# Lending Loop - Peer to peer lending



## Getafix (Dec 29, 2014)

Anyone heard of Lending Loop? It's a peer to peer lending platform which allows SME's to get loans which banks won't give them. SME's can borrow from $5000-500'000 with interest rates starting at 6% up to double digits (1.5% goes to L.L). If you want to loan money to a business you can start with as little as $50. 

Seems interesting as you can choose which businesses to loan money to & spread out your risk. Think i'll give it a try with a couple of grand to test it out.

Some articles:

http://www.theglobeandmail.com/glob...g-coming-to-canada-this-fall/article26316712/

http://business.financialpost.com/n...ng-u-s-style-peer-to-peer-borrowing-to-canada

Guide to lending process:
https://s3.amazonaws.com/lendingloop-production/Assets/Downloadable+Content/Lending+Guide.pdf


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## namelessone (Sep 28, 2012)

As soon as I saw the field asking for S.I.N, I stopped. I won't give out S.I.N unless it's a well established and well known business.


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## doctrine (Sep 30, 2011)

I don't see any particular reason to get in 'on the ground floor' here - they've only been in business a few months. Why not wait, at least a year if not more, to see how it goes and get some stories from both sides? There may or may not be issues with the securities regulators yet (they say there isn't any issues....not tested in court though).


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## andrewf (Mar 1, 2010)

I see that there does not seem to be any 'accredited investor' requirement to be a lender. Have the regulations changed? I recall that being one of the factors that prevented peer to peer lending from taking off in Canada previously.


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## Getafix (Dec 29, 2014)

Yeah i'm in no rush to jump in, apparently there are only a handful of companies at the moment. I will be keeping an eye out for this though as it seems like a good idea to me for both parties. I have no idea of the legality or regulations behind this concept though, which is why i posted here for discussion.


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## treva84 (Dec 9, 2014)

andrewf said:


> I see that there does not seem to be any 'accredited investor' requirement to be a lender. Have the regulations changed? I recall that being one of the factors that prevented peer to peer lending from taking off in Canada previously.


They have a "proprietary secret" to by-pass this regulation so anyone can sign up. The minimum "pledge" (loan) is $50, and it increases in $50 increments.

After some apprehension about giving out my SIN I decided to sign up. It took them 2 business days to verify my info, but the platform opened up to me yesterday.

Currently there are 3 businesses all seeking $50,000 loan with a repayment duration of 2 - 3 years. Also there are 2 businesses so far that have been fully funded (a yoga studio; a consumer tax chain)

My impressions so far:

- Interface is intuitive, very nice and easy to use
- On the "marketplace" (where you can view the companies that you can loan money to) there is a thumbnail with the business, a photo of the business, geographical location, loan duration, interest rate and perceived credit risk. 
- When you click the thumbnail, it opens up a more in depth page that has tabs. It covers information regarding what the company is about, why they want they money and what they plan to use it for, whether or not there is a personal guarantee behind the loan, the companies last 3 years of financial statements, and then a Q&A tab where you can type them questions, forum style and have them answer you. Last but not least there's the repayment schedule clearly defined.
- All loans so far have a personal guarantee and are backed by a general security agreement. 

There's also your "pledge" home page, where it shows you who you have lent money to, your current gross yield, lifetime interest earnings, and "asset mix" which I don't totally understand at this stage. 

Tonight I pledged to one of the three companies. Defiantly going to keep some cash in this account to jump on other opportunities. For those wondering, the pledge I made has an expected rate of return of 9% (the actual loan interest is higher but Lending Loop takes a cut). 

If anyone has any questions please feel free to PM me!


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## SquidPope (Nov 19, 2015)

So far, I've pledged to every loan that's appeared on the marketplace. My thinking is, if people don't get in on the ground floor then very few loans will be funded. If few loans are funded, then businesses won't have a reason to have confidence in Lending Loop. If they don't have confidence, they won't apply, and Lending Loop goes away.

It definitely has room to improve, but I expect that to happen naturally as more lenders join up.


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## bds (Aug 13, 2013)

I signed up, waiting on verification now. I love the idea and I've been waiting for one to come to Canada.


