LinkedFinance - new website

Philbert

Strettie - thanks for the table.

But actually I wanted to get it in a formula so I would have the interest rate in one row in Excel. Here is that very formula;

=((H2/12)*F2*(1+(H2/12))^G2)/((1+(H2/12))^G2-1)*G2-F2

F2 = Loan Amount € (e.g. €100)
G2 = Term in Months (e.g. 24)
H2 = Interest Rate % (e.g. 10.7%)

Formula works perfectly and it means you don't need the big amortization table to figure out the interest earned. It should be possible to tweak the same formula to take account of the 1.2% fee, either in the same cell or an adjacent cell, but I haven't been able to make that work accurately, as the amortization of the fee appears to work differently to that of the interest. (I.e. you cannot just take 1.2% away from 10.7%).

If anyone wants to 'fork' the formula to get the fee working, please do so!

darragh0000

I see in the linkedfinance report they calculate the default rate based on Euro value of loans instead of number of loans.

I think this could be misleading, I'll give a simple example:

---

I'm using autobid

I lend to €200 to 100 businesses (the way autobid works I lend €200 on every loan regardless if loan is 10k or 75k, no option for bid amount as percentage of loan amount)

5 loans 10k
5 loans 20k
45 loans 30k
45 loans 50k

1 x 10k loan defaults,
1 x 20k loan defaults,
1 x 30k loan defaults,
everything else repaid in full

I see that as 3% default rate (3 loans out of 100)

BUT

Linkedfinance calculation would be:

60,000 / 3,750,000 = 1.6%

I would only have achieved 1.6% default if my bid amounts were relative to the loan amount (50 on a 10k loan, 100 on a 20k loan, which autobid doesn't allow)

---

does anyone agree? I tried explaining this to someone else today but they couldn't see my point

sceach16

darragh0000 wrote: »

I see in the linkedfinance report they calculate the default rate based on Euro value of loans instead of number of loans.

I think this could be misleading, I'll give a simple example:

---

I'm using autobid

I lend to €200 to 100 businesses (the way autobid works I lend €200 on every loan regardless if loan is 10k or 75k, no option for bid amount as percentage of loan amount)

---

does anyone agree? I tried explaining this to someone else today but they couldn't see my point

There is a problem with all stats...they only work for defined parameters. I quoted earlier based on number of loans rather than cash value. U pays your money and takes your pick! But U don't have to use autobid if it does not suit. I am not investing much but would only use autobid for minimum amounts...less than (say) 100 or 2% of portfolio.

The other point about cash values is that it gives the amount of the loan that went bad...it could be much less than the original amount. A loan is one loan if 10% or 60% paid off!

Dream123

sceach16 wrote: »

There is a problem with all stats...they only work for defined parameters. I quoted earlier based on number of loans rather than cash value. U pays your money and takes your pick! But U don't have to use autobid if it does not suit. I am not investing much but would only use autobid for minimum amounts...less than (say) 100 or 2% of portfolio.

The other point about cash values is that it gives the amount of the loan that went bad...it could be much less than the original amount. A loan is one loan if 10% or 60% paid off!

A bit surprised by the arrears levels in the report, 22 loans out of almost 600 .... C. 4%, although take some comfort from the arrears by value state at c. 1% (and ultimately its value that matters)

Been luckier than the average myself (definitely luck as I've definitely done less due diligence on more recent loans before bidding than previously but still happy with my own loans generally). At this stage I've stopped bidding and just looking to withdraw over time

I have a sense (nothing I can quantify) that more recent loans are riskier, just based on the profiles I've read and comments by people on here

Strettie11

darragh0000 wrote: »

I see in the linkedfinance report they calculate the default rate based on Euro value of loans instead of number of loans.

