Crowdlending Services like lendingloop.ca | General financial discussion | Discussion forum

I got in about 3 years ago, and sprinkled $50-100 over a lot of names. My estimate is I am prob break even to up small, definitely not 5-8% a year. Now keep in mind covid prob killed a lot of the small biz that borrowed from lendloop, but I also have biz that stopped paying and eventually charged off even before covid.
I pegged the "non-performing" loans ratio to be at least 20% regardless of credit ratings.

One reason why the return will be much lower is because biz that does well will pay off their loan early (reinvestment risk), while those goes under will stop paying.

Red flag: Why can't I find historic investor returns on their web site?

Their statistics pages has some fancy graphs and numbers. But, no useful loan interest rates and default rates that one can calculate what someone investing would end up with.

One should be suspicious of investments that hide or don't disclose historical returns. Instead of disclosing actual rates of return, the site has meaningless "projected" 5% to 8% rate of return that are "projected" loan interest rates combined with "projected" loan loss rates and "projected" default rates!

From time to time, we provide projected net returns on the Website. The projected net returns are a portfolio weighted estimate of the annual return. To calculate the net return, we use the projected gross yield, the projected loss rate, the projected slope of the default curve and the servicing fee for the Borrower Loans made. The average return is compounded monthly and shown before tax. …

Given that, the experience file and savemoresaveoften had does not surprise me.

According to September 2019 Globe & Mail subscriber-only article Lending Loop offers a novel way for business owners to get funding, they are funding business loans that are declined by the big banks and lenders like BDC.

savemoresaveoften said
…One reason why the return will be much lower is because biz that does well will pay off their loan early (reinvestment risk), while those goes under will stop paying.

That's insightful. Kind of like investing in bonds where the borrower can redeem the bonds should they become successful and can borrow from a bank at a much lower interest rate. But, the investor can't force the borrower to repay when the borrower stumbles and no-one else will lend, not even with an interest rate of 30%!

Save2Retire@55 said
Thank you both. Good to hear from those with first hand experience.

savemoresaveoften - Can you give me more info? Like how much money did you put in to get that $50-$100? Would you recommend it or it is a don't get close to it? If not, did you pull out?  

I meant just "lend" $50-$100 to a whole bunch of names (ranging from 5%-25% interest) just to get a feel of this type of crowd funding. Prob put in a measly $3-4k in total and maybe 40 names in total ? Quite a few ended up in limbo and 1-2 completely charged off (as in dead and no chance of recouping my remaining principal). You would imagine 40 names over various credit ratings is a well diversified portfolio. Because of covid, I cant proof it one way or the other. But a couple of "good credit" names as ranked by LendingLoop ends up defaulting and stop paying after a few months.

You can withdraw the return cash (interest and principal repayment) anytime you want, with a minimal withdrawal of $100 each time. Each loan has a term and you cant call it (as in get ur money back sooner).

I played it with the mindset from a credit card issuer perspective, which is charge a high enough interest with a diversified customer base to turn a profit and minimize my net loan loss probability. Its an interesting exercise. For the record, I have not put any new money into any new loans even a few months before covid hit.

Save2Retire@55 said
Thanks. Guess it is not even worth the hassle and too risky. …

It looks that way. But, it could be worth losing a few thousand to become experienced and "inoculated" against these kinds of "opportunities" in the future. That 5% to 8% per year return looks really juicy compared to 1.9% per year on a 5-year GIC.

Very long time ago we had this community thing were we all put money in a pool. …. After 20 months everyone gets a $2000 back. The ones at the end might got in just for helping out others and not needing the money.

That sounds nice. But, what happens should a few of the participants turn out to have an substance or gambling addiction and squander their $2,000 loan instead of using the money for "medical" expenses?

Save2Retire@55, that's interesting, I've done similar things locally, i.e. directly to families in need, no charity receipts, etc. How do you find the communities in need in other countries? And how do you ensure 100% of your gift is used as you intend?

Save2Retire@55 said

Honestly, the community kept monitoring the participants for any red flags. It is all part of the agreements plus there were official signed with witness documents saying who took what. Filing a law suit against that person was always on the table. They all had cars at least. Worst case scenario would be .. sell your car and pay off. I don't recall anyone bailing on paying though.

I see. It was more than passing a hat around, giving the hat of money to a selected person, and writing down the person's name and repayment date on a sticky note somewhere.

Thanks, Save........I'm the same re 90% of the world people get no help, but I don't travel outside USA/Canada or read travel stuff so I guess it won't work for me. Plus I'm old enough to know/think there are bad apples absolutely everywhere who'll take what they can get their hands on, so doesn't sound like it would work for me.

Transplant funding is tricky because the recipient, if the surgery is a success, will need medications for the rest of their life and monitoring by specialists twice a year. They may also require additional hospitalizations if something needs more attention. If these things can't be arranged and funded, there isn't much point, sadly.