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## makemerich (Oct 1, 2015)

namelessone said:


> As soon as I saw the field asking for S.I.N, I stopped. I won't give out S.I.N unless it's a well established and well known business.


This is likely due to the fact that the borrower will need to issue a T5 for interest


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## bds (Aug 13, 2013)

The SIN field isn't mandatory, I didn't fill it out.

Whether they force me to do it later or not, I'm not sure, but I've completed my profile for now.


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## SquidPope (Nov 19, 2015)

If anyone's curious about the time frames involved in signing up: when I signed up, account verification took about 4 hours and the initial transfer of funds from my bank to Lending Loop took about two weeks.

Of course, the only reason the fund transfer took so long is that I had to use the VersaPay option since they haven't added my bank (Tangerine) to their list of banks that they work with for faster transfers yet. So far that list is CIBC, Scotiabank, BMO, RBC & PC Financial; if you're banking with one of them, it'll go quicker.


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## Freedom45 (Jan 29, 2011)

Based on the loans that are currently being offered, what rates are being offered, and over what time frames? I find it very interesting in theory...


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## treva84 (Dec 9, 2014)

Freedom45 said:


> Based on the loans that are currently being offered, what rates are being offered, and over what time frames? I find it very interesting in theory...


Current loans are $50,000 or $55,000. Rates vary with risk, currently they are 9% - 12.9%. Terms are 2-3 years.


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## SquidPope (Nov 19, 2015)

Of the loans currently open for funding:

1) $55000, 3 years, C+ risk rating, 12.9%
2) $50000, 2 years, B+ risk rating, 9.0%
3) $50000, 3 years, B risk rating, 11.4%

The minimum loan amount, time frame, and interest rate are $5000, 6 months, and I think 6%?

(I've been following this Lending Loop thing not-so-patiently since late 2014, which is why I'm so chatty about it.)

EDIT: *sigh* I forgot that OP covered the minimum rates in the very start of this thread.


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## Freedom45 (Jan 29, 2011)

Are you able to see the current funding status of each loan (how close they are to being funded)? 

For example, on the 9.0% loan, the interest to the borrower is 9.0%, of which, lending loop takes 1.5% and the lenders get the remaining 7.5%. Is this correct?


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## treva84 (Dec 9, 2014)

Freedom45 said:


> Are you able to see the current funding status of each loan (how close they are to being funded)?
> 
> For example, on the 9.0% loan, the interest to the borrower is 9.0%, of which, lending loop takes 1.5% and the lenders get the remaining 7.5%. Is this correct?


The current funding status is disclosed as a % (i.e. 30% funded or 60% funded). Yes, the posted interest rate is the interest rate for the loan before Lending Loop takes their cut (which does appear to be 1.5%). After you agree to pledge there is a screen where you have to electronically sign a loan document. On this screen it'll tell you what your actual expected rate of return.


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## SquidPope (Nov 19, 2015)

Looks like a third loan is about to be successfully funded: a tanning studio in Calgary is $2450 away from their target!


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## smihaila (Apr 6, 2009)

From a risk-mitigation and diversification perspective, one is supposed to invest only as low as $25 per pledge/borrower, and spread the money to invest to at least 200 borrowers. That is the approach used with other consumer-focused P2P lending platforms like LendingClub.com and Prosper.com.

But with LendingLoop, having as little as 3-4 businesses to invest in, investors with larger amounts of idle money waiting to invest, would be forced to take increased risk - having to allocate too much into one investment. Not to mention also that business loans are the riskiest in general. And loans with a duration > 4 years are again even riskier.

I have an account active with them, but I think I'll be waiting on the side, until more diversification can be achieved. For the moment, it's a bad value proposition.


