Risk summary for P2P agreements or P2P portfolios

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1. You could lose the money you invest

  • Many peer-to-peer (P2P) loans are made to borrowers who can’t borrow money from traditional lenders such as banks. These borrowers have a higher risk of not paying you back.

  • Advertised rates of return aren’t guaranteed. If a borrower doesn’t pay you back as agreed, you could earn less money than expected. A higher advertised rate of return means a higher risk of losing your money.

  • These investments can be held in an Innovative Finance ISA (IFISA). An IFISA does not reduce the risk of the investment or protect you from losses, so you can still lose all your money. It only means that any potential gains from your investment will be tax free.

2. You are unlikely to get your money back quickly

  • Some P2P loans last for several years. You should be prepared to wait for your money to be returned even if the borrower repays on time.

  • Some platforms may give you the opportunity to sell your investment early through a ‘secondary market’, but there is no guarantee you will be able to find someone willing to buy.

  • Even if your agreement is advertised as affording early access to your money, you will only get your money early if someone else wants to buy your loan(s). If no one wants to buy, it could take longer to get your money back.

3. Don’t put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.

  • A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

4. The P2P platform could fail

  • If the platform fails, it may be impossible for you to collect money on your loan. It could take years to get your money back, or you may not get it back at all. Even if the platform has plans in place to prevent this, they may not work in a disorderly failure.

5. You are unlikely to be protected if something goes wrong

  • The Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover investments in P2P loans. You may be able to claim if you received regulated advice to invest in P2P, and the adviser has since failed. Try the FSCS investment protection checker here.

  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here. For further information about peer-to-peer lending (loan-based crowdfunding), visit the FCA’s website here.

Blend South-West

We are THE SPECIALIST DEVELOPMENT FINANCE LENDER

We finance ground-up development, conversion & refurbishment of land with Residential Planning Permission Bridging.

"The team at Blend really understand both finance and property. 

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Their efficient processes and proactive approach ensured funding was provided withing the timescales we aimed for. This was extremely refreshing compared to my experience with a lot of mainstream lenders who can be slow and sluggish. Great team to work with”- Sean, Property developer

Local Developer focused Financing solutions

Smart financing solutions

We offer acquisition, refurb, ground up, conversion, development and bridging loans across the UK.

Mid-market focus

Our typical loan sizes are between £1m to £10m.

Senior stretch

Two thirds of our loans are between 65% and 75% LTGDV.

Fixed rates

Giving you certainty in these uncertain times.

Smart financing solutions

We offer acquisition, refurb, ground up, conversion, development and bridging loans across the UK.

Mid-market focus

Our typical loan sizes are between £1m to £10m.

Senior stretch

Two thirds of our loans are between 65% and 75% LTGDV.

Fixed rates

Giving you certainty in these uncertain times.

Meet Phil Anderson, Personal lender for Northern Ireland

Philip joined Blend in 2022 and is based in Belfast covering our Northern Ireland lending operations. Prior to joining Blend, Philip was a relationship manager in the corporate banking property team at Allied Irish Bank and before that he spent 3 years as a consultant at PricewaterhouseCoopers. Philip holds a BSc in Business with Accounting from Ulster University and a diploma in SME Credit from the Institute of Banking Ireland. Philip is a keen sailor and races in Belfast Lough and Strangford Lough.

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OUR MOST RECENT DEVELOPMENT IN THE AREA

Blend Network has provided a loan of £1.375M to help repay the existing borrowing and facilitate the conversion of a former hotel into 3 ground floor commercial units and 5 maisonettes above in the popular seaside village of Mumbles which sits on the edge of Swansea. The property sits on the sea front and is ideally located for residents and second home owners alike. We have agreed to fund 65% LTGDV which included 100% of the construction costs. Work is progressing well, and Sean expects work to be completed by the end of this year.

OUR LATEST DEVELOPMENTS

We fund experienced developers helping to solve the UK's housing crisis. Take a look at some of our recent projects.

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