LinkedFinance - new website

at9qu5vp0wcix7

Averaging 13.2% myself, but finding it hard to find suitable loans lately. Money that would have been put into Linked Finance has been diverted into Mintos simply because it has more suitable and secure loans.

spudwould

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

I gave a loan to one of these "Fixed Rate" loans .. just to see how much is returned after 12 months.
WELL I CAN TELL YOU THE FIGURES ARE STAGGERING!

On a loan of 100 euro @ 8.5% the return is .. WAIT FOR IT! ... 3.96 euro!

Now compare this to my average loans .. one is 100 euro @ 14% and the interest after 12 months is 11.15 euro.

OR BETTER STILL ... I made an error bid at the flat rate of 8% .. which returns after 12months 5.86 euro!

So my question to all lenders that are going mad for the FLAT RATE loans . is WHY??

sceach16

spudwould wrote: »

I gave a loan to one of these "Fixed Rate" loans .. just to see how much is returned after 12 months.
WELL I CAN TELL YOU THE FIGURES ARE STAGGERING!

On a loan of 100 euro @ 8.5% the return is .. WAIT FOR IT! ... 3.96 euro!

Now compare this to my average loans .. one is 100 euro @ 14% and the interest after 12 months is 11.15 euro.

OR BETTER STILL ... I made an error bid at the flat rate of 8% .. which returns after 12months 5.86 euro!

So my question to all lenders that are going mad for the FLAT RATE loans . is WHY??

First, I agree with your point that the 8.5/8.8 is low. However your example of the interest return of 3.96, while mathematically correct for a one year loan at 8.5% does not take into account that every month you receive a repayment(part interest,part capital) so that a loan of 100 becomes on average over the year an Average Amount closer to 50. The only way 8.5% can be got for a year on the full amount (100) is by reinvesting the monthly capital return at the same rate. All loan rates on a per annum basis (not just Linked) work on this assumption.

Your interest on the 3 year loan at 8% is higher because 100 is repayed over 3 years so the amount outstanding in year 1 is well above 50%, probably closer to 80% average.

slowjoe17

Today's loan is to a company that is loss-making, has declining sales, loan to be used for working capital, and the borrower is not responding to questions.

So the loan is 146% funded.

Obviously.

at9qu5vp0wcix7

slowjoe17 wrote: »

Today's loan is to a company that is loss-making, has declining sales, loan to be used for working capital, and the borrower is not responding to questions.

So the loan is 146% funded.

Obviously.

They are a free t-shirt away from hitting 300%.

sceach16

Mila Calm Ax wrote: »

They are a free t-shirt away from hitting 300%.

Miaow, miaow!:mad::(

Wheety

Can see a huge amount of money being withdrawn from all kinds of State Savings schemes, because of the slashing of rates again, and a lot will probably end up in the P2P lending market because of the rates currently available compared to traditional methods. LinkedFinance rates could drop even further now.

Anyone any thoughts on this? In case you haven't seen it http://www.statesavings.ie/Downloads/NTMA%20Rates%20June.PDF

Squall Leonhart

Good call on the 11.7% Sceach

I've only got 14 loans out. My initial investment money is gone, so I'm only going to be able to add maybe 100 a month for a while. It's not as much fun waiting for the repayments to come in to reinvest with a small loanbook as I imagine it must be with a larger one! Also hinders maximising my returns.

I'm thinking I should maybe have about 1500 invested with an average of 13% or so to be able to comfortably continually reinvest from repayments (assuming no defaults). As it stands I've 800 euro. Debating on whether or not to dip into some reserves and just get that ball rolling.

sceach16

Squall Leonhart wrote: »

Good call on the 11.7% Sceach

I've only got 14 loans out. My initial investment money is gone, so I'm only going to be able to add maybe 100 a month for a while. It's not as much fun waiting for the repayments to come in to reinvest with a small loanbook as I imagine it must be with a larger one! Also hinders maximising my returns.