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## treva84 (Dec 9, 2014)

smihaila said:


> From a risk-mitigation and diversification perspective, one is supposed to invest only as low as $25 per pledge/borrower, and spread the money to invest to at least 200 borrowers. That is the approach used with other consumer-focused P2P lending platforms like LendingClub.com and Prosper.com.
> 
> But with LendingLoop, having as little as 3-4 businesses to invest in, investors with larger amounts of idle money waiting to invest, would be forced to take increased risk - having to allocate too much into one investment. Not to mention also that business loans are the riskiest in general. And loans with a duration > 4 years are again even riskier.
> 
> I have an account active with them, but I think I'll be waiting on the side, until more diversification can be achieved. For the moment, it's a bad value proposition.


It is indeed true, diversification is an issue. But the website also just launched 4 weeks ago. The way I see it though is if too many people sit on the sides nothing will get funded and thus it won't grow. I've put money in to 2 / 3 available loans to try and get it to pick up some steam (get some momentum building so it can grow).

Yes, there is risk, but that's also why the interest rates are higher. If you want safety you'll have to settle for something like a GIC (and the associated 2%).


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## smihaila (Apr 6, 2009)

treva84 said:


> Yes, there is risk, but that's also why the interest rates are higher. If you want safety you'll have to settle for something like a GIC (and the associated 2%).


Not being afraid to take risks, but they must be calculated ones. And, for let's say $5,000 divided between 3 business loans vs. 300 consumer loans as situation, I will chose the latter. Which as a matter of fact, already did - I am $5k invested through lendingclub.com, only in 36-month loan durations and $25 max per note. With a risk band averaging between C4, C5, all D's and E's. What I have noticed so far, is that the so-called "less risky" and worthier borrowers are the ones failing more often, while the riskier ones and relatively worse credit scores, are fairing better overall.


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## andrewf (Mar 1, 2010)

smihaila said:


> From a risk-mitigation and diversification perspective, one is supposed to invest only as low as $25 per pledge/borrower, and spread the money to invest to at least 200 borrowers. That is the approach used with other consumer-focused P2P lending platforms like LendingClub.com and Prosper.com.
> 
> But with LendingLoop, having as little as 3-4 businesses to invest in, investors with larger amounts of idle money waiting to invest, would be forced to take increased risk - having to allocate too much into one investment. Not to mention also that business loans are the riskiest in general. And loans with a duration > 4 years are again even riskier.
> 
> I have an account active with them, but I think I'll be waiting on the side, until more diversification can be achieved. For the moment, it's a bad value proposition.


Well, if you consider this as part of a larger portfolio, $10,000 invested in those 4 businesses in a $1.5 million portfolio is not an unacceptable risk/level of diversification.


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## smihaila (Apr 6, 2009)

andrewf said:


> Well, if you consider this as part of a larger portfolio, $10,000 invested in those 4 businesses in a $1.5 million portfolio is not an unacceptable risk/level of diversification.


From that perspective, yes you may say that. In my case, I have 360k ready to invest, but even with that amount, 10k to me is STILL 10k, for which I still wish to control the risk as much as I can. Also for the 360k, it would be absolutely insane to fork 120k into each of those businesses


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## treva84 (Dec 9, 2014)

smihaila said:


> Not being afraid to take risks, but they must be calculated ones. And, for let's say $5,000 divided between 3 business loans vs. 300 consumer loans as situation, I will chose the latter. Which as a matter of fact, already did - I am $5k invested through lendingclub.com, only in 36-month loan durations and $25 max per note. With a risk band averaging between C4, C5, all D's and E's. What I have noticed so far, is that the so-called "less risky" and worthier borrowers are the ones failing more often, while the riskier ones and relatively worse credit scores, are fairing better overall.


Personally I would consider consumer loans riskier than business loans - individuals who need consumer loans tend to make poor financial decisions, hence needing a consumer loan to cover their financial obligations. My thoughts are that, if a business is demonstrating a healthy balance sheet, the loan is considered "good debt" in that it's being used to grow the business, rather than as a short term fix to cover financial obligations which are a symptom of a long term problem (poor money management). 

Of course, LendingLoop is my first experience with P2P lending, so we'll see if what I think is consistent with the reality.


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## SquidPope (Nov 19, 2015)

Don't forget, since Lending Loop is open to ordinary people who don't have enough income and assets to be Accredited Investors, you can keep your investment really low if you just want to test it out.

