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Rebuildingsociety Lenders In 200+ Loans Have Positive Results
One of 4thWay's specialists will update the Rebuildingsociety review next month and you can expect a huge amount of updates to it. And certainly a lot more detail and opinion than I'm about to give you today, as I'm just looking at one small aspect of this business lending P2P lending site: I want to visit some interesting stats we've been sitting on from spring this year, due to the chaos and extra work that COVID-19 has caused us!
Back then, we asked Rebuildingsociety* how many lenders who had lent in at least 200 loans were sitting on losses.
Rebuildingsociety told us that a total of 20 lenders have lent in at least 200 loans. Here are there results as of April/May 2020. Clearly, this is before any pandemic impact, so it shows what happens in an ordinary economy:
| Loan Count | Net Return |
| 218 | 32% |
| 239 | 24% |
| 263 | 16% |
| 228 | 12% |
| 253 | 11% |
| 262 | 10% |
| 219 | 10% |
| 205 | 10% |
| 225 | 9% |
| 262 | 9% |
| 214 | 8% |
| 200 | 8% |
| 228 | 7% |
| 252 | 7% |
| 220 | 7% |
| 200 | 7% |
| 229 | 6% |
| 251 | 6% |
| 203 | 5% |
| 212 | 4% |
As you can see, all lenders who have lent in at least 200 loans are currently looking at positive results. Bear in mind that they won't be lending in all these loans at the same time; many will have been paid off, or written off, already.
Importantly, I've not been given any details to support how the above returns are calculated. For example, it might be based on an optimistic estimate of the amount of any outstanding bad debt that will be recovered, especially since it's record in this area has been poor.
I think this also shows the importance of lending in lots of loans. The 20th lender is currently looking at 4% returns. This is based off a typical lending interest rate of 17%. Therefore, if you've been lending in a much smaller number of loans, you might have much more wild results!
For ordinary small business loans to creditworthy businesses, which might typically earn you between 4% and 15% interest, 4thWay specialists estimate you should look to spread across at least 180 loans, provided the P2P lending site has shown itself capable in borrower selection. If you lend in fewer loans, the chances begin to rise that you lose money through bad luck.
I'm disappointed that just 20 lenders have managed to lend across 200 loans since Rebuildingsociety started, although that's not Rebuildingsociety's fault. We repeatedly see signs that a very large number of lenders don't choose to diversify enough to contain the risks. Although potentially – hopefully – some of the lenders with fewer Rebuildingsociety loans have spread a lot more money across loans on other P2P lending websites.
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