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5 reasons to invest in P2P lending


With interest rates currently at an all time low of just 0.25%, and another cut in the rate a possibility, many savers are earning lower returns than ever before on their money and are seeking out alternatives to traditional bank saving. Figures from the industry-wide NESTA report on alternative finance published in February 2016 show that the peer-to-peer business lending sector grew considerably in 2015 to £1.49 billion, up from £749 million in 2014.

Peer-to-peer lending (P2P), part of the rapidly growing alternative finance market, is one option for investors to consider. There are now a number of P2P platforms in the UK operating a variety of business models, but generally investors lend funds to businesses seeking a loan to receive regular repayments of capital and interest over the term of the loan.  

Investors, depending on their investment objectives, may opt to receive all their capital and interest over the term of the loan, whilst others may take a portion back or reinvest all interest and capital for growth.

At LendingCrowd we have facilitated over £7 million of loans to businesses across the UK in the last 2 years, and have over 2,000 registered investors.

So why do investors choose LendingCrowd? Here are 5 reasons to invest with us:

2.5% Bonus

LendingCrowd is currently running an Autumn Cashback Promotion, offering investors a 2.5% bonus award when they invest £5,000. (Terms Apply). New and existing investors who lend £5,000 through the Loan Auction and Loan Exchange before 31st December 2016 will be eligible for the bonus award, which will be paid directly into your Investor Account.

This bonus can help further boost your potential returns – there has never been a better time to invest in LendingCrowd!

Adjusted rate of return 8.1%*

UK interest rates remain at an all time low and there appears to be little chance of this changing in the near future. Many investors are looking for ways to achieve a better rate of return on their investment. An increasing number are turning to P2P lending as part of an overall investment strategy. Investors should be aware that P2P lending carries a degree of risk: the borrower may not be able to make their repayments and investor funds are not covered by the Financial Services Compensation Scheme (FSCS).

However if investors are willing to accept a higher risk profile than some other asset classes, there is the potential for good rates of interest to be earned. In the last 12 months, LendingCrowd investors earned 8.1%* on average, after fees and estimated bad debts. This is a much higher rate of interest than is available through most savings accounts, and offers the chance for investors to grow their capital or generate income.

Credit approach

Our highly experienced Credit Team assesses each loan application on case-by-case basis, taking the time to get to know each business and understand its funding needs. The team has over 80 years’ combined experience dealing with business loan applications, and ensure that all loans are carefully assessed using a variety of tools (including our risk engine developed in-house). All loans are given a Credit Band, to help investors make an informed decision about the businesses they’re lending to.

Each loan has financial information, credit scores, and a detailed business brief explaining what the loan will be used for, to help give investors enough information to decide which businesses they want to invest in.  

Ability to trade your assets

Investors who want to sell their investments (i.e. a loan before the of the original term) can do so on the Loan Exchange, our secondary market. You can list your investments for sale at any time, and you can quickly remove them if you change your mind. The Loan Exchange allows investors to free up capital to invest in other loans, and new investors who wish to diversify their loan portfolio can instantly invest in a wide number of loans across different sectors, risk bands and loan terms.

Low charges

LendingCrowd’s fees are low and transparent, so investors won’t face hidden charges for investing with us. There is a 1% annual investment fee taken from each repayment made to investors. To sell loans on the Loan Exchange, our secondary market, there is a 0.5% sale fee taken. There is no fee to buy loans on the Loan Exchange, but the new owner of the loan takes on the 1% monthly fee.

That’s all – there are no other charges for lending with us.

Start lending today!

You can start investing with as little as £20 and investors earned average returns of 8.1%* over the last year, so why not get started with LendingCrowd today? There are over 2,000 investors already signed up – join today and start lending to businesses across the UK!

 

5 reasons to invest with LC

 

*The current estimated return is an estimate of the annual (October 2015 to October 2016) return after fees and estimated bad debts that investors could earn. It is calculated by taking the gross interest rate less fees and estimated bad debts that will occur in the future. The average return is compounded and before tax.

Article author

Heather Mackay

Heather Mackay

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If you invest through LendingCrowd you should understand that your capital is at risk.

LendingCrowd is the trading name of Edinburgh Alternative Finance Limited, Company Number SC468392, authorised and regulated by the Financial Conduct Authority (Firm reference number 670991). LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.

Read more about the risk involved when investing and borrowing.

The company's registered office is 23 Manor Place, Edinburgh, EH3 7DX.

Copyright © LendingCrowd 2019. All rights reserved.

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