Right now, I've got five hundred dollars in my Lending Loop account, and I'm pledging to businesses $50 at a time. So far, only $100 is actually tied up in loans; that's only 0.3% of my entire investment portfolio, 1.6% if you include the money that's in my account but not lent out yet. Granted, with the timeframe and interest rates involved, my monthly payments from each loan are only going to be a little over $1, but once the platform has found it's footing I'll be more comfortable with a larger investment.


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## crazyjackcsa (Aug 8, 2010)

I signed up with $100 and spread it across two businesses. 

There has already been two red flags for me. One funding window was extended when it was clear the goal wasn't reached. That seemed to fly in the face of the info that had been presented to me.

The second is the loan amount. One company was asking for $55,000 and it was dropped to $50,000. Again, I believe to make the funding goal.

I view it as gambling at this point. No better than the slots or the lotto.


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## Smith (Dec 29, 2015)

*Update*

Any update from the folks that registered? Has the numbers of businesses increased and have you received any repayments yet?


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## treva84 (Dec 9, 2014)

Smith said:


> Any update from the folks that registered? Has the numbers of businesses increased and have you received any repayments yet?


There have been a total of 8 businesses funded, since inception. There are currently 3 more seeking funding. Loan durations vary from 6 mo to 4 years (most seem to be around 2-3 years) with loan amounts varying from $10,000 - $50,000.

I received my first payment yesterday for the first company I had allocated money to (also first company I lent to get the loan approved). My next payments should be mid - end of January for my other loans (which have been approved and are in "repayment"). My gross yield (no defaults yet, still very early days) for all the companies I'm funding is 11.7%.


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## Freedom45 (Jan 29, 2011)

Finally got around to setting up my account on Lending Loop. It'll be funded with "play" money for the time being, but I'm very interested to see how if fares long-term. 

If anyone has or wants a referral (both the referrer and the referred get $50 after pledging at least $500) shoot me a pm.


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## bds (Aug 13, 2013)

Messaged you Freedom45.

I've received 2 payments so far, it's still early for them but I'm very satisfied so far. Loans are being added more frequently now. I'm at 11.7% return as well (before LL fees).


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## SoloSailor (Feb 17, 2016)

*Personal Experiences thus far ...*

I have been an active member of Lending Loup for about 5 weeks :

Communications :

The communications from one of the co-founders as well as staff has been excellent. The response times haven't be fast, but the quality of the responses to my questions have been thorough and upfront.

Loans :

At first there weren't a lot of new loans being posted on a regular basis by lately the frequency of new loans being posted has improved. And recently 2 loans were financed by lenders within 24 hours of the loans being posted on the LendingLoup website.

Diversification :

I am taking a conservative and disciplined approach for the time being. I plan to lend to 20 borrowers at $50 each so that my risk is limited to 5%. At that point, I will be lending $100 to some borrowers, trying to keep my maximum risk to a single borrower at 10% or lower. If my confidence in Lending Loup increases and as well as my confidence in my own ability to carry out appropriate Due Diligence on the business I am willing to loan money to, I will be steadily increasing the funds in my account and increasing the amount I am willing to loan to any one single borrower.

Confidence/Trust

I currently have a healthy level of confidence and trust in Lending Loup. Currently, the amount I have in my Lending Loup account equates to less than 1% of my investment portfolio.


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## Freedom45 (Jan 29, 2011)

I've been using it for a few weeks as well. I'm using a similarly cautious strategy at this point, pledging no more than $100 to any one loan. I've funded four @$100/ea so far, with three starting repayment next month, and one still pending further funding. I'm just waiting for some more cash to transfer in, then I'll pledge a few more. 

I like that the volume of loan requests appears to be growing. There are a few that I haven't pledged because I wasn't fully confident in the loan application/applicants, or their finances.


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## gardner (Feb 13, 2014)

I'm not sure if I would lend via lending loop. But it does look lucrative for LL themselves. They pocket 3.5% to 5.5% of the full loan amount up-front and 1.5% of whatever is payed back, if anything. They appear to take on no risk at all.
Although their loans are meant to be secured, there seems to be no information about how they handle foreclosure or collection or whatever. No word on what happens to lenders when the borrower defaults.


