rebuildingsociety.com

rebuildingsociety.com is a Leeds-based peer-to-peer lending platform focusing on finance for small and medium businesses. The company was launched in 2012 by Daniel Rajkumar.[1] The first loans were completed in February 2013.[2]

rebuildingsociety.com
TypeLimited
FoundedUnited Kingdom (2011)
FounderDaniel Rajkumar
Headquarters
Leeds
,
England, UK
Key people
David Powell, Philip Webb, Kylie-Jo Greeff, Stephen Wallis
ProductsPeer-to-peer lending
Websitehttps://www.rebuildingsociety.com/

Operation

The rebuildingsociety.com website operates as a lending platform by allowing approved businesses to publish a loan application.[3] Investors can subscribe to parts of the loan after assessing the business's information, committing an amount of their choice, with an interest rate of their choice.

rebuildingsociety.com was one of the early P2P lending platforms to have launched in the UK prior to the regulation of the industry.[4] Research by rebuildingsociety.com in late 2013 found SME owners were still largely unaware of peer-to-business lending and rely on personal borrowing to support their businesses. According to the study, about 290,000 SME owners would use their personal credit cards to raise money, similar numbers will borrow from friends and family, and about 500,000 SME owners will be remortgaging their own home.[5]

Potential returns

Because investors choose which businesses and at what rate they lend, returns can vary considerably.

As of 12 January 2014, the average interest rate payable to lenders from 25 loans completed was 15.57% gross. Earnings are reduced by any defaults which are forecast to be up to 7% depending on the risk appetite of the lender.[6]

Risks and rewards

As with other peer-to-peer lending companies, if a borrower fails to fully repay the loan the lender risks losing money invested. Defaults can be expected and lenders should understand that any recovery process may be lengthy, and even then there is no guarantee of success.

Rebuilding Society requires that businesses wishing to borrow money have a minimum of two years trading history and an annual turnover of at least £150,000.

Investment capital is at risk, so investors are encouraged to give very careful consideration to each lending prospect by accessing and properly assessing both free and pay to view data sources external to the Rebuilding Society lending site itself. Given the higher risk nature inherent to P2B lending fund allocations will take time and should be made with a view to diversity.

In summer 2019 rebuildingsociety launched the P2P BuyBack Guarantee, allowing sophisticated and HNW lenders to sell, for a premium, microloans with a guarantee to buy them back if the loan falls 60 days behind with its repayments.[7]

Regulation

The Financial Conduct Authority (successor to the Financial Services Authority) undertook to regulate the peer-to-peer lending industry from April 2014.[8] With assistance from Kylie-Jo Greeff, Richard Farr and Jay Tikam, Rebuilding Society participated in responding to various consultation papers to help shape the regulatory framework for the industry.

As of 22 February 2017, Rebuilding Society transitioned from interim permission to full FCA authorisation,[9][10] with the following permissions:

  • Operating an electronic system in relation to lending
  • Client money

Pensions and ISAs

In 2014, the UK government announced it was considering setting up a separate type of tax-free individual savings account (ISA) for people who want to lend out money. The new ISA would be for people who lend money via peer-to-peer borrowing sites.[11]

Rebuilding Society opened IFISA (innovative finance ISA) pre-registrations in March 2017.[12]

In January 2015, rebuildingsociety.com announced a new partnership with SIPPclub, which will allow qualifying Rebuilding Society investors to invest through a specially-designed self-invested personal pension (SIPP). The platform’s investors will be able to invest via an EvolutionSIPP. All investments made through a SIPP are tax-free – meaning participating investors will stand to recoup higher rates of interest through the Rebuilding Society platform.[13]

Growth and maturity

The UK industry is set for rapid growth as one in four savers is ready to invest according to industry research undertaken by rebuildingsociety.com.[14]