I'm thinking I should maybe have about 1500 invested with an average of 13% or so to be able to comfortably continually reinvest from repayments (assuming no defaults). As it stands I've 800 euro. Debating on whether or not to dip into some reserves and just get that ball rolling.

On average, 100 euro loans return me about 3.33 per month so 3 loans return 10 and 30 loans of 100 (total 3000) return 100 pm (capital and interest). I have a bit more than that but am now only reinvesting returns. Less fun and now harder to get 14% plus returns but thats life.:D

Squall Leonhart

sceach16 wrote: »

On average, 100 euro loans return me about 3.33 per month so 3 loans return 10 and 30 loans of 100 (total 3000) return 100 pm (capital and interest). I have a bit more than that but am now only reinvesting returns. Less fun and now harder to get 14% plus returns but thats life.:D

Are you now only reinvesting returns for any particular reason? Just curious if maybe you feel at X amount, you're better off finding another basket to put eggs in, or what the rationale is?

EDIT:
I mean re-investing returns only as opposed to adding 'fresh' money to the pot.

sceach16

Squall Leonhart wrote: »

Are you now only reinvesting returns for any particular reason? Just curious if maybe you feel at X amount, you're better off finding another basket to put eggs in, or what the rationale is?

EDIT:
I mean re-investing returns only as opposed to adding 'fresh' money to the pot.

Yes. I put a limit on the amount I would put with Linked. Not a view on them but actually a personal decision for non investment/ non portfolio reasons.

Squall Leonhart

Thanks Sceach, wasn't looking to get too personal, hopefully I didn't!

sceach16

Squall Leonhart wrote: »

Thanks Sceach, wasn't looking to get too personal, hopefully I didn't!

No prob !:)

sceach16

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."

New waffle on the blog.....says fixed rate loans have met higher rating criteria but non fixed loans could have as well!

spudwould

Looking at the LIVE loan book it seems that lenders have been discouraged by the 3 year FIXED RATE loans.
2 are live right now for 30k each and only 9.9% & 9% funded.
AS I said I would be staying clear of the 1yr fixed rate loans as I do not see a good return for the investment and there would be no way I would give an investment of 3yrs at a FIXED RATE of 8% or 8.8% ... the return is approx: 10.89% over the 3yrs or 3.63% annual!
What they have to remember is these are NON-guaranteed loans ... and IF they go bust .. well best of luck recovering your investments.
Or when they go bust ... you can not write off these bad debts against your tax returns.
Where is the incentive?

slowjoe17

sceach16 wrote: »

New waffle on the blog.....says fixed rate loans have met higher rating criteria but non fixed loans could have as well!

To be fair to LF, they have no shortage of muppets offering loans. They do have a shortage of businesses requesting loans.

Reducing interest rates makes LF more attractive to businesses. This is a aside from the fact that it pisses all of us lenders off.

Squall Leonhart

slowjoe17 wrote:

To be fair to LF, they have no shortage of muppets offering loans. They do have a shortage of businesses requesting loans.

But treating lenders like muppets is not a great business plan..

Welruc

Does anyone know the formula Linked are using to calculate repayments?

Im just looking to calculate if i invest x amount at y rate for z months, what the returns would be monthly and overall.

Wheety

deuceswild wrote: »

Does anyone know the formula Linked are using to calculate repayments?

Im just looking to calculate if i invest x amount at y rate for z months, what the returns would be monthly and overall.

This calculator is spot on.

http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx

Welruc

Wheety wrote: »

This calculator is spot on.

http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx

Nice one, thanks

Wheety

I see you can now withdraw money 4 times a year of your own choosing. It used to be 4 specified times didn't it?

sceach16

Wheety wrote: »

I see you can now withdraw money 4 times a year of your own choosing. It used to be 4 specified times didn't it?

Yes, changed a few months ago. It was four specific dates.

m320325

Does anyone here have a copy of the questions/answers from previous loans?

