Investing

Lending Loop - peer to peer lending - do due diligence

  • Last Updated:
  • Nov 15th, 2017 3:41 am
[OP]
Member
User avatar
Apr 2, 2015
211 posts
58 upvotes
Ottawa, ON

Lending Loop - peer to peer lending - do due diligence

Promising of course after seeing other peer to peer lenders in Canada stuck in the accredited rut, but caveat emptor.

https://www.lendingloop.ca

Worth looking into until your provincial jurisdiction applies the long arm, or at least a space to watch as there needs to be a player or two in the space. The P to B lending model or microfinance in some places may have a different end run than CommunityLend did?

Reviews and news:

http://business.financialpost.com/news/ ... -to-canada


http://www.theglobeandmail.com/globe-in ... e26316712/

After a couple of active threads past years on P to P like Community, Grouplend and Borrowell etc... Might be time for more RFD critique and discussion as usual!
278 replies
Deal Addict
Jul 28, 2009
1312 posts
220 upvotes
I signed up this weekend, will let you know how it goes... Waiting for account approval and funding to go through. It looks way better than Grouplend and Borowell since you don't have to be accredited.

edit: My account is officially approved and active, going to start lending now! Will let everyone know how it goes... so far their platform looks great.
Penalty Box
Oct 26, 2007
887 posts
89 upvotes
Toronto
Can someone explain the business model here?

How does lending loop make money?
[removed]
A guide for the everymans guide to investments
Jr. Member
Dec 7, 2014
101 posts
17 upvotes
Windsor, ON
rammingman wrote:
Nov 16th, 2015 1:08 am
Can someone explain the business model here?

How does lending loop make money?
They take some of the interest on the loans. (The interest you receive is 1.5 percentage points lower than the interest the borrower pays.)
Sr. Member
User avatar
Aug 15, 2013
577 posts
277 upvotes
Guelph
I have some concerns with this model especially from the lender's point of view i.e. what is the lender hoping to generate as a return?

The 1st thought comes to my mind is, who is securing the loans and what is the security? More new businesses tend to fail than become successful, and unlike home mortgage, businesses don't carry much liquidation value.

The other important thing is what kind of return / interest rates can a lender/borrower expect? If the interest rate is higher than offered by banks, a borrower who can offer security will just go to the bank and get the cheaper rate, meaning you'll just get the duds with no security.

I see this is a bit like venture capitalist for the Johns. However, the VC's aim big and so buy a stake in the company rather lend a debt, as startups may not have a reliable cash flow in the initial period to cover interest/principal payments.
Deal Addict
Nov 9, 2013
1901 posts
664 upvotes
Edmonton, AB
PunPryde wrote:
Nov 16th, 2015 12:33 am
I signed up this weekend, will let you know how it goes... Waiting for account approval and funding to go through. It looks way better than Grouplend and Borowell since you don't have to be accredited. If anyone needs a referral code PM me, we'll both get $50 free, it's a bit hard to find them right now since there are so few members on this site.
I signed up as well; very interested to see how it goes. I too am waiting for approval and funding. I was coming to create a thread to talk about it lol. As far as I know you can't see the businesses you can lend to when your account isn't yet validated, right?
[OP]
Member
User avatar
Apr 2, 2015
211 posts
58 upvotes
Ottawa, ON
clvhin wrote:
Nov 16th, 2015 1:50 am
They take some of the interest on the loans. (The interest you receive is 1.5 percentage points lower than the interest the borrower pays.)
And an origination fee paid by the business borrowing the money, covers initial costs and they must have a margin and risk calculation of course as loan percentages appear variable based on this. The secondary market if mortgages are any indicator could be pretty successful.

The question most of the media had is how this model is not securitization and requiring prospectus and accredited investment. No opinion there as this is early days but corporate, trust and damming procedures could be the key to taking this to market as they did?

