LinkedFinance - new website

scheister

JTMan wrote: »

Isn't there a CGT tax free allowance that needs to be factored in too? Thanks.

if its deemed income which id think it is not cgt allowance

Strettie11

CGT does not apply to any income from linked Finance

_Tombstone_

I expect to see ye all on the tax defaulters list in a few years!!

tomwaits48

3 year loan fixed at 8.8%?....I'm out....interesting defence from the owner though..


Q:Hi there. What is the logic in a 3 year fixed rate loan? At 8.8% this is only slightly above the 1 year fixed rate so is really low from a lender perspective considering you are taking 3 times the risk (3 times longer). Not sure if this is a question for the linked finance team?

by T. ODonovan (placed 0 bids for €0.00 on this loan)

A:Hello, Thank you for asking the question. I think it's a really important one. When I first crowd funded in 2014, the premise behind crowd funding was that whilst the banks weren't lending to small businesses, those lucky enough to have deposits/ savings accounts were only getting at max 2%, so crowd funding became a source for lenders to make a better return on their savings whilst those who needed money had access to cash they might never have been able to access. It was to be a win win for everybody. As I went through the process, I found that once we had reached a certain level of funding, the bids tapered off until the last day when we got countless offers at 15%. If you run a small business as I do and worked as hard as I had to make a success of it, those 15% offers can make you feel pretty low. You no longer feel that you are part of a win win community, but that there are lots of people, who see crowd funding as an opportunity to make a huge profit, on the back of a business that needs support. There is a spirit to crowd funding, that I believe needs to be at it's core and I personally don't think bids of 15% are part of that spirit. I completely understand that lenders take a risk, but lenders also need to know that making repayments is a serious matter for the businesses. Nobody wants to fall behind, I am more than happy to pay for the risk my lenders take with me and I thank them wholeheartedly for their courage to do so. But I personally want to work hard to make a success for those lenders who believe in that core spirit of people to people lending and I think that 8.8% is a fair rate. I hope this answer helps. Shirley

Squall Leonhart

^^^

Sorry Shirley... but.. no. Just, no. 36mths fixed @ 8.8%

No.

_Tombstone_

Squall Leonhart wrote: »

^^^

Sorry Shirley... but.. no. Just, no. 36mths fixed @ 8.8%

No.

Slurry is what I'd call that reply.

A community, lol.

lcwill

manafana wrote: »

Their fees have to be tax deductable you can't charge income tax on something and not allow the costs linked to getting that income, allowable expenses as such

I don't know if that is a general principle - I.e. not all costs of an investment property are deductible. Looks like you are right though, just found the answer on linked finance website too: how to calculate tax due -
"The final step is to add up all interest paid for the period, deduct all fees paid an that will give you the total 'interest paid' for tax purposes."

at9qu5vp0wcix7

I think many more people would be comfortable with 8.8% if the loan was secured on their assets - this would surely not be too much of an ask for any business that takes repayment as a 'serious matter'. High interest rates are needed to cover losses associated with a large default rate, many investors would be more than happy to accept a lower interest rate if it meant the loan was secured on assets which would mean full repayment upon default.

With the fixed rate loans and so many small loans right now, it must be very hard for people who are trying to make their initial investments, not just reinvesting repayments.

sceach16

Mila Calm Ax wrote: »

I think many more people would be comfortable with 8.8% if the loan was secured on their assets - this would surely not be too much of an ask for any business that takes repayment as a 'serious matter'. High interest rates are needed to cover losses associated with a large default rate, many investors would be more than happy to accept a lower interest rate if it meant the loan was secured on assets which would mean full repayment upon default.

With the fixed rate loans and so many small loans right now, it must be very hard for people who are trying to make their initial investments, not just reinvesting repayments.

I absolutely agree. Equally, I do not understand why some loans are approved for a "fixed" and low rate. Why are they approved? Are they a better risk? Have we now two categories of loans ? One good enough for fixed and another not good enough!

at9qu5vp0wcix7

sceach16 wrote: »

I absolutely agree. Equally, I do not understand why some loans are approved for a "fixed" and low rate. Why are they approved? Are they a better risk? Have we now two categories of loans ? One good enough for fixed and another not good enough!

I guess it allows for better financial planning for businesses. Many may actually get loans under the 8-9% fixed band - as we have seen with breweries and loans under the 10-15k range. As we have seen, a loan could be up for 21 days, only for the average percentage to drop by 2-3% on the final day - making it harder to plan for repayments etc.