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## LongShorts (Feb 18, 2016)

So I've been cautious, as everyone else likely is. I only have 2% of my portfolio in Lending Loop right now, but so far I'm liking the numbers. I have been lending out $100.00-$200.00 to companies (depending on their risk) as they come onto the market. My current return is sitting around 9% right now, which is not too bad. What I especially like about this model is that, unlike a junk bond (which is how I'm treating these for now), you get part of your principal returned with each payment, rather than waiting for maturity. This means I can re-invest my compounded income much quicker than in bonds, which should bring my annual returns up significantly. I'll probably be cautious with this for the first year while waiting for a better scope of this company's future outlook....but so far, so good.

EDIT: If anyone would like a referral code for a free $50.00, please send me a message. What's better than free money???


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## andrewf (Mar 1, 2010)

^I think you're mistaken. Getting principle back early does not raise your return... it just exposes you to reinvestment risk.


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## LongShorts (Feb 18, 2016)

andrewf said:


> ^I think you're mistaken. Getting principle back early does not raise your return... it just exposes you to reinvestment risk.


Rookie mistake on my part. I realized after I wrote it that the monthly interest payments are based on the remaining amount owing, which lowers the interest and increases the principal each payment. So no, there is no actual increase in annual return unless I reinvest my returns from a lower interest-paying loan into a higher interest-paying loan.

All that said, this message is now posted on their page:

"Lending Loop is currently engaged in discussions with the appropriate securities regulatory authorities to ensure that its model complies with applicable laws. As an act of good faith, we have decided to voluntarily and temporarily halt the posting of new loan requests on our website during this period. Lending Loop will, however, continue to fund loans with its own financial capital and/or the financial capital of investors of Loop Financial Inc. Additionally, Lending Loop will continue to service all funded loans during this period and all existing lending partners will be able to access their Lending Loop accounts, and withdraw available funds at no cost."


Hmmmmmmmmmmmm


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## andrewf (Mar 1, 2010)

Not surprised. My guess is they fell afoul of the accredited investor requirement.


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## Lending Loop (Mar 1, 2016)

Currently, there is no regulatory framework around peer-to-peer lending in Canada. All of our current operations were and still are in line with all existing laws. We currently have the opportunity to work directly with the appropriate regulatory bodies to lay a framework for how peer-to-peer lending can operate and grow long term. As an act of good faith, we have decided to voluntarily and temporarily halt the posting of new loan requests on our website during this period.

If you have any questions regarding this matter, we encourage all Lending Loop users to reach out to us directly.

Best,

The Lending Loop Team


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## andrewf (Mar 1, 2010)

I do hope the regulatory environment is relaxed. I think the current rules around accredited investors can be dangerous, as it leads some people to invest in a far to concentrated way in speculative investments, using the $150k investment exception to minimum income thresholds. I have heard horror stories about unscrupulous advisors prompting clients to borrow up to the $150k requirement so invest in a private REIT, for instance.


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## james4beach (Nov 15, 2012)

These interest rates like 10% sound too low to me. These people couldn't get bank financing, couldn't get unsecured lines of credit (which would be 6% to 8%) but people are lending to them here for just a couple hundred basis points more? It sounds like a better deal for the borrower than the lender.

Not a bad concept in theory, but I was turned off from what I saw on Prosper. That one had lots of attractive women looking for money to start their "businesses" which sounded more like they were hobby projects, or really half-brained ideas. There also were signs these people had maxed out their credit and had exhausted the credit card transfer game, or maybe even using Prosper as the next source of their credit pyramid (pay off the CC's). When I read about tanning salons and yoga studios in this thread, that's what popped into my head.

I've read the whole pitch about community lending and all that, but I know too many people who are absolutely reckless with credit. And I can't shake off the perception that those people are the ones who flock to these borrowing platforms.

But that was Prosper, several years ago, and maybe that's not how things are these days. I read this MMM article on his use of Lending Club and from his article and comments it sounds like people are getting 9% to 11% annualized.

