Wellesley & Co has become the UK’s first peer to peer lending platform to use its own money to fund every loan agreed with its borrowers pending its lender clients participating in those loans.
In addition, it will always retain a portion of every loan. The shareholders have committed to provide £5 million of their own money for this purpose.
The company currently offers returns of 5.5% or more, with security for lenders and low cost loans secured on property to creditworthy borrowers.
Wellesley & Co currently provides loans of up to £1m secured on UK property, and hopes to increase its loan sizes as the P2P platform grows. In particular it provides property investors and developers with access to much needed funding.
Lenders with Wellesley will start earning interest as soon as their money is committed. Meanwhile, the company is able to fund successful loan applicants immediately and its ability to lend is not initially dependent on matching a borrower with a lender. Wellesley has already attracted loan applications worth more than £100m in recent months.
It stresses it has a conservative approach to lending, with an average LTV of 62% across its existing loan portfolio, with no delinquencies or defaults.
It also offers savers access to a provision fund which is currently funded with an initial £100,000 provided by the shareholders of Wellesley & Co. As each loan is drawn-down a percentage will be paid into the fund so that it keeps pace with the growth of the loan book.
In the event of a default the security will be realised and sold. Wellesley & Co have subordinated their interest to those of their lenders, so that peer to peer lenders will always be repaid first. Should any lenders still suffer a loss they may apply to the directors of the Pprovision fund for the return of their money.
CEO, Graham Wellesley, Viscount Dangan, who is a direct descendent of the Duke of Wellington, Arthur Wellesley, said: “We are very excited to be launching our platform at a time when the sector is growing exponentially. We spotted a gap within the market which to date has not been addressed.
“We are bringing to the market for the first time an asset backed model where the operator is taking a stake in every loan. Through our board’s strength and proven pedigree within financial services, banking and property; we strongly believe we are offering a truly unique product within peer-to-peer lending.”