I think the thought process is firstly whether or not they could fill the loan at the fixed rate, and secondly if they could get a loan at an even smaller rate if they went down the traditional bidding route.

sceach16

Mila Calm Ax wrote: »

I guess it allows for better financial planning for businesses. Many may actually get loans under the 8-9% fixed band - as we have seen with breweries and loans under the 10-15k range. As we have seen, a loan could be up for 21 days, only for the average percentage to drop by 2-3% on the final day - making it harder to plan for repayments etc.

I think the thought process is firstly whether or not they could fill the loan at the fixed rate, and secondly if they could get a loan at an even smaller rate if they went down the traditional bidding route.

U are much kinder than me! I think the non fixed/ linked recognise they would probably not get a loan at the 8.? rate. very few loans , even with offers, average under 9%

traprunner

Mila Calm Ax wrote: »

I guess it allows for better financial planning for businesses. Many may actually get loans under the 8-9% fixed band - as we have seen with breweries and loans under the 10-15k range. As we have seen, a loan could be up for 21 days, only for the average percentage to drop by 2-3% on the final day - making it harder to plan for repayments etc.

I think the thought process is firstly whether or not they could fill the loan at the fixed rate, and secondly if they could get a loan at an even smaller rate if they went down the traditional bidding route.

I'd have thought that any logical and sensible business person would plan for the worst and hope for the best when it comes to interest rates on LF.

newacc2015

tomwaits48 wrote: »

3 year loan fixed at 8.8%?....I'm out....interesting defence from the owner though..


Q:Hi there. What is the logic in a 3 year fixed rate loan? At 8.8% this is only slightly above the 1 year fixed rate so is really low from a lender perspective considering you are taking 3 times the risk (3 times longer). Not sure if this is a question for the linked finance team?

by T. ODonovan (placed 0 bids for €0.00 on this loan)

A:Hello, Thank you for asking the question. I think it's a really important one. When I first crowd funded in 2014, the premise behind crowd funding was that whilst the banks weren't lending to small businesses, those lucky enough to have deposits/ savings accounts were only getting at max 2%, so crowd funding became a source for lenders to make a better return on their savings whilst those who needed money had access to cash they might never have been able to access. It was to be a win win for everybody. As I went through the process, I found that once we had reached a certain level of funding, the bids tapered off until the last day when we got countless offers at 15%. If you run a small business as I do and worked as hard as I had to make a success of it, those 15% offers can make you feel pretty low. You no longer feel that you are part of a win win community, but that there are lots of people, who see crowd funding as an opportunity to make a huge profit, on the back of a business that needs support. There is a spirit to crowd funding, that I believe needs to be at it's core and I personally don't think bids of 15% are part of that spirit. I completely understand that lenders take a risk, but lenders also need to know that making repayments is a serious matter for the businesses. Nobody wants to fall behind, I am more than happy to pay for the risk my lenders take with me and I thank them wholeheartedly for their courage to do so. But I personally want to work hard to make a success for those lenders who believe in that core spirit of people to people lending and I think that 8.8% is a fair rate. I hope this answer helps. Shirley

Look at it from the point of a credit union. A CU is all about the 'community' etc. They still have no issue with charging 12% for a car loan to a low income individual ie someone who is not suitable for a prime loan. Do people get outraged our CU's high rates? No, as they are lending to traditionally risky customers and high interest compensates for the extra risk. Why does Shirley think people lending to her shouldn't be compensated for lending to a subprime borrower.

At the end of the day, P2P finance is basically subprime lending. You are lending money you can't get finance from a traditional source ie a retail bank. I imagine Shirley is a savvy business person and knows that she could get a secured loan from BOI for around 5.7%. But if she could borrow at 5.7%, I imagine she would take it. But with a secured loan,the bank can at least recover some of their borrowing and seize assets. That is not the case with P2P finance.

IMO the rate of P2P finance should reflect the riskiness of the borrower. What Shirley doesnt seem to understand is when people trust and believe in businesses on Linkedfinance, they get reasonable interest rates to borrow on. It is not personal, but business. If you want 'feel good lending' and lending people money on a whim without a strong business model go for crowdfunding, gofundme etc. But P2P finance is people are willing to invest in risky businesses with an interest rate that compensates for that risk. A fixed rate is not dealing with that issue

m320325

sceach16 wrote: »

I absolutely agree. Equally, I do not understand why some loans are approved for a "fixed" and low rate. Why are they approved? Are they a better risk? Have we now two categories of loans ? One good enough for fixed and another not good enough!

Theres more about it on their blog but not too sure how the credit score is calculated

blog dot linkedfinance dot com/new-fixed-rate-loan-products-on-the-way

"Fixed rate loans will allow us to set rates based on the businesses overall credit score with Linked Finance."

sceach16

It appears that fixed rate loans have a higher credit rating. See extracts from Linked website!!

