Congratulations, first, to Zopa for passing the major milestone of lending a cumulative £1bn in the 10 years since its launch. It’s obviously a big moment for the P2P movement and, given that we now know which was the first UK platform to top £1bn, might this be a suitable moment for alternative finance providers to start quoting their origination volumes in ways that better reflect the real financial world?

 

 

Given the increasing rate at which Zopa is expanding, it follows that a large percentage of the £1bn it has lent so far remains outstanding. At some point, platforms are going to need to stop telling the world how much money they have lent in their entire history, and to start making their headline number the size of the existing loan book. After all, this is the number that everyone uses to working out whether banks are expanding their lending or retrenching – why not apply the same yardstick to the alternative world too?

 

 

We would be justifiably sceptical if a major bank tried to tell us how much money it had lent to small businesses in the 200 years since it was founded, given that the number would doubtless run into the hundreds of billions and therefore be effectively meaningless. It is only a matter of time before alternative platforms face the same problem. Coming up with big numbers makes for good press, but what really matters is the size of the live loan portfolio.  

 

 

Elsewhere in the P2P world, property bridging specialist Saving Stream hit a big number of its own last week, when 600 lenders filled three loans totalling £1.3m in just over 20 minutes. Saving Stream offers a flat 12% return on everything, which not surprisingly has lenders flocking. Indeed, according to co-founder Liam Brooke, the three loans would have filled much faster had the volume of user traffic not brought the Saving Stream website to a crawl.

 

 

In response, Saving Stream, which to date has operated as an online platform to sell on loans funded from the balance sheet of its sister company, Lendy Ltd, has launched an interesting option called pre-funding. This allows lenders to specify in advance what sum they want to commit to every loan that becomes available (without having seen any of the documentation). In the first week, lenders have made pre-funding commitments of £1m, effectively giving Saving Stream that sum as an ongoing underwritten lending facility. That number will change as people opt in and out of the pre-funding scheme and alter the level of their commitment, but it’s a neat way to ensure that the platform has a more predictable level of liquidity available on demand, as bridging lenders require.

 

 

If there is more pre-funding money available than the size of the loans on offer, all lenders large and small will be scaled back by the same proportion, meaning that everyone who pre-funds will gain some exposure to every loan. Obviously, it also means people will be buying into loans they have not reviewed but that is the price of getting into these high-yield deals when demand to lend far outstrips supply – and it is the norm on lots of other platforms, from Wellesley to Funding Circle’s Autobid function and the big consumer loan specialists. Ultimately, this factor will probably increase the volume of loan parts coming on to Saving Stream’s (currently deserted) secondary market as investors sell out of deals that don’t fit their criteria.

 

 

It’s a neat idea for those aiming to run up big numbers.