Our previous How To blog for investors guided you through the process of placing a bid on the Loan Auction to invest in new loans. The other way of investing your funds is to buy a loan part from the existing investments on the Loan Exchange, our secondary market. This guide explains the process of buying on the Loan Exchange.
The Loan Exchange has a large number of investments available for lenders to buy loan parts in, making it a great way to diversify your portfolio. We recommend that all lenders invest in lots of different loans to spread their investment risk as broadly as possible. You should remember that there will always be risk involved in this type of investment.
The Loan Exchange gives you the chance to purchase an instant investment when you buy a loan part, without having to wait for a loan auction to close, so that you can start earning interest immediately.
1. Sign in and go to Loan Exchange
The first step to investing through the Loan Exchange is to sign into your LendingCrowd account and go to the Loan Exchange page.
2. Review available investments
Each investment listed shows the loan’s Credit Band, the number of months left in the loan term, the maximum available investment in that loan, and the indicative interest rate of the investment. You can also see a short summary about each loan.
The interest rate listed for each company loan is indicative of the weighted average interest rate of all the investments available for that loan. All of the investments listed for sale will have rates contributing to this indicative weighted average. The average rate is weighted by the different values of the available investments.
The maximum available investment is the total combined value of all of the investments available for sale in a particular company loan, minus those that you own.
Please be aware that the indicative interest rate shown may differ from the actual interest rate available for the amount you want to invest.
Simply choose the investment you want to buy a loan part in, and click “Invest in this loan” as seen below.
You can filter the investments shown by choosing different criteria at the top of the list of loans, including Credit Band and minimum interest rate. This is especially useful if you have certain parameters for the loans you invest in, and will mean you don’t have to scroll through the whole list.
3. Select amount to invest
Once you have chosen the loan you want to invest in and you are on the investment’s page, you can enter the amount you want to invest in the loan. After you have entered the amount you’re looking to buy, the availability of this investment will be checked.
Please be aware that the interest rate available for the amount you wish to buy may be different to the indicative rate shown. This could be because another lender has listed or unlisted an investment, or if another lender has bought an investment in the same loan you are looking at.
The rate you are shown for the amount you have entered is correct at the time the availability was calculated – if you leave the Loan Exchange without purchasing the investment and then come back later, the same rate may not still be available.
4. Confirm investment
Finally, double-check the amount and rate of the investment you are purchasing, read and accept the Terms & Conditions, and click Confirm Purchase. That’s it – you have an instant investment in the loan and are earning interest immediately!
This loan part is now shown in your list of investments and you will start earning interest on this immediately.
We hope this guide helps give you more information about how to buy a loan part on the Loan Exchange. If you have any questions please email email@example.com or call us on 0131 564 1600.
LendingCrowd matches investors with small and medium sized businesses (SMEs) seeking business loans. Our community of lenders from across the UK has funded more than £5.5million in loans to over 60 UK businesses to date. LendingCrowd investors are currently earning an average interest rate of 7.2%* on their investments.