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- Focussed on business loans
- Operates a loan ‘auction’ system
- ‘Back Office Sponsors’ provide application development support
- Rates typically around 11%
- Loans are typically secured against assets or guarantees
- Offers pension / investment schemes
Thincats is a loan site that was launched in 2011 following the banking crisis of 2008. ThinCats uses a slightly different business model in that the lenders can choose their bid amount and preferred interest rate for an investment via an auction system that dynamically matches supply with demand. They use a back office of sponsors who provide support in loan application development to improve the success rate and deliver a form of “Crowd due diligence”. This increases the applicant’s costs but increases their chances of success
The average loan is usually over approximately 3 years at a rate of just over 11%. The highest loan they have approved is £2.7M over 10 years. ThinCats expect their loans to be secured against assets or guarantees and publishes data on default rates and arrears, but with only 4 full years of trading year-on-year assessments are almost impossible. They expect a default rate of between 1-2%.
Half their business comes from the financial, insurance, construction, manufacturing and wholesale/retail sectors.
ThinCats methodology uses a close partnership with a network of financial professionals who vet and structure the loans and continually monitor the underlying businesses. These professionals are labelled as “Sponsors” and draw a fee from the businesses that they guide through the application process. The Sponsor is the first point of contact for potential borrowers. They are financial services professionals, always in teams that include at least one person with banking experience. Their role is to assess the business proposal and vet applications for loans. They help the borrower to prepare the loan information, which can include meeting with the borrower at least twice, getting to know their business, as well as assessing the security on offer. They answer questions from lenders during the auction and monitor the loan after it has been completed. All loans on ThinCats have to be supported by a Sponsor. The Sponsor’s reputation depends on the quality of the deals they back and how they deal with the questions and problems.
The Sponsor presents a detailed information pack for each loan and after the loan is made, is expected to provide quarterly monitoring reports on the progress of each loan. Sponsors make no recommendations and offer no investment advice. The role of the sponsor is reflected in the income they receive as a result of the deals they make, which is typically 2-4% on loan drawdown and 0.5% p.a. as they continue to be involved with the business they have assisted.
Like other P2P (peer to peer) platforms lenders can incorporate their borrowing into personal pension schemes and other savings instruments SIPPS to maximise UK tax relief opportunities.