ABLRATE has launched its first portfolio loan product, a flexible business finance facility that its investors can hold in an Innovative Finance ISA (IFISA).
The peer-to-peer secured business lender said on Wednesday that the first single company portfolio loan is for Merchant Transaction Finance (MTF) – a trade financier looking to scale up its operations.
MTF, in partnership with equity backer Ridge Road Partners, had approached Ablrate to provide a facility of up to £5m to support its expansion.
The funds will be allocated to a special purpose company that funds each underlying transaction, giving Ablrate investors diversification within a single loan, the P2P platform said.
Investors can expect annual returns of eight per cent, with no minimum term.
“Our lenders have previously successfully loaned £600,000 to MTF and those loans are performing as expected, so we know the company, its processes and its team well,” said chief executive David Bradley-Ward.
“What attracts us to MTF, and why lenders should take up this loan, is that each transaction is covered by trade credit Insurance from a triple A grade insurer and protected by a well-established security process, so lenders get a very good risk-adjusted return.”
Bradley-Ward confirmed to Peer2Peer Finance News that the structure of the facility means that it does not fall into the definition of wholesale lending, which has now been outlawed by the Financial Conduct Authority.
Ablrate is planning to launch a range of portfolio loan products in the coming months.
They will be split into two types: single company portfolio loans and diversified portfolio loans.
Single company portfolio loans are designed for borrowers seeking flexibility, while the diversified portfolio loans product enables Ablrate to accept potential borrowers whose requirements did not fit the platform’s self-select model. This could be because the loans are too small (below £100,000) or too short a term.
“These new products are an excellent addition to our range that will give additional flexibility to lenders and we have around £10m lined up so far,” said Bradley-Ward.
Ablrate has lent out £32m since launching to the public in 2015, with £14m traded on its secondary market.