What will be really interesting is to see the effect of the economic downturn. Once we have data on defaults and net ROR through a down-cycle, we'll know how solid these approaches are. There's a possibility that default rates in this marketplace could be quite horrendous compared to traditional lending. Or not.


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## SquidPope (Nov 19, 2015)

It figures; ordinary Canadians get a way to diversify our portfolios while helping small businesses, and regulators try and shut it down. We wouldn't want the little people making too much money or creating too many jobs, would we?

Not sure what we can do to help other than writing to our MPs, our MPPs, and the federal and provincial Finance Ministers to explain to them why P2P lending is good and why small investors should be allowed access to it.


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## LongShorts (Feb 18, 2016)

Yes, the longer this "freeze" in lending continues, the less confidence investors will have with investing in this company. P2P lending is a great idea, but it's looking like one of those "little bug, big shoe" scenarios right now


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## getliquid (Mar 2, 2014)

Lending Loop said:


> Currently, there is no regulatory framework around peer-to-peer lending in Canada. All of our current operations were and still are in line with all existing laws. We currently have the opportunity to work directly with the appropriate regulatory bodies to lay a framework for how peer-to-peer lending can operate and grow long term. As an act of good faith, we have decided to voluntarily and temporarily halt the posting of new loan requests on our website during this period.
> 
> If you have any questions regarding this matter, we encourage all Lending Loop users to reach out to us directly.
> 
> ...


so when you fund a business, do you only get an agreement with LL? or do you get something with the business directly in case LL goes offline?


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## EngPhysGuy (Jul 9, 2015)

Looks like they have just recently been approved by the OSC and have re-opened for business. Been thinking of dabbling a little bit not that it seems like they are up and running for good.

I'm interested what happened with people's investments while Lending Loop was talking with OSC and apparently shut down their site? Did the borrowers continue to pay and was there any communication from Lending Loop?

Thanks.


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## bds (Aug 13, 2013)

Yes, borrowers continued to pay while the site was shut down for new loans. I have one that has defaulted, but it was a higher risk one that I only put a little money into so it's not a huge deal. LL provides updates with what is happening with the borrower and they will be liquidating their assets to pay back debtors, so with any luck I'll get some more of that money back in the future.

Overall, very pleased with LL and I'll be investing more.


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## mars (Mar 11, 2014)

I have two small investments from back in February and they have both been making payments and I've been receiving the return of capital and interest ever since, even during the time LL was not accepting new investments. My return is around the 12% mark on the capital invested. I only put in a small amount to just try out the site and see how it went. So far I'm happy with LL. Also because they were dealing with the regulation issues it gave me time to get payments and build up enough cash that I can now use to invest in other opportunities now that they are back up and running.


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## EngPhysGuy (Jul 9, 2015)

mars said:


> I have two small investments from back in February and they have both been making payments and I've been receiving the return of capital and interest ever since, even during the time LL was not accepting new investments. My return is around the 12% mark on the capital invested. I only put in a small amount to just try out the site and see how it went. So far I'm happy with LL. Also because they were dealing with the regulation issues it gave me time to get payments and build up enough cash that I can now use to invest in other opportunities now that they are back up and running.


Thanks a lot! Glad to hear they didn't let their current investors out to dry during this time. Adds a little more credibility to the company. I'm thinking of starting off with a small investment now and see how that goes.

Thanks again for the feedback.


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## andrewf (Mar 1, 2010)

Do they have an accredited investor requirement?


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## bds (Aug 13, 2013)

No, I am not accredited. It's very easy to get started with.


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## doctrine (Sep 30, 2011)

It looks like they're open for business for all investors, with some restrictions. $10k for a non-eligible investor (basically anyone), $100k for an eligible investor (>$400k assets, >$75k income), and of course no limits for accredited investors. 

http://support.lendingloop.ca/custo...what-are-the-investor-limits-on-lending-loop-

http://support.lendingloop.ca/custo...479-what-are-the-different-investor-statuses-


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## andrewf (Mar 1, 2010)

^ Has OSC gotten a bit more sensible with their regulations?

