Rebuildingsociety is a Leeds based P2B (peer-to-business) lending site which has funded around £10 million in loans since launching in late 2012. To borrow, businesses must meet certain requirements on trading history, turnover and credit rating. Here’s the founder talking about peer-to-peer lending recently:
Expected Returns: Historical performance of 16.8% gross yield with 9.6% defaults.
Provision Fund: No.
Sell Out: Yes, secondary market.
Minimum Investment: None.
Cashback: £10 on valid registration via this link.
Speed of Investment: Fast via secondary market, but not huge quantity of new loans.
Rebuilding Society (also known interchangeably as ‘rebuildingsociety’) has been around a relatively long time for a peer-to-peer lending platform. Their statistics page allows us to get a truer understanding of its performance in relation to bad debts and defaults:
From this table, it’s clear to appreciate the real risks of bad debt. However, it’s hard to measure the true loss from a default as many loans pay back both interest and capital each month. So these loans may have already paid back a significant proportion by the time they went into default.
Rebuilding society attempts to build more of a shared community than other platforms. They state on their about us:
Our model creates a community where borrowers and lenders alike are invested in the businesses’ success and growth.
Once registered and logged in you’ll be awarded with ‘trust points’ that can be gained through activities like connecting your Facebook account and lost through late payments or account inactivity. These are awarded to both lenders and investors, but as an investor I’m not sure in practice what benefit my current points have.
When it comes to features Rebuilding Society has it all. There’s a ‘bidpal’ function to automatically invest in new loans. There’s a secondary market with the ability to set discount or premiums up to 5% either way. You also have the necessary tax statement that breaks down interest and capital gains. Finally, the dashboard pulls together all your data and calculates various measures. If anything the dashboard is a bit of an overload, it has 10 different calculations like gross/net return, transaction loss, actual loss and others. These are presented in a nice looking 5 x 2 grid, but would probably more make sense as lines of accounts.
The founder of rebuildingsociety, Daniel Rajkumar, is a internet entrepreneur who had previous success founding the translation company www.web-translations.com. This background surely helped with the technical side of building the website and keeping costs low. For me, it’s sometimes a worry with P2P platforms that spiralling IT costs could lead to risks of the platform itself running into financial trouble. However with rebuildingsociety I personally feel that there is less risk on the IT side. When I looked at the website code itself, I saw they’d started with the Wordpress content management system and a couple of well known plugins to manage members/ contact forms and finally added their own customised plugin on top. When I did a little more research I found they’d been so successful with the website they were white-labelling the solution to others like eMoneyUnion.
To bid on a new loan you chose a rate and an investment amount of any £10 multiple. Say a business wants to borrow £10,000. The first 100 people come along and all bid £100 at 20%, so the whole £10,000 is matched at 20%. Then, if another investor wanted a part of the loan they would start offering 19% or below to knock out the last person offering 20%. This continues until the deadline is reached, to give the best possible rate to the business. There are cashback incentives on every loan for things like being in your £10k pledged, lending to someone with a similar postcode to you or bidding among the first 10 people. For every loan there are relevant downloads, financial details of the company, a profile and a discussion area:
(potentially confidential details have been blurred out)
My only issue with the website is that for me, as a new customer, the initial bid process was confusing. Somehow I accidentally ended up investing twice my desired amount in the same loan when I wanted to invest to two different businesses. To make matters worse, something happened to the business repayments which meant that I was unable to sell on the secondary market.
With rebuildingsociety you get a website with lots of functionality. In my opinion there is less platform risk due to its relatively longer history and how the website was built. I would hope that they can subsidise the costs and invest in ongoing maintenance through releasing it as a white label solution. However, there is still a significant investment risk due to late payments and defaults. In my instance, after my unfortunate mishap on the unwanted loan duplication I will wait to see how repayments progress before adding more funds.
Update: 16th August
Rebuilding Society got in touch with me to explain the unwanted loan duplication/ double booking problem. Apparently it may have been due to me having multiple sessions open at the same time (I usually open different loans in new browser tabs while I decide what to invest in). They were really helpful and suggested to reach out to them if this happens in future so they can try to correct it.
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