I think this could be misleading, I'll give a simple example:

---

I'm using autobid

I lend to €200 to 100 businesses (the way autobid works I lend €200 on every loan regardless if loan is 10k or 75k, no option for bid amount as percentage of loan amount)

5 loans 10k
5 loans 20k
45 loans 30k
45 loans 50k

1 x 10k loan defaults,
1 x 20k loan defaults,
1 x 30k loan defaults,
everything else repaid in full

I see that as 3% default rate (3 loans out of 100)

BUT

Linkedfinance calculation would be:

60,000 / 3,750,000 = 1.6%

I would only have achieved 1.6% default if my bid amounts were relative to the loan amount (50 on a 10k loan, 100 on a 20k loan, which autobid doesn't allow)

---

does anyone agree? I tried explaining this to someone else today but they couldn't see my point

Daragh0000

Default rates are always calculated based on value of the loan that went bad in your example you are assuming by using full value of loan that day went bad on first day of loan when in reality using your example

1 x 10k loan defaults 6k left to pay,
1 x 20k loan defaults 8k left to pay,
1 x 30k loan defaults 25k left to pay,

39,000 / 3,750,000 giving default rate of 1.04% this is what you would provision for in calculating your net return

Strettie11

Excel file for calculating
- loan repayment schedule
- gross interest
- LF fee
- Tax
- USC
- PRSI
-Default Provision

Any mistakes give me a shout and I will correct

Strettie11

Questions answered today and turns out 2014 accounts are for only 3 months.

Strettie11

Would welcome your comments on the Q3 loan book section of LF blog. Not looking for comments to support my argument just wanting some debate Pro or con so LF produce a default % that you feel will be useful going forward

https://blog.linkedfinance.com/loan-book-report-q3-2016

sceach16

Strettie11 wrote: »

Would welcome your comments on the Q3 loan book section of LF blog. Not looking for comments to support my argument just wanting some debate Pro or con so LF produce a default % that you feel will be useful going forward

https://blog.linkedfinance.com/loan-book-report-q3-2016

I would take a stronger line. I absolutely accept the pont that loans less than 90 days cannot be in default. In practice, I would not expect any loan to default in the first 12 months if Linked have done any proper validation.

Default rates should be calculated as a % of loans over 12 months old, not a % of total loans which understates the default rate.

Default rates based on default cash rather than numbers will reduce the overall rate as loans over 12 months old will be significantly reduced.

sceach16

sceach16 wrote: »

9.6 % less Linked 1%is 8.6 less 50% Tax/Usc is 4.3% less provision for bad loan ....dependent on your view of Murphys. Linked say1.5% for A loans. So that would put it at 2.8% return for most taxpayers. Not a great return but not the worst. Murphy's have a great product...nicer in Dingle than anywhere else (IMO)...so decision is yours!

BUT always remember to diversify.....no more than a low% of your lending in any loan.

Per Q/A ....Capitalised research & development costs are 204,000 (other fixed assets). This is 62,000 euro more than shareholders funds! ..."A" rated.

darragh0000

Strettie11 wrote: »

Daragh0000

Default rates are always calculated based on value of the loan that went bad in your example you are assuming by using full value of loan that day went bad on first day of loan when in reality using your example

1 x 10k loan defaults 6k left to pay,
1 x 20k loan defaults 8k left to pay,
1 x 30k loan defaults 25k left to pay,

39,000 / 3,750,000 giving default rate of 1.04% this is what you would provision for in calculating your net return

thanks for explaining!

darragh0000

Value Tech bids were returned today 14th Oct, loan ended 22nd Sept.

Recently you had funds accepted into a loan for Value Tech. We regret to inform you that we have been unable to proceed with this loan.

As such, the funds that you committed will now be returned to your Linked Finance lending account.

We understand that these funds were tied up for quite some time and we apologise sincerely for that.

The terms of the Director's Guarantee were not acceptable to the borrower and despite our best efforts to find a solution over the last number of days, we were unable to reach an agreement on this.

ShoulderChip

darragh0000 wrote: »

Value Tech bids were returned today 14th Oct, loan ended 22nd Sept.

Recently you had funds accepted into a loan for Value Tech. We regret to inform you that we have been unable to proceed with this loan.

As such, the funds that you committed will now be returned to your Linked Finance lending account.

We understand that these funds were tied up for quite some time and we apologise sincerely for that.