I recall a lot of private corps looking for investments suggesting people take mortgages on their homes so they can come up with enough capital ($150k) to circumvent the accredited investor requirements. It makes way more sense to allow people with less assets and income invest up to a smaller amount.


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## EngPhysGuy (Jul 9, 2015)

andrewf said:


> ^ Has OSC gotten a bit more sensible with their regulations?
> 
> I recall a lot of private corps looking for investments suggesting people take mortgages on their homes so they can come up with enough capital ($150k) to circumvent the accredited investor requirements. It makes way more sense to allow people with less assets and income invest up to a smaller amount.


It looks like it and I'm really hoping that's the case. Peer-to-peer lending has been big in US and Europe for some time now. Seems like Canada might finally be coming around.


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## andrewf (Mar 1, 2010)

My understanding is that peer-to-peer lending has been taken over by hedge funds and other institutional investors on the lending side, so it's really more like unbundling the role a bank would play of originating loans and funding them.


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## jargey3000 (Jan 25, 2011)

doctrine said:


> It looks like they're open for business for all investors, with some restrictions. $10k for a non-eligible investor (basically anyone), $100k for an eligible investor (>$400k assets, >$75k income), and of course no limits for accredited investors.
> 
> http://support.lendingloop.ca/custo...what-are-the-investor-limits-on-lending-loop-
> 
> http://support.lendingloop.ca/custo...479-what-are-the-different-investor-statuses-


So......are you saying the MINIMUM you can invest ...is $10K....??


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## bds (Aug 13, 2013)

jargey3000 said:


> So......are you saying the MINIMUM you can invest ...is $10K....??


That's the maximum


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## jargey3000 (Jan 25, 2011)

bds said:


> That's the maximum


oh. OK. my bad.


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## bds (Aug 13, 2013)

For those interested in what happens when loans default with LL, I have examples now. I was very curious about this when they first came out so I figured I'd share my experience back. I put small amounts of money ($100 usually) into some of the riskier ones early on and I have had two that have stopped paying. Both were 14.5% interest fast food companies that I put $100 into.

The first one has been settled now after being delinquent/in default for about 10 months. In total I got 3 payments of $4.82 before they stopped paying, then after LL came to a settlement with them I received $84.69 in January. Total of $99.15 back from my $100 loan, minus the LL fees of $1.43 for all the transactions I now have $97.72 back - not bad for a defaulted loan.

The second one hasn't been fully settled yet, and may not ever be. In total I have received 3 payments for $8.99 before they stopped paying, $26.97 total. LL chased them for money for a while but were unable to get a settlement from them and have passed the debt off to a third party collection agency and given lenders the warning "At this time, collection on this loan is unlikely". Worst case I will be left with $26.97 minus LL fees of $0.36, or $26.61 on my $100 gamble.

While the second result is less than ideal, I knew it was risky before getting invested in it. I have had great success with my other loans on LL and will now be even more strict on what (if anything) I lend to riskier loans.

Hope that helps anyone curious about this.


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## mars (Mar 11, 2014)

Thanks for the info bds. I currently have 3 loans out with LL and so far I haven't run into a default yet. One of the loans is half way through being repaid as it was only a 2 year loan. I'm currently looking at a 4th opportunity, just waiting for a couple of payments to come in to get some cash to loan out. Like you I don't go big but just do small loans. The first two were $100 each and the third was $75 as it was all I had in the account at the time.


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## houska (Feb 6, 2010)

Am just exploring this as an investment oppty.
FYI I wrote to support asking more about their credit rating methodology. They pointed me to their template offering memorandum, accessible at https://www.lendingloop.ca/offering-memorandum (available only to verified, registered users, I think). It gives a 2-3 page description, including target default rates by rating class. These rates of course are just numbers, not promised and not -- afaik -- historically backtested. And of course there may be cyclical and other contagion effects. Also not 100% clear to me if the numbers are PD (probability of default) or EL (expected loss) numbers, and loan-lifetime or annualized, but still indicative.