Do your research and read their site - RFD will have several users here give things a whirl and review most likely. As per OP do due diligence and as usual take things here as opinion or subjective.
Deal Addict
Jul 28, 2009
1312 posts
220 upvotes
treva84 wrote:
Nov 16th, 2015 9:14 am
I signed up as well; very interested to see how it goes. I too am waiting for approval and funding. I was coming to create a thread to talk about it lol. As far as I know you can't see the businesses you can lend to when your account isn't yet validated, right?
Yeah, it doesn't look like you can see anything at all until the account is approved and funded... excited to see what it's like after the approvals go through! I doubt there are enough people on the platform yet to actually fund full loans yet though.
Deal Addict
Nov 9, 2013
1901 posts
664 upvotes
Edmonton, AB
PunPryde wrote:
Nov 16th, 2015 10:12 am
Yeah, it doesn't look like you can see anything at all until the account is approved and funded... excited to see what it's like after the approvals go through! I doubt there are enough people on the platform yet to actually fund full loans yet though.
I was poking around on their twitter feed yesterday (was apprehensive about having to provide my SIN) and there was a tweet from a Yoga studio in Toronto that had thanked them for a loan so it looks like at least 1 small business has been funded.
Jr. Member
Oct 31, 2014
163 posts
48 upvotes
Edmonton, AB
So any rough idea on your lending interest rate .... 6% perhaps.... with a small risk

So if you had $1,000 to 10 different businesses at 6%

one goes under, liquidates a return of $50

9(100) x 1.06 = 954 + 50 = $1004

if all goes well
10(100) x 1.06 = $1060 ... just like DRIP you can reinvest that $60 into a new company after a year of collecting interest


meaning a savings account of 1.8% would get you $18
or a 4% dividend yield would get you $40


I do think that the website would probably be better than a savings account.... but its more like a laddered GIC because you gotta wait for your money to be paid back
Deal Addict
User avatar
Dec 8, 2010
2007 posts
626 upvotes
Current available businesses range from 9-13%, less LL's 1.5% take. So 7.5% to 11.4%

There are only a few businesses to invest in, though. Hopefully as companies become aware, there will be lots more.
Sr. Member
User avatar
Oct 19, 2014
756 posts
106 upvotes
Waterloo, ON
Interesting, think i'm going to sign up as well.
Deal Addict
Jul 28, 2009
1312 posts
220 upvotes
My account is officially approved and active, going to start lending now! Will let everyone know how it goes... so far their platform looks great. Very intuitive dashboard. So far it looks like there 5 total businesses requesting loans, 2 have been fully funded already (wow!), so 3 remaining for funding possibility. Excited for this website to grow.
Deal Addict
Nov 9, 2013
1901 posts
664 upvotes
Edmonton, AB
PunPryde wrote:
Nov 17th, 2015 12:00 am
My account is officially approved and active, going to start lending now! Will let everyone know how it goes... so far their platform looks great. Very intuitive dashboard. So far it looks like there 5 total businesses requesting loans, 2 have been fully funded already (wow!), so 3 remaining for funding possibility. Excited for this website to grow.
When did you submit all the stuff to open the account? I submitted my stuff over the weekend and today is business day 2 and I'm still waiting. Hopefully soon :)
Deal Addict
Nov 9, 2013
1901 posts
664 upvotes
Edmonton, AB
So my approval went through and the interface opened up to me this evening. Currently there are 3 businesses all seeking $50,000 loan with a repayment duration of 2 - 3 years.

My impressions so far:

- As previously mentioned, interface is very nice and easy to use
- On the "marketplace", there is a thumbnail with the business, a photo of the business, geographical location, loan duration, interest rate and perceived credit risk.
- When you click the thumbnail, it opens up a more in depth page that has tabs. It covers information regarding what the company is about, why they want they money and what they plan to use it for, whether or not there is a personal guarantee behind the loan, the companies last 3 years of financial statements, and then a Q&A tab where you can type them questions, forum style and have them answer you. Last but not least there's the repayment schedule clearly defined.

There's also your "pledge" home page, where it shows you who you have lent money to, your current gross yield, lifetime interest earnings, and "asset mix" which I don't totally understand at this stage.

Tonight I pledged to one of the three companies. Defiantly going to keep some cash in this account to jump on other opportunities. For those wondering, the pledge I made has an expected rate of return of 9% (the actual loan interest is higher but Lending Loop takes a cut).

If anyone has any questions please feel free to PM me!

Top