Wellesley & Co has launched the first peer to peer lending platform that uses its own money to fund every loan agreed with its borrowers pending lender client participation.
The shareholders have committed to provide £5m of their own money for this purpose with Wellesley & Co retaining a portion of every loan.
The company currently offers returns of 5.5% or more, with security for lenders and low cost loans secured on Property to creditworthy borrowers.
Graham Wellesley, chief executive of 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.”
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 and the company is able to fund successful loan applicants immediately as its ability to lend is not initially dependent on matching a borrower with a lender.
Wellesley has a proven ability to source borrowers having already attracted loan applications worth more than £100m in recent months.
The company 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 a further security measure, provided by 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 P2P lenders will always be repaid first.