Extract from Blog

Helping You To Make Better Credit Decisions - Fixed rate loans will allow us to set rates based on the businesses overall credit score with Linked Finance. This will allow you to make more informed decisions and ultimately develop a more balanced portfolio with a risk profile that you are comfortable with.


Extract From FAQ
Unlike most crowdfunding sites for business lending, we do NOT give a credit risk rating for each borrower. We believe that relying largely on credit rating agencies for this information would be inappropriate in the context of the Irish market. Their information and risk ratings are often out of date and cannot be relied on as a measurement of current performance.

Instead, we base our credit decisions on up-to-date information relevant to the credit assessment of potential borrowers. We have also devised a grouping system for borrowers (the CMYK system – see questions 5 and 6). This system gives lenders a sectoral choice of Businesses they may wish to support..

Strettie11

The higher credit score rating is not borne out by the some of the businesses that so far have been offerred at fixed rates.

The prime example for me was Stelafoods which had red flags from the financial information it presented: High stock, high creditors, very high debtors, very low figure for staff wages.

I believe LF should be providing more information to lenders on borrowers seeking fixed rate loans. There is a much shorter window to do research and ask questions of borrowers for fixed rate loans. In fact sadly we will soon see fixed rate borrowers not even bother to answer questions as they seem to be easily getting funding in a short timeline.

LF need to reduce the same Q's being asked on every loan

My list of informtion requirements I would like to see
- any heading on balance sheet with "Other" in the description should be broken down as part of initial profile. If LF is doing its credit checking they already have this infomation.
- Where balance sheet metrics are worse than certain levels there should be an explanation given on profile by borrower.: stock greater than 100 days, debtors greater than 80 days....
- cash flow statements prior and forecast to reduce concerns on cash deficits. I think 1 fixed rate loan has been in conjunction with Microfinance Ireland @ 8.8 %. To apply for the Microfinace portion of the loan the business had to provide 3 years forecast cash flows and Profit & Loss accounts yet we as lenders are expected to provide funding at the same rate with none of this information !!!!!!!
- what are the personal quarantees given on the loan, these need to be detailed
- a tighter debt recovery timeline on fixed rate loans. lenders are giving up any bad debt premium on the basis that LF have done their homework is setting the loan rate
- directors drawings/salaries taken from the business . I know this would be confidential info but even if they provided the info within bands .
- I believe credit scores should be provided
- aged debtors analysis
l
Shirley may have decided what a fare rate is ( and you should go to her bog to see a longer commentary of those seeking high rates) but we the lenders need the same info as banks to determine if it is a fair rate

sceach16

I am asking current borrowers this question

Extract fromLinked Blog
"Helping You To Make Better Credit Decisions - Fixed rate loans will allow us to set rates based on the businesses overall credit score with Linked Finance. This will allow you to make more informed decisions and ultimately develop a more balanced portfolio with a risk profile that you are comfortable with."
What is your credit score withLinked?

sceach16

Sent this email to Linked late on 1 June,

"Do these loans have a better credit rating than other loans on Linked Finance?"

No response yet (16.40 2 June)

Smiler1955

sceach16 wrote: »

I try and get as high a rate as practical. I am a lender looking after myself.

Why are you so bothered by the Fixed Rate Loans when you've said on many occasions you try to get the highest rate possible and would never be interested in the 8% FRL? It comes across as somewhat odd you spammed the LF Q&A on a topic you've no truck with.

sceach16

Smiler1955 wrote: »

Why are you so bothered by the Fixed Rate Loans when you've said on many occasions you try to get the highest rate possible and would never be interested in the 8% FRL? It comes across as somewhat odd you spammed the LF Q&A on a topic you've no truck with.

I asked current prospective borrowers who Linked say have a credit score what it is. Linked have also said that they do not do ratings as such. The simple question is whether the fixed rate loans are rated by Linked. If they are, are they more highly rated than other loans. If this is the case, a lower rate MAY be justified. Until now Linked have treated all loans equally. this no longer appears to be the case.

Apart from this , you should try an online dictionary to see the difference between practical (in my post which you quote) and possible which you use.
You might also look up spam.

sceach16

sceach16 wrote: »

I am asking current borrowers this question

Extract fromLinked Blog
"Helping You To Make Better Credit Decisions - Fixed rate loans will allow us to set rates based on the businesses overall credit score with Linked Finance. This will allow you to make more informed decisions and ultimately develop a more balanced portfolio with a risk profile that you are comfortable with."
What is your credit score withLinked?

Got a response in the Q/A from Wayne Elliott Ltd which is short and sweet. It said "100".

sceach16

sceach16 wrote: »

I am asking current borrowers this question

Extract fromLinked Blog
"Helping You To Make Better Credit Decisions - Fixed rate loans will allow us to set rates based on the businesses overall credit score with Linked Finance. This will allow you to make more informed decisions and ultimately develop a more balanced portfolio with a risk profile that you are comfortable with."
What is your credit score withLinked?

