Assetz Capital is a crowd investing platform from the UK that lets investors earn interest by investing in secured business loans.

Key features:

  • Loan types: Asset-backed business loans
  • Loan terms: 6 months to 5 years
  • Interest rates: 4.5% to 11%
  • Fees: no fees
  • Minimum investment: 10 GBP
  • Currency: GBP
  • Secondary market: no
  • Auto-invest: yes
  • Buyback guarantee: only on auto-invest funds
  • Bonus: 50 GBP when you invest at least 1000 GBP on the platform

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Investing in Assetz Capital

You can either invest manually or through one of the predefined auto-invest funds available on the platform.

The manual investments offer an average return for its investors of around 8% per year. The currently available interest rates are between 4.5% and 11.9%, so the 8% return assumes a diversified portfolio and also takes into account the defaults.

The automatic investment setups offer a cap to 6.25% on the annual return. Lower than the manual investment options, although for now, I prefer the auto-invest funds.

So, why not invest manually in Assetz Capital loans?

Because of the higher risk involved. All the automatic setups have a provision fund that covers any losses due to borrower default. The manual investments don’t have a provision fund. In case of default, I’ll need to wait and see if the borrower has enough assets to pay back my investment. And this takes time. All loans are secured by land or property, with an LTV ratio between 50% and 75%, so I should get back my funds eventually.

But what I want is a fairly simple platform to invest in that required minimum maintenance and offers a decent return.

So, these are the options Assetz Capital offers when it comes to auto-invest:

  • Great British Business Account – the target interest rate is 6.25%. If it’s more, it will be stored in the provision fund (the same goes for all the other auto-invest funds). Automatically invested in loans with asset security. Loan terms from 6 months to 5 years. Loans secured with first/second charges over land or property. Maximum LTV ratio is 75%. The expected loss is 0.25%, and the provision fund covers 4.15 times the expected loss. The current size of the provision fund is 474.000 GBP (as of December 2018).
  • Property secured account – the target interest rate is5.5%. Loan terms from 6 months to 5 years. Maximum LTV ratio is between 50% and 72%, depending on the type of property. Provision fund is currently at 322.000 GBP. The expected default rate is 0.3%, and the provision fund covers 5.10 times that.
  • 90-day access account – the target interest rate is 5.75%. It invests in short-term secured business loans form less than 1 month to 5 years. It’s a new account type and has a provision fund of 300.000 GBP.
  • 30-day access account – the target interest rate is 5.1%. The expected default rate is 0.58% and the provision fund (2.5 million GBP) covers 4.23 times that.
  • Quick access account – the target interest rate is 4.1%. The expected default rate is 0.58% and the provision fund (1.4 million GBP) covers 4.23 times that. This is just a type of fund where you put money for a really short term until you find a better usage for them.

Why invest in Assetz Capital

While there are many other European p2p lending platforms offering business loans for investment at higher interest rates, Assetz Capital still has a few strong points.

It certainly helps to diversify my portfolio by investing in the UK market. Most of the platforms I’m invested in are based in the Baltic countries. I’d hate to see the Eastern Europe economy go haywire and all my funds disappear overnight. Keeping my funds invested in different economies lowers my risks.

One reason to invest specifically in Assetz Capital is that is one of the safest platforms in the UK. While the loans offered don’t come with a buyback guarantee, the funds I can invest in do have a sizable provision fund to cover for unexpected defaults.

Even more, the provision funds cover on average about 4 times the expected default rate, so it can definitely handle bad days. I also like that Assetz Capital is transparent on the state and size of the provision fund.

Assetz Capital is a mature platform with more than 30.000 active investors and more than 70 million GBP interest earned so far by its investors.

Investing in business loans versus consumer loans

Most of my funds invested in p2p lending platforms are deployed into consumer loans. While this is not bad in itself, it comes with a few downsides.

Most of the consumer loans help finance bad habits. A new car, a new laptop, that vacation somebody always wanted to take. That money is spent by the end receiver of the loan without improving his life or making him richer.

Companies use business loans in general to expand their operations. This usually comes with new jobs created. I might say business loans bring higher value to the overall economy than a consumer loan.

The person employed by the company that contracted the business loan will have more cash to spend and this creates a ripple effect across the entire economy. Here in Romania, every 3 new jobs in the industry sector help create 1 new job in the services sector.

So, it creates jobs that in the end have a multiplier effect in the economy. This means that every 1 GBP invested in a project here will have a trigger effect that will generate in the end more than 1 GBP in the economy.

For example, let’s say a company needs capital to build a new factory. The loan is funded, and the factory is built. In the new factory, there will be workers that at the end of the month will get a paycheck. With that paycheck, they’ll buy more food from the local grocer, who’ll finally be able to expand and hire new staff to cover the new demand. The factory workers will also spend more money on clothes, and new stores will open nearby. And so on, that’s the multiplier effect a business loan has in the economy.

On the other hand, consumer loans only fund consumer needs. Even if in the short run they increase demand for some products, the demand will decrease back when they’ll need to repay the loan. Even more, because of the high-interest rates they managed to get the loan with, the local economy will lose a lot more on the long term. So, one could say consumer loans have a negative effect on the economy.

How are my test investments doing so far?

I’ve invested 100 GBP in 3 different funds with an average interest rate of 5.87%. It doesn’t look that much, but I’m mostly looking for how the actual returns compared to the expected ones. I’ll decide later if I want to add more to this platform or not.

Conclusions on Assetz Capital

While Assetz Capital offers a lot lower returns than the typical Baltics p2p lending platforms, it’s a good option to diversify my portfolio by investing in UK loans.

Its strong points are the maturity of the platform and the provision funds that cover the auto-invest funds it offers.

I’m not planning to invest more funds in the short-term, but I’m keeping an eye on it.

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