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
When did LendingCrowd start?
LendingCrowd has been growing slow but steady since 2014 and has done tens of millions of pounds of loans.
What interesting or unique points does LendingCrowd have?
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.
How good are its loans?
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.
Its lending accounts all have the second top 4thWay PLUS Rating. If we rated the loans that LendingCrowd grades as A+ and A separately from the rest, those loans would receive the top 4thWay PLUS Rating of 3/3. In the current economic environment, I would particularly want to put more money in the lower-risk, lower-rate loans over its other loans.
How much experience do LendingCrowd's key people have?
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 review: lending processes
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.
Has LendingCrowd provided enough information to assess the risks?
LendingCrowd* is transparent and upfront, providing answers to almost all of our questions and a lot of detailed data to back it up.
Is LendingCrowd profitable?
LendingCrowd is not yet profitable, but, in early 2019, LendingCrowd received £6 million in investment, up from an initial investment of £2 million in 2018. This is highly reassuring and greatly extends LendingCrowd's runway to aid its growth.
What is LendingCrowd's minimum lending amount and how many loans can I lend in?
For these kinds of business loans, you normally need to lend in around 180 or more 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.
Does LendingCrowd have an IFISA?
LendingCrowd's lending products are available as IFISAs.
Here we show the P2P lending site's own estimate Description: £330m in residential buy-to-let loans since 2014, secured with reserve fund, auto-lend & early exit. IFISA available if you lend at least £5,000 Early exit is not guaranteed. Usually, other lenders need to buy your loans Yes, unless adjusted to stop new lender losing out Landbay has completed over £100 million in residential landlord mortgages since 2014. Internally assessed by…
4thWay PLUS Rating
Interest rate after bad debt
(or 4thWay's if theirs are not appropriate)
4thWay Risk Score
Minimum lending amount
Exit fees - if you sell loans before borrowers fully repay
Do you get all your money back if you exit early?
Loan size compared to security value
Reserve fund size as % of outstanding loans
Company/directors lend alongside you/first loss
Landbay Quick Expert Review: strict lending criteria and low-risk BTL mortgages for lenders
Here we show the P2P lending site's own estimate
Description: £330m in residential buy-to-let loans since 2014, secured with reserve fund, auto-lend & early exit. IFISA available if you lend at least £5,000
Early exit is not guaranteed. Usually, other lenders need to buy your loans
Yes, unless adjusted to stop new lender losing out
Landbay has completed over £100 million in residential landlord mortgages since 2014. Internally assessed by…Read the full review here
Independent opinion: 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.
Experts, journalists and bloggers 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. They 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 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.
*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 LendingCrowd 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 How we earn money fairly with your help.