Got this reply from Linked in the Q/A
Thanks for your query. Linked Finance does not provide this information to borrowers. Questions for Linked Finance can be directed to help@linkedfinance.com. Thanks, the Linked Finance team.
Emailed them. Will advise response

sceach16

I got this email from Linked which I post without comment at this stage.

"Thanks for your enquiry. Fixed-rate loans are only being offered to businesses that meet certain additional credit criteria. Once those criteria are met, the business is approved for the finance at 8.5% for a 1 year loan or 8.8% for a 3 year loan.


Not every business that meets these criteria however will opt for a fixed-rate loan. So just because a business is not 'fixed-rate' does not necessarily mean that it has performed less favourably during our credit approval process.


We use a comprehensive credit approval process for every business that goes live on the website. That will not change. When you see a fixed-rate loan, you know that not only has the business met our normal criteria, but has also exceeded a range of additional requirements relating to various balance sheet, repayment capacity, turnover and credit history metrics."

slowjoe17

Smiler1955 wrote: »

Why are you so bothered by the Fixed Rate Loans when you've said on many occasions you try to get the highest rate possible and would never be interested in the 8% FRL? It comes across as somewhat odd you spammed the LF Q&A on a topic you've no truck with.

The obvious reason is that any sane business will opt for the fixed rate loan if available.

Sceach could be concerned about two things:

1. If the best credit risks are all on fixed rate loans, the variable loans are more risky than otherwise.

2. Businesses on variable rate loans will be more likely to reject some/all of offers because their view on a "reasonable rate" will be drawn towards the fixed rate rather than the current bank rate.

m320325

sceach16 wrote: »

I got this email from Linked which I post without comment at this stage.

"Thanks for your enquiry. Fixed-rate loans are only being offered to businesses that meet certain additional credit criteria. Once those criteria are met, the business is approved for the finance at 8.5% for a 1 year loan or 8.8% for a 3 year loan.


Not every business that meets these criteria however will opt for a fixed-rate loan. So just because a business is not 'fixed-rate' does not necessarily mean that it has performed less favourably during our credit approval process.


We use a comprehensive credit approval process for every business that goes live on the website. That will not change. When you see a fixed-rate loan, you know that not only has the business met our normal criteria, but has also exceeded a range of additional requirements relating to various balance sheet, repayment capacity, turnover and credit history metrics."

I don't understand why some borrowers would decide not to take the fixed rate loan if offered, its unusual for a normal loan to go below 8.8% average, unless the loan amount is 10-15k or they have a good offer for lenders.

m320325

I'm wondering if theres higher fees for a fixed rate loan? Borrower fees can vary from 2.5% to 5% according to the FAQ, I always thought it was a fixed fee of 2.5% so maybe this has changed recently

17. What fees do you charge borrowers?
To register on Linked Finance, you must pay an application fee of €99 incl. Vat.

If you enter into a loan contract, we will charge you a completion fee of between 2.5% and 5% of the total loan amount. This is to cover the costs of facilitating the borrowing process. We will deduct this fee from the loan before we transfer the loan funds to you.

sceach16

The Ashford Collection


This loan has disappeared from the live loans on Linked. It was a 3 year 8.8% fixed loan. There were 3 bidders of 50 each at this rate. It was due to close in the next few days.

sceach16

8.8% over 3 years.????

By rough calculation, a rate of 8.8 less linked charge of 1.2 is a gross return of 7.6% and a net return (based on 41% tax and USC etc) of about 3.8%. If one in a hundred loans go bad, it is 2.8%, If 2/100 go bad, it is 1.8%. 3/100 it is 0.8%.

Linked figures for end Q1/2016 show 404 of 415 loans up to date . i.e 97%. 3 % are not. Not all the 3% may go bad but .....

These are crude calculations but , I think, broadly accurate. Anyone else any views?

lawlolawl

Am i just ill-informed or is LinkedFinance rubbish compared to the likes of Twino and Mintos?

I wouldn't mind investing in loans here in Ireland but the interest rates on most of the loans are comparatively a bit crap from what i can see

sceach16

lawlolawl wrote: »

Am i just ill-informed or is LinkedFinance rubbish compared to the likes of Twino and Mintos?

I wouldn't mind investing in loans here in Ireland but the interest rates on most of the loans are comparatively a bit crap from what i can see

I will not give an opinion on you but I am happy with Linked. I am investing since last summer. I have 131 loans at an average of 13.8% with no defaults to date. What I did was bid 100 on most loans at the best rate I could get. At present, I am ahead of my expectations when I started using the site.