Secured Lending Competitor Analysis

The findings of the analysis were as follows:

  1. 1. Premiums on The Route – Finance’s (R-Fin) Loans are significantly higher than other ‘Peer to peer’ lenders.
    1. The R-Fin targets a return of 15% per annum on Secured loans which is higher than other ‘Peer to peer’ lenders where below 10% is the norm
    1. 2. The Route – Finance only deals in secured lending.
      1. It is now an absolute requirement that there must be assets available as security that provide at least 150% coverage for the loan capital plus interest.
      2. The R-Fin will only consider assets that can be easily valued and sold e.g. property and land. Examples of assets that would not be acceptable security are shares in unlisted companies, patents or Intellectual Property (IP).
      1. 3. The Route – Finance only deals with High Net Worth Investors.
        1. Most ‘Peer to peer’ lending sites will allow investors to participate with amounts as low as £50.  When raising sums up to £2.5 million it could take some time to raise the amounts required.
        2. The R- Fin’s minimum investment is £25,000 per investor, per project. The average investment per investor, per project is £70,000.
        3. This means that the fundraise process can be completed relatively quickly. A Secured Loan of £1 million can usually be raised from Route Investors within ten days.

4. The underwriting process for Route – Finance projects is longer.

  1. On average, it takes four weeks for R- Fin to complete the due diligence (DD) for each Secured Loan.
  2. Other peer to peer lenders complete their assessments within days. This either means that they are not conducting any due diligence or that they are accepting some, or all, of the information at face value.

5. The Route – Finance only offers short term loans.

    1. Each R- Fin Secured Loan is short term, usually up to 18 months with an absolute maximum term of 24 months.
    1. 6. Access to structured meetings and the wider Route – City wealth club (R- Cwc) advice proposition.
      1. Most peer to peer lenders are online businesses where investors log on to a website to obtain any information they require. They do not have the option to visit an office, or have a conference call, to discuss your projects.
      2. Peer to Peer lending websites do not offer access to other complementary services such as pension advice if you wish to invest part of your pension in Secured Loans.
      3. The R- Fin Membership provides access to a Relationship Manager, structured meetings and conference calls to discuss your projects.
      4. The R- Fin is part of R-Cwc. Members of The R- Fin can access services from the other parts of R-Cwc such as property, retirement and tax advice.

What did The Route – Finance learn?

The primary deficiency of The R-Fin’s proposition, compared to the other peer to peer lenders, is that their online functionality is far greater. All other ‘peer to peer’ lenders have online portal facilities that allow investors to log on and review their investments, any updates, expected returns etc.

As a result, The R- Fin launched its own website in December 2013. The first phase of the website is for borrowers; the website allows them to contact The R- Fin direct.

The second phase of the website will bring The R- Fin in line with the remainder of peer to peer lenders by providing an online portal facility. This will allow Route Investors to log on to the website to view their Secured Loans seeing how much is invested, the anticipated returns, loan updates etc. This second phase of the website is expected to be launched in Q3 2014.

Investing in loans via Route-Finance is only suitable for certified High Net Worth investors. Investments in Loan Notes should be considered to have a risk level of ‘absolute’- i.e it is possible to lose all of your investment. The Route- Finance is not regulated by the FCA and this document does not constitute financial advice.

The Route – Finance – Market Analysis- Feb