The terms of the Director's Guarantee were not acceptable to the borrower and despite our best efforts to find a solution over the last number of days, we were unable to reach an agreement on this.

seems amicable enough

darragh0000

If you put I2 = Linkedfinance fee (e.g. 1.2%), would this work:

=(((H2-I2)/12)*F2*(1+((H2-I2)/12))^G2)/((1+((H2-I2)/12))^G2-1)*G2-F2

*replace H2 with (H2-I2)

eg:
€100 loan, 12 months, 8.5% with 1.2% fee

Result:
€4.66 (your formula)
€4.00 (modified, including fee)

Philbert wrote: »

Strettie - thanks for the table.

But actually I wanted to get it in a formula so I would have the interest rate in one row in Excel. Here is that very formula;

=((H2/12)*F2*(1+(H2/12))^G2)/((1+(H2/12))^G2-1)*G2-F2

F2 = Loan Amount € (e.g. €100)
G2 = Term in Months (e.g. 24)
H2 = Interest Rate % (e.g. 10.7%)

Formula works perfectly and it means you don't need the big amortization table to figure out the interest earned. It should be possible to tweak the same formula to take account of the 1.2% fee, either in the same cell or an adjacent cell, but I haven't been able to make that work accurately, as the amortization of the fee appears to work differently to that of the interest. (I.e. you cannot just take 1.2% away from 10.7%).

If anyone wants to 'fork' the formula to get the fee working, please do so!

darragh0000

sceach16 wrote: »

There is a problem with all stats...they only work for defined parameters. I quoted earlier based on number of loans rather than cash value. U pays your money and takes your pick! But U don't have to use autobid if it does not suit. I am not investing much but would only use autobid for minimum amounts...less than (say) 100 or 2% of portfolio.

The other point about cash values is that it gives the amount of the loan that went bad...it could be much less than the original amount. A loan is one loan if 10% or 60% paid off!

Linkedfinance encourage lenders to use autobid. I've had many emails about this.

They dont give lenders an option to bid a percentage of the 'loan amount' therefore even if I bid on every loan, I can still end up with a much higher default rate than they claim

simple example:

Just 2 loans

20k, 50% repaid and it defaults (10k outstanding)
50k, repaid in full

I bid 100 on each.

My default rate was:

50 (100 loan with 50 repaid) / 200 (2 loans of 100) = 25%


Linkedfinance default rate:

10,000 / 70,000 = 14.2%


In order to get the 14.2% I should have bid 50 on the 20k loan and 125 on the 50k loan (bid amount needs to be proportional to the total loan amount)

25 (50 loan with 25 repaid) / 175 (50bid+125bid) = 14.2%

sceach16

darragh0000 wrote: »

Linkedfinance encourage lenders to use autobid. I've had many emails about this.

They dont give lenders an option to bid a percentage of the 'loan amount' therefore even if I bid on every loan, I can still end up with a much higher default rate than they claim

simple example:

Just 2 loans

20k, 50% repaid and it defaults (10k outstanding)
50k, repaid in full

I bid 100 on each.

My default rate was:

50 (100 loan with 50 repaid) / 200 (2 loans of 100) = 25%


Linkedfinance default rate:

10,000 / 70,000 = 14.2%


In order to get the 14.2% I should have bid 50 on the 20k loan and 125 on the 50k loan (bid amount needs to be proportional to the total loan amount)

25 (50 loan with 25 repaid) / 175 (50bid+125bid) = 14.2%

Yes , that is a problem with autobid. It is convenient but not flexible.

losttheplot74

I wonder if this is another one about to default:

Can't post URLs yet, but according to the Irish Times, Liberties Press is in the red. They're about half way through their loan.

spudwould

losttheplot74 wrote: »

I wonder if this is another one about to default:

Can't post URLs yet, but according to the Irish Times, Liberties Press is in the red. They're about half way through their loan.

Liberties Press, which has published books by President Michael D Higgins, the late taoiseach Garret FitzGerald and former tánaiste Eamon Gilmore, has admitted it owes money to many of its authors and former staff.

Its owner Seán O’Keeffe came in for heavy criticism from writers when The Irish Times reported last week that he was charging unpublished authors €100 each to read their manuscripts.

After that report, 11 Liberties Press authors and three former staff contacted the newspaper to say they had not been paid the money due to them under the terms of their contract.

