How we reached over £80m

February 20, 2024
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Since Loanpad opened for business in late 2018, the platform has grown to a current loanbook size of over £80m with zero capital losses to date. As the platform aims to reach at least the £100m mark by the end of 2024, it seems like a good time to pull the curtain back and share a little bit of the Loanpad growth story.

 

How did Loanpad grow its loan book to over £80m in just five years?

 

The main driver of the platform’s growth has been word of mouth. Loanpad was founded by Louis Schwartz in 2015 and launched in 2018 after Neil Maurice joined the firm. Their objective was to build a business that was simple to use with a product that people wanted, that could provide a risk-adjusted return.

 

“It caught on,” says Maurice. “Word of mouth picked up. And as a result of that, people just came back to us over and over again, and they told their friends and families.

 

“It all goes back to our values, that by delivering and by honouring our commitments and by responding to people in an efficient, honest and open manner, it gave our investors comfort and trust in our business and we built it from that.”

 

No investor losses to date

 

It also helps that there have been no investor losses to date. Loanpad has always been careful to communicate the risks as clearly as possible to all potential investors, but the platform has also worked hard to mitigate the risk of capital losses. All Loanpad loans are secured against UK property, with an average loan-to-value of 41 per cent. This means that even if the property value somehow fell by 59 per cent, it could still be sold to repay investor capital. It is worth noting that during the global financial crisis of 2007-2008, UK-based property values fell by an average of 20 per cent.

 

In practice, the majority of Loanpad loans are unlikely to reach the stage where the underlying asset has to be sold through a receivership process. Loanpad works with a limited number of lending partners who have been thoroughly vetted by the firm. Throughout the duration of the loan, Loanpad is in regular communication with these lending partners to ensure that the borrowers are meeting certain milestones. Any possible issues which could impact the loan’s repayment can be flagged early, allowing the platform to take measures to protect investor capital and interest. Investors are also updated regularly on the progress of every loan, so that they can keep track of their portfolio as closely as they like.

 

£100m milestone

 

Loanpad’s ethos has allowed the platform to grow organically and steadily over the past five years, despite the changing P2P lending landscape. Increased regulation has led a number of competitors to leave the market, and many of their investors have opted to move their money into Loanpad. This in turn has allowed Loanpad to fund more loans and further expand its loan book.

 

It has also become easier to originate loans over time, due to the expertise that Loanpad has built up and the relationships that the company has developed with its lending partners. That means that there are more investors, funding more loans than ever before. But for Schwartz and Maurice, it is important that this growth continues to be organic and reflective of the company’s values.

 

 “If we wanted to be a £2bn loan book in a year, it would risk the integrity of the business,” says Maurice. “That’s not what we want to do.”

 

“Our investors love the fact that our customer support is so responsive, they like the diversification of the portfolio, they like the fact that they can see the property and they like that we update them every 90 or 120 days on every single deal.”

 

“That sense of community only makes our platform stronger.”

 

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