ThinCats

History

Thincats is a trading name of Business Loan Network Ltd and was launched in 2011. The company was set up to help meet demand for funding generated largely by the tiwhtdrawal of the banks following the banking crisis of 2008. By its second year of trading ThinCats had been doubling its business every six months. Its members include private individuals, pension fund managers and companies with cash deposits. In April 2016, ThinCats facilitated a £3.5million loan to insurance group LAMP. This is thought to be the UK's largest ever non-property related peer-to-peer loan. In 2014 ThinCats entered into a joint venture taking a 25% stake in ThinCats Australia, which commenced operations in December of that year.

ESF takeover

In December 2015, it was announced that institutional peer-to-peer accelerator ESF (European Specialty Finance) had purchased a 73.4% equity stake in ThinCats. Following the acquisition, ESF’s CEO John Mould was named CEO of ThinCats, with ThinCats founder & CEO Kevin Caley taking on the position of Chairman. ESF now underwrite a number of ThinCats loans and support the platform with investment and lending capital.

The Platform

Membership of ThinCats is free and there are no fees for lending. Members sign up via the website and can then view auctions and read loan documentation. There is a Q&A facility where members can ask questions relating to the loan. This has been referred to as ‘crowd due diligence’ by Chairman Kevin Caley. Lenders make investments by bidding on loan auctions. Bids can be made in £1,000 increments, and the interest rate is decided by the type of auction: Variable or fixed rate. Variable rate allows members to place dynamic bids, which gives the member the chance to choose a maximum and minimum interest rate. The site then adjusts the bid accordingly to try to keep the lender within the auction without them having to constantly monitor. Fixed rate is where the loan rate has already been pre-decided, and bids are allowed in the auction on a first come first serve basis.

ThinCats uses a network of sponsors to prepare loans for the platform. The sponsors are financial service professionals who vet applications, and monitor their progress subsequent to the loan being drawn down. If there are problems with a company the sponsor has a personal connection with the borrower and is able to pursue the repayment of that loan. As of June 2016 ThinCats has expanded its team to include a credit team who pre-vet every loan that is submitted by the Sponsor, as well as a monitoring and recoveries team, who are there to protect the interest of lenders.

ThinCats’ Secondary Market was launched in January 2013. This allows lenders to sell parts of their loans (if the loan is considered suitable for sale) if their circumstances change and if they need their capital back without having to wait till the end of the loan term.

Returns

ThinCats advertise a historic average return for lenders of 9% (after all costs and provisions for losses but before income tax). By the end of 2012 lenders were earning an average of 11% interest (before losses and income tax).

Lending via a pension fund

ThinCats lenders can in certain limited circumstances be used for personal pension investments such SIPPs. This should only be considered by experienced investors, as it requires lenders to make their own pension investment decisions.

Regulation

In December 2012 the UK Government announced that it was intending to regulate the peer-to-peer and crowdfunding industry from 2014. A consultation document was published in March 2013 and the FCA expect consultation to run through autumn 2013 with the final rules being published in 2014. Business Loan Network Limited are authorised and regulated by the FCA, but like other major P2P platforms are still awaiting full accreditation.