Loanpad has been branded as one of the safest investments of any asset when it comes to managing risks.
The endorsement came from peer-to-peer lending analyst 4thWay, which gave Loanpad’s premium account and Innovative Finance ISA (IFISA) an exceptional three out of three on its plus ratings.
A review of the P2P lender by 4th Way said investors have a very safe position and are unlikely to lose money with the platform.
The ratings firm said with lenders’ money automatically spread across all existing loans, and regularly redistributed, the risks are “better contained” than at any other P2P platform or IFISA provider.
The review said Loanpad lenders buy the “safest slice” of the platform’s bridging and development loans, so the property’s value must drop by around 50 to 60 per cent of the valuation before lenders can expect to lose money.
It added that partner lending companies keep the riskier part of every loan, taking the first loss, usually of the first 25 per cent of losses or even more.
4thWay said that during the pandemic, only one loan turned bad but was never at any risk of becoming a loss for lenders and has since been repaid in full, and Loanpad’s high standards have “pulled many investors back to it”.
“Loanpad is one of the safest investments of any asset class available to lenders in the UK,” 4thWay said in the review.
“I believe lenders are unlikely to lose money under any imaginable market conditions, with the possible exception of catastrophes along the lines of nuclear war. This is the only P2P lending company that I have said this for.
“As of March 2022, we have received full data and information from Loanpad that shows impeccable performance since the pandemic began.
“A small number of loans have been extended more than usual, which is normal at present in property lending as building materials have been in short supply. Just one loan turned bad, but it was never in any danger of becoming a loss for lenders and has now been repaid in full.
“Lenders have a very safe position and they won’t come close to losing money. Indeed, it’s unlikely that lenders will suffer even a small loss in any individual loan, i.e. they can expect to receive all their money back, plus interest.
“Loanpad built an excellent reputation for continuing to be able to allow lenders to sell their loans and withdraw swiftly, even as investors in all types of investments panicked early in the pandemic. It’s high standards quickly pulled many more lenders back to it.”
In January, Loanpad chief executive Louis Schwartz said the platform is preparing for “steady stable growth” this year since reaching profitability month-on-month from June.
4thWay said it expects the platform to be a “sustainable business from this point onwards”, because it should find it easy to maintain and grow its borrower and lender base and to contain costs.