Find out everything you need to know about LendingCrowd.
Peer-to-peer (P2P) lending is where individual investors lend money to businesses in return for interest payments and the repayment of capital over time. Online P2P lending firms remove the banking ‘middleman’, meaning that borrowers can benefit from lower interest rates and investors can receive improved headline rates.
The P2P lending industry has been regulated by the Financial Conduct Authority since 1 April 2014, giving consumers greater protection.
Under the rules administered by the FCA, all information about the P2P platform must be clearly presented and easy to find, as well as easy to understand. The risks of such investments must be clearly laid out. P2P firms must have contingency plans in place in case things go wrong and must provide clear information on the specific nature of a P2P agreement. There are also rules requiring the assessment of borrowers for creditworthiness. All comparisons with cash savings account interest rates must be fair and not misleading, as must any promotions.
These rules make it safer and more straightforward to invest or borrow using LendingCrowd – there’s extra protection in the greater level of transparency and clarity required and it’s also easier to access and understand information about LendingCrowd and P2P lending.
If LendingCrowd were to go out of business, investors would still continue to receive repayments on loans originated with us, because all loan contracts are between borrowers and investors and would remain valid. Under FCA rules, P2P platforms are required to appoint a third-party standby servicing company to administer the loan book in the event of the platform ceasing operation. LendingCrowd has appointed Equiniti Group as its standby servicing partner to oversee the repayment of loans should this situation arise. This should reduce the risk to both borrowers and investors.
All investor funds are held in a separate Barclays Client Money bank account and don’t form part of LendingCrowd’s assets.
LendingCrowd carries out stringent identification checks on all investors and borrowers using manual intervention and GB Group, a specialist in identity data intelligence. In addition, all borrowers will also have a credit search carried out through a credit reference agency. The credit underwriters who review the applications are also very experienced in looking for fraud indicators.
Visit our How it works page to discover how our purpose-built platform brings together investors looking for new opportunities and borrowers seeking access to finance.
We take a number of factors into account to determine our credit decisions, and you can find more detail in this blog post. In short, we look at cashflow, management ability, a business plan and the industry the business is in.
The credit scores shown for each loan are supplied by a third-party credit reference agency. They’re independent of the Credit Bands assigned by our Credit Team, who consult the company and consumer reports from credit reference agencies to form part of their assessment.
Our Credit Team assign the Credit Bands for each loan, based on their assessment of the loan using their experience, ExpertLender (our in-house credit assessment tool) and affordability models. Each Credit Band corresponds to a minimum interest rate, listed below:
We take debentures or bond and floating charges over the company, or third-party guarantees where appropriate. We decide security arrangements on a case-by-case basis.
If a repayment is late, we’ll contact the borrower as soon as possible to establish the reason for this and when we can expect payment. If we don’t receive the payment within 4 days of the due date, we consider the repayment to be overdue and will charge the borrower a late payment fee. We’ll also inform credit reference agencies that the borrower has missed a payment. This could affect the business’ and the director’s credit ratings and therefore their ability to borrow more money.
If the borrower hasn’t paid within 45 days of the repayment date, we’ll consider the loan to be in arrears.
If a loan falls into default and there’s no clear indication of how and when we’ll receive the payment, we’ll take recovery action. This will include referring the matter to our panel of experts – which includes solicitors, accountants and debt collectors – who’ll provide guidance or act on our behalf, whichever is the most appropriate course of action. This could involve placing the company into administration or sequestrating/instigating bankruptcy against a guarantor or individual, and forcing the sale of assets.
Read more about our default process.