Asset Finance  through peer Lending

Thanks to all who funded the Bottling Plant loan which closed today. The bottling plant will be operated by Morrow Brothers, a very well established business in the industry. With funds coming in also from the Pennine Regeneration Fund the project is set to be a fabulous one for the local community. We have been informed also, that when the loan repays there will be an opportunity to re-invest for the longer term, we will let you know the details nearer the time.

New Platform

We are currently beavering away with development of the new platform. There has been a period of discussion with the developers and we are due to begin work shortly. It is important, perhaps, to say why we are looking at a new platform only 6 months after opening our virtual doors. The simple fact of the matter is that the industry is moving so quickly that a view has to be taken on where it will end up in the coming year.

We feel there are two trends going on. One is the model where platforms are looking to make the process of investing easier, by allowing lenders to invest an amount of money and then pretty much forget about it. This acts more like a savings account where allocation is made by the platform and there is little interaction from the investor. It is also much easier for a platform to manage funds and loans this way.

This suits certain investors who would just prefer to invest for a better rate but are not inclined to manually review loans and actively manage their account. This is one of the areas that we will be addressing with the new system but in a slightly different way. We think it is important for investors to see where loans are being allocated and how those loans are doing even if, at the outset of their investment, they are not too interested in the manual elements of investing. It may be that as an investor becomes more active they want to take more control, this is something that will be able to be achieved on Ablrate, or you will be able to sit back and have the system do it.

The second model is a more actively managed way of investing, which is more core to the initial goals of the industry. For those who actively manage their portfolios, we think that there are not enough tools out there to do so, on other platforms. We will providing additional functionality to make managing your investments easier.

The one thing that we have had a lot of feedback on is that many investors don’t like the idea that active traders can 'game' a platform for their advantage. Whenever there is an ability to trade something there will be those who look to create an advantage for themselves. Our new platform will allow the active lender to manage their portfolio as aggressively as they see fit, but there will also be tools that allow the passive investor to make sure they are not disadvantaged.

Tools for borrowers will be increased, with a complex maths system behind the loan inputs that give the borrower (and us) the breakdown on how the deal looks from a cash flow and LTV perspective, and with sophisticated analysis tools. It will calculate amortising loans (coming on the new platform) and all of the cash flows associated allowing the borrower to accurately forecast repayments and other factors. It will give us a snapshot of whether the deal has enough security/cash flows to be a loan that will work on the commercial aspects of it not just now but in the future.

For example, a borrower on another platform may take a loan at a high rate, taking most of the cash flows out of the transaction and making the loan more likely to default if the economy changes slightly. Although we do have security over the asset we do not want to post loans whose cash flows don’t make commercial sense, that is recipe for default and repossession. What we want to the borrower to do is post loans that are a good rate for borrowers, but are commercially sensible.

We feel there are too many borrowers, on other platforms, paying a higher rate and hoping to refinance the transaction later down the line. Our goal of zero defaults is something that may lose us business in the short term (because we don’t approve loans that don’t fit this criteria) but will prove sensible in the long term for both our business and our borrowers, if that is the case it will prove better for our investors.

The system we will be launching in March/April will be something different from everything out there but we believe it will appeal to all types of investors, we can’t wait to let you all loose on it!