It would make it easier if they made them available to us. Some of the current borrowers have previously been on Linkedfinance but I cant remember what answers were given, if any eg Quarry Plant, CAFCO, Get Fresh Vending, Eurotech Renewables etc

m320325

I was just calculating the interest received by lenders V the fees received by Linkedfinance on the new fixed rate loans, in this example it appears Linkedfinance receives a higher amount than interest paid to lenders. These are just my calculations based on information given on the linkedfinance website, if you see any errors let me know.

If we lend @ 15% and receive 13.8% after the fee, it means the linkedfinance fee was 8% of the interest received (1.2/15)
If we lend @ 8.5% and receive 7.3% after the fee, it means the linkedfinance fee is now 14.1% of the interest received (1.2/8.5)

Example:

1 year loan of €10,000, fixed @ 8.5%
Total interest €466

Lender:
Receives €400 interest

Total: €400 (before tax, usc, prsi)


Linkedfinance:
Receives €66 fee from interest
Receives €250 (2.5% completion fee)*
Borrower Application fee €99

Total: €415


*FAQ17 “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”.

- I'm assuming the fee is the lowest at 2.5%.
- For larger loans the interest amount is greater than fees but still surprised how close as the lenders are taking all the risk
eg. €50,000 loan (interest for lenders = €2000, Linkedfinance fees =€1,679)

tomwaits48

What are people's thoughts on lending to companies who were previously in administration/examinirship? I am looking at the Playzone Celbridge one. The owner alludes to the fact that they hired a new FC and now have much stringent financial controls....that's all well and good but what happens if that FC leaves? Doesn't fill me with an abundance of confidence.

fancylady

CAFCO (loan 17/02/16)
Q:
HI Ger..congrats on your success to date. I note that the figure for stock seems to be inordinately high...is there a particular reason that you carry so much stock? Secondly, I note that cash & equivalents are nil...this is surprising for such a well established business. Can you advise the age profile of the trade debtors and what % of this, if any is outstanding more than 6 months? Thanks...
by Money Talks (placed 0 bids for €0.00 on this loan)
A:
Hello there. Over the lifetime of the company we have changed and added new segments, originally we were parts only, As we got the opportunity after 10 years trading to develop the workshop manufacturing element to which today is 50% of our business and in more recent times we are developing vehicle sales. To be completive in all these areas of activity we need to purchase our parts or production materials from source In UK or Europe in the revelent quantity that make sense for shipping to deal direct cutting out the middle man to be completive With others that we compete with, they may only have to cater the one speciality whereas we have to accommodate all areas of our activity i.e. parts, production, vehicle sales stock, hence our stocking facility is what it is. The debtors are mostly made up of 30 to 90 day accounts with less than 5% in 180>. Thanks, Ger
________________________________________
Q:
Hi Ger, following on from Money Talks query - very high stock and zero cash - what is the turnover of this stock ? Thanks
by Allardstown1 (placed 0 bids for €0.00 on this loan)
A:
Hi there. Value of stock turn @200k month average. Thanks, Ger
________________________________________
Q:
Hi Ger. It is really useful to have up to date financial information by way of management accounts to 2015. Would you also have rough figures for your stock level at Dec 15 and also what was you cash balance at Dec 15? Thanks
by roindub (placed 1 bids for €300.00 on this loan)
A:
Hello,our end of 2015 accounts are with the accountant in preparation for completion end of year at present. And pulling the stock figure level for Dec. 2015 value 1,249,395 as guide and the cash + 216,356. Thanks, Ger

