the UK, particularly for its use of a provision fund. Ratesetter will, proudly, tell you that while they have lent out nearly £1.5bn of investors’ cash they have not lost a penny for investors.
The firm currently has an offer of £100 cash back returned after one year, as long as it is not moved out of the account over that period. However, it is open to new customers only and investors have to deposit the £1000 within 30 days of opening an account.
Here are the other caveats.
In addition, Ratesetter have a referral scheme bonus that allows investors to earn an extra £50 for introducing other investors.
Next, the oldest P2P platform in existence. The firm have three main options for investors.
Zopa Access which targets 3.3 per cent. “Great if you're new to Zopa, or if you want to dip into your money occasionally,” the firm says on its website.
Zopa Classic, which targets 4.2 per cent annual return. “Great if you want to put your money away and leave it to grow,” it says.
Zopa Plus – which targets 6.5 per cent annual returns. “Zopa Plus – “Great if you're happy lending at Zopa and want a higher return for more risk.”
Zopa have a referral scheme of £50 per new investor introduced to the platform. However, sadly the firm has stopped allowing new account holders as of the end of September be beneficiaries of the referral bonuses.
UPDATE: The aforementioned RateSetter offer has now closed for new customers. However, the offer is still open for people who are introduced by another RateSetter investor. All investors are given a tracking link, which they can use to refer a friend via email, Twitter, Facebook and so on.