Ablrate’s New Product: Portfolio Loans 13/12/2017
Here at Ablrate we are always looking to create new products or better what is out there. We created Instant Returns, an improved version of ‘Cash Back’ and we are pleased to offer a new auto-lending product to lenders which will be coming to the platform soon called ‘Portfolio Loans’.
We are aware that this usually refers to loans against shares and commodity portfolios, but the name was a little better and descriptive than some of the others that didn’t make it to the final cut!
We have uploaded some pages for Portfolio Loans (click the link) and invite comments as to the clarity of the information, but do remember each portfolio loan will have its own specific borrowing proposal laying out the terms of that loan.
So what are Portfolio Loans?
Here is the thing; not all loans that come to us suit the current ‘self-select’ product. This leads to us turning down loans, not because they are poor loans but because they don’t fit the ‘fixed term, fixed amount’ structure.
As a consequence, Lenders are missing out on potentially good loans and facilities that can provide excellent security and diversification.
Many lenders also wanted to have a ‘fire and forget’ auto-lending where they can loan into, and sell out of, efficiently.
To address this we have created, alongside our core self-select product, the functionality for Lenders and Borrowers to come together and solve these issues.
There are two basic types of these loans that solve different problems:
Single Company Portfolio Loans
Some companies may wish to have a flexible facility with our lenders, where they can increase and decrease the amount they borrow as and when they can provide security or pay back the loans. This is typical for development projects, bridging on asset finance, ongoing expansion through asset purchase or invoice financing.
Through the new Single Company Portfolio Loan all of these types of facility could be set up for borrowers increasing the potential origination of deals and the diversification for lenders.
Diversified Portfolio Loans
There are loans that are too small for self select (under £100k), some where timing is against us (as they need to be subject to DD, written and paid out quickly) and some where the borrower has some other commercially sensitive aspects of the loan and does not wish these to be released publicly.
Some Lenders also want a portion of their funds on Ablrate to automatically diversified without the need to use the secondary market. This product solves both of these issues.
The Diversified Portfolio Loan will allow lenders to allocate funds to a specific Diversified Portfolio Loan which will then be loaned to various businesses, the allocation will be automatically diversified across all loans written from that Diversified Portfolio Loan.
Each borrowing proposals for these loans will detail what loans will be written. For example, it may be a property based loan with specific parameters such as loan to value and seniority of charge. It could be in a specific sector, like technology, and again specified LTVs and charge structures.
These loans will also have extra protection in each loan, specific to that loan. It is not a ‘Provision Fund’ but ‘Provision Income’ based on the fees generated within the portfolio loan.
We have aimed to make it straight forward to buy and sell these loans (what we are calling ‘Allocating and ‘Withdrawing’). We have utilised the secondary market technology to account for accrued interest and the mechanism of updating agreements etc.
Loans will be Allocated and Withdrawn at par, meaning £1 for every £1 of capital remaining with the interest that the holder is owed (the accrued interest) calculated in the transfer between lenders (as it is now on the secondary market).
Allocations will be automatically matched with withdrawals (buyers with sellers) and will have priority, automatically, over new tranches of loan being issued.
We have a few of these types of loans in the pipeline and as soon as we launched the new user interface we will be making one available for you. We are working furiously on the UI right now and hope to launch soon, hopefully before Christmas, but in all likelihood it will be more like January.
Take a look at the Portfolio Loans section and let us know your feedback!