Non-bank lending grew at its fastest rate since 2008 in the year to October 2013, with over £10.5bn of credit arranged through peer-to-peer lending, invoice discounting, asset finance and leasing.[15] rebuildingsociety.com passed the £1m of lending mark in October 2013 [16]

As of 14 August 2014, total advances stood at around £3.5m,[17] while in January 2015 it passed £5m of loans completed.[18] In August 2016, total lending surpassed £10.4m,[19]

As with most maturing P2P lending platforms, Rebuilding Society has seen an increase in defaults. The platform works to recover any non-performing loan by taking legal action against defaulting borrowers and enforcing the security provided to recover the outstanding debt. Investors are encouraged to review the statistics visible on the website.

Technology

rebuildingsociety.com also offers a licensed version of its technology to other businesses looking to break into the peer-to-peer lending industry through White Label Crowdfunding. In August 2013 it announced its first three clients.[20]

It has a contract to license its technology to ThinCats who use it to run ThinCats Australia [21]

Awards and commendations

rebuildingsociety has achieved the following awards since launch including:

  • In November 2019, rebuildingsociety.com received a five-star rating in the first "Loan Based Crowdfunding" analysis by financial sector analyst Defaqto.[22]

References
  1. Bernard Ginns (20 August 2012). "Funds website aims to cash in as firm favourite". Yorkshire Post.
  2. Ian Briggs (19 February 2013). "rebuildingsociety.com gives boost to businesses". The Business Desk.
  3. Rachel Lacey (18 July 2014). "Peer-to-peer providers compared". Moneywise.
  4. Art Patnaude (27 March 2013). "'Crowdfunding' Takes Hold in the U.K". The Wall Street Journal.
  5. Kathryn Hopkins (8 February 2014). "SMEs can use more small business lenders". The Times.
  6. Elaine Moore (26 July 2013) "Risk and reward in the p2p revolution". Financial Times.
  7. Neuwirth, Suzie. "Rebuildingsociety launches buyback guarantee on secondary market | Peer2Peer Finance News". Retrieved 20 September 2019.
  8. Jonathan Moules (7 December 2012). "Government boost for peer-to-peer lending". Financial Times.
  9. Erin Hobey (27 February 2017). "UK Lending Platform RebuildingSociety Awarded Full FCA Authorization, May Now Offer Innovative Finance ISA". Crowdfund Insider.
  10. Claus Lehman (27 February 2017). "Rebuilding Society Receives Full FCA Authorisation". P2P Banking.
  11. BBC News (17 October 2014). "Government to consult on new Peer-to-Peer lending ISA". BBC News.
  12. Suzie Neuwirth (27 February 2017). "Rebuilding Society opens IFISA pre-registrations after gaining FCA approval". Peer to Peer Finance News.
  13. Ryan Weeks (8 January 2015). "P2P Pension Products Proliferate". AltFi News.
  14. Suzan Uzel (4 June 2013). "Savers ready to invest in new peer-to-peer industry". Yorkshire Post.
  15. Andrew Bounds (22 October 2013). "Non-bank lending to small businesses at highest level since 2008". The Financial Times.
  16. Angel News (25 November 2013). "rebuildingsociety.com facilitates over £1 million of loans to SMEs". Angel News. Archived from the original on 1 December 2013.
  17. Wanda Rich (14 August 2014). "RebuildingSociety marks unprecedented month as loans soar to £3.5m". Global Banking and Finance.
  18. Nick Moules (29 January 2015). "RebuildingSociety passes £5m of loans". rebuildingsociety.com.
  19. Juana Wells (26 August 2016). "Largest UK P2P lending websites by funds raised". SMN Weekly.
  20. Ellie Newton-Syms (30 August 2013) "Media Buzz: Turn Key; rebuildingsociety.com; Refractiv; Dinosaur PR" The Business Desk
  21. Georgina McCreadie (18 November 2014). "Rebuilding ThinCats". AltFi News.
  22. "Defaqto". defaqto.com. Retrieved 23 November 2019.
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