To the extent one can trust the numbers (the memo explicitly discourages using the numbers to estimate future returns as I am now shamelessly doing...), interpreting them as annualized PD, and multiplying by a ballpark 75% LGD (loss-given-default), it would imply expected losses of <20% of gross returns for high-rated loans increasing to about 30% for low-rated loans. Combined with Lending Loop's 150 bps cut, it would imply a reasonable expectation of the IRR of a fully-invested diversified portfolio could be about 60% of the weighted-average nominal (i.e. gross) interest rate. So e.g. if you invested in a hypothetical portfolio of many loans all at 16% listed interest rate, you might quite reasonably expect to realize a 9-10% IRR (60% of 16% is 9.6%). Of course, all bets might be off due to contagion effects in event of a recession. 

Thoughts? I may have misinterpreted something. I am sweating the numbers past their intended use, and recognize there are structural risks (macroeconomic ones, failure of the P2P business model, regulatory issues, etc) -- but still thinking it's helpful to ballpark *some* expectation of how much of a haircut from the posted gross loan rates it is reasonable to expect.


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## bds (Aug 13, 2013)

LL has put out some loan stats now that they have a bit of history.

https://www.lendingloop.ca/statistics


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## caltran (Mar 16, 2017)

Is there a way to do this from a TFSA account?


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## gma (Jun 10, 2017)

We have a lending loop portfolio, you can track it here: globalmarketanomalies.com/our-journey-on-lending-loop


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## BennyTroves (Jun 10, 2017)

caltran said:


> Is there a way to do this from a TFSA account?


It's not offered through a TFSA right now. I believe they left it as a "future option". The lending loop concept is great but you get fully taxed on proceeds which makes it a terrible "investment" right now.


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## mars (Mar 11, 2014)

I had another interesting situation happen just recently. I had loaned to a party earlier this month. The loan finally received its full funding and was processed. Just yesterday the loan was paid off in full plus the interest for a few days that they had the loan. So I put in $50 and ended up getting something like $50.25 back. Not sure if the company ended up getting financing somewhere else with better rates or how it worked or they just decided to cancel the loan and had to pay a small interest. I had another loan earlier that had been paid off early but only about 4 months short of the final payment so I had received payments for the period up to the loan being paid off.


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## xtthew (Aug 16, 2017)

I just logged in to Lending Loop and theirs only one business listed on there. It's an old request as well! I remember seeing that loan request on there before.

Is there a problem with Lending Loop or has it not gotten enough attention that businesses aren't requesting loans?


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## doctrine (Sep 30, 2011)

They had 12 loans up just a few weeks ago. They must have filled. They are growing crazy, 60-70% growth in Q2 over Q1 in originations based on their statistics, when they had 113 loans worth $6.5M. https://www.lendingloop.ca/statistics


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## bds (Aug 13, 2013)

I've noticed many of the loans get filled in minutes now that they have their auto-lend feature.


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## mars (Mar 11, 2014)

It varies. As mentioned, there were many on there a couple weeks ago and once they were filled the number dropped for a bit, then a few more went up but were filled quickly. I had another loan paid off early so had some cash laying around waiting to be used. As I was notified of new loans I would look quickly to see if I was interested. It took a few but eventually I found one that I loaned to replace the previously paid loan.


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## mars (Mar 11, 2014)

xtthew said:


> I just logged in to Lending Loop and theirs only one business listed on there. It's an old request as well! I remember seeing that loan request on there before.
> 
> Is there a problem with Lending Loop or has it not gotten enough attention that businesses aren't requesting loans?


I was just on the lending loop site and noticed there are about 14 listings looking for loans at the moment. I wonder if September, or the summer was just a slow period for loan generation. Things have seemed to pick up over the last month or two.


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## john.cray (Dec 7, 2016)

Reviving this old thread. I am interested what the current opinions are about lendingloop after a few more years in existence. Feel free to share your experience, returns and concerns.


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## andrewf (Mar 1, 2010)

You may find these more insightful. Doesn't look encouraging.


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https://www.reddit.com/r/PersonalFinanceCanada/comments/duhh2k






r/LendingLoop


r/LendingLoop:




www.reddit.com


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