Mr O’Keeffe has now apologised for failing to pay advances and royalties to his authors. He also acknowledged that three former members of staff who left this year had not been paid their full wages. “This is a situation I am sorry about and I am addressing,” he said.

tomwaits48

spudwould wrote: »

Liberties Press, which has published books by President Michael D Higgins, the late taoiseach Garret FitzGerald and former tánaiste Eamon Gilmore, has admitted it owes money to many of its authors and former staff.

Its owner Seán O’Keeffe came in for heavy criticism from writers when The Irish Times reported last week that he was charging unpublished authors €100 each to read their manuscripts.

After that report, 11 Liberties Press authors and three former staff contacted the newspaper to say they had not been paid the money due to them under the terms of their contract.

Mr O’Keeffe has now apologised for failing to pay advances and royalties to his authors. He also acknowledged that three former members of staff who left this year had not been paid their full wages. “This is a situation I am sorry about and I am addressing,” he said.

did anyone save the financials and business overview as provided on their loan request? be interesting to read in light of the above.

sceach16

tomwaits48 wrote: »

did anyone save the financials and business overview as provided on their loan request? be interesting to read in light of the above.

Anybody who lent can access the blurb and fincials by clicking on the loan in their lent data....I didn't lend on this ....before I joined rather than inspiration!

sceach16

Financial.....profit 3539 and shareholders funds 3639 after this! Newly incorporated and significant new business. Invested funds are in other liabilities ! Profit is about 0.6 of 1% of Turnover.

Linked rate this as C !!!!

sceach16

Turnover 2014 2.7 million, 2015 2.1 million and 2016 1.9 million. Profit 2014 126K, LOSS 2015 449K and profit 2016 161K before depreciation, Latest Balance sheet, Shareholders funds 303K NEGATIVE, other liabilities 929K. Disconcerting.

Linked rate this C!!!!!

Strettie11

Agree with you on F4Energy , they need to answer the questions asked on the Q&A

Daragh0000 did you delete your reply to sceach16 or was it removed ?

tomwaits48

didn't think F4 Energy was too risky myself at 1 year term and positive trading performance.

sceach16

linked rate this as a grade B.

This is a loan to a sole trader with accounts for 30/06/15...nearly 17 months ago. There is a balance sheet for a sole trader which is rather unusual.

It is an interesting niche business turning over c100k.

Extract from Linked blog....Every time someone is approved for a loan, they will be given a loan grade based on the outcome of our credit evaluation process.

Why is it a B? looks more like Y to me.

sceach16

This is loan to a company turning over 400K pa with profits over 40k,,,based on 30/06/16 data (nearly 5 months ago..pity others are not as up to date!). Net assets are 72K.


linked rate this a C

Neon_Lights

sceach16 wrote: »

This is loan to a company turning over 400K pa with profits over 40k,,,based on 30/06/16 data (nearly 5 months ago..pity others are not as up to date!). Net assets are 72K.


linked rate this a C

Got on that one... looks like one of the better ones with a nice quick turnaround

tomwaits48

Neon_Lights wrote: »

Got on that one... looks like one of the better ones with a nice quick turnaround

not sure about that one myself, what happens if the son has a change of heart and decides not to lease the machines to the father?

celica00

Hey guys,

just came across this and started off with reading the first 20 pages (and it sounded good!)
now i just finished reading the last 10 pages and seriously dont know if its worth it to get into LF?

Seems like there has been some changes in regards of rates but except for the usual risks etc, would you still recommend LF for a newbie to start or is there better providers out there?
Not sure if that question is okay to ask, but after reading the last 10 pages im not too sure anymore.

Thanks!

manafana

celica00 wrote: »

Hey guys,

just came across this and started off with reading the first 20 pages (and it sounded good!)
now i just finished reading the last 10 pages and seriously dont know if its worth it to get into LF?

Seems like there has been some changes in regards of rates but except for the usual risks etc, would you still recommend LF for a newbie to start or is there better providers out there?
Not sure if that question is okay to ask, but after reading the last 10 pages im not too sure anymore.

Thanks!

i'd recommend mintos investing in the buyback guarentee loans, return is decent and site is top notch with some well explained emails on new loan products.