Quarry Plan (Loan 25/04/16)
Q:
Hi Danielle, whom are your longest serving clients? Do you export machinery, if so to whom and what countries? Thanks in advance.
by minion2016 (placed 1 bids for €100.00 on this loan)
A:
Good morning minion2016, Apologies for the delay in reply, I'm currently in Germany for meetings. In terms of our clients, we have customers all across the globe including the Middle East, America and Asia. We have great relationships with our customers, many of which have been with us for 30 years. Hope this helps to answer your query and many thanks for your support. All the best, Danielle
________________________________________
Q:
Hi Danielle, What is the breakdown of "Other" liabilities? How many stockturns do you have on average each year?
by Jostler (placed 1 bids for €2,000.00 on this loan)
A:
Morning Jostler, Apologies for the delay in response, as per the below, I'm currently away on business. In terms of stockturns, we have 12 per year. The nature of our business is that we purchase machinery every month and sell it the following month. Our success has been founded on our ability to quickly turn around sales based on customer needs. Our other liabilities is made up of stocking finance and overdrafts on machinery due to be sold. I hope this helps to answer your queries and thanks for your interest in our business. Many thanks, Danielle
________________________________________
Q:
Hi Danielle, Sorry to interrupt your business trip, which I hope goes well for you. Thank you for your above answer.My question about stockturns was an oblique way to find out the breakdown of your turnover into equipment rental, refurbishment of customer equipment, sales of spares and sales of your own refurbished equipment. Could you please let me know that breakdown. Thanks.
by Jostler (placed 1 bids for €2,000.00 on this loan)
A:
________________________________________
Q:
Hi Balance Sheet to 31/12/15 please
by SamMeath (placed 0 bids for €0.00 on this loan)
A:

scheister

tomwaits48 wrote: »

What are people's thoughts on lending to companies who were previously in administration/examinirship? I am looking at the Playzone Celbridge one. The owner alludes to the fact that they hired a new FC and now have much stringent financial controls....that's all well and good but what happens if that FC leaves? Doesn't fill me with an abundance of confidence.

Playzone is a odd one. Scary that its open 11 years as I worked their when it opened. The location is right beside a place called base which operates a bowling alley soft play area and host parties. So im some places they are directly competing.
I think when they opened they went in not fully realising the task that was ahead of them and it was a steep learning curve.
But from the reports I've heard they now know what they are doing. I would be happy to invest in them based on where they are at the moment.

sceach16

New 1 yr fixed looking for 50,000 at 8.5%. Look carefully at their info and financial data. I asked the following and await a response.

"How much are you borrowing from your bankers and for how long? You are looking for 50k from Linked lenders also! Have you other borrowings? Your shareholders funds/net assets are less than 20K. How can you support current and additional borrowing and repay minimum of 50K in one year? "

Extract from linked blog


"When you see a fixed-rate loan, however, you know that not only has the business met our normal criteria, but it has also exceeded a range of additional requirements relating to balance sheet, repayment capacity, turnover and credit history metrics.

Many of our high-interest lenders might balk at the 8.8% interest available on 3-year, fixed-rate loans but we feel that based on the strength of the businesses that qualify for these loans, this is a fair rate of return that refelcts the lower level of risk associated with these stronger businesses."

sceach16

I think a 3 yr fixed loan due to mature in a few days has disappeared. Please advise Linked Finance if you find it. Otherwise their statistics and puffing about successful loans may not be accurate. This was another that
"When you see a fixed-rate loan, however, you know that not only has the business met our normal criteria, but it has also exceeded a range of additional requirements relating to balance sheet, repayment capacity, turnover and credit history metrics.

Many of our high-interest lenders might balk at the 8.8% interest available on 3-year, fixed-rate loans but we feel that based on the strength of the businesses that qualify for these loans, this is a fair rate of return that refelcts the lower level of risk associated with these stronger businesses."

Lenders didn't think so !:eek::eek::eek:

sceach16

m320325 wrote: »

Does anyone here have a copy of the questions/answers from previous loans?

It would make it easier if they made them available to us. Some of the current borrowers have previously been on Linkedfinance but I cant remember what answers were given, if any eg Quarry Plant, CAFCO, Get Fresh Vending, Eurotech Renewables etc

If you have lent any money on these loans,Linked will send you the info quoted at the time of the loan.