ArchOver Investment Overview

By Jordan Stodart | On March 17th, 2017

Founded in 2014, ArchOver is a peer-to-peer lending platform that facilitates investment in fixed term loans for growing UK businesses. You can earn an average interest rate of 7.2% per annum (p.a), manually selecting the loans you wish to invest in.  All loans are secured with an all-asset charge over the borrower’s business, registered at Companies House. For additional security, all borrower revenues flow through controlled bank accounts owned by ArchOver.

Below is an overview of the platform, revealing key performance statistics, lending criteria, investment process, security measures and investment opportunities available.

ArchOver Statistics

(Statistics correct at time of publication 17/03/17)

 

Estimated returns/rates
7.2% p.a (average)*

 

Historic default rate
0%

 

Total lent funds to-date
£31,098,000

 

Total no. investors to-date
1200

 

Average pledge
£5,300

 

Total no. borrowers to-date
28

 

Average loan size
£260,000

 

Min. investment amount
£1,000

 

*Because you manually select the loans you invest in, the rate of return will vary depending on the borrower and the term. Your returns may be higher or lower than the advertised average. The rate posted with each loan is the rate you receive.

Loan Purpose

The business loans offered across the ArchOver platform vary in purpose, from raising working capital to replacing invoice discounting to factoring or bank overdrafts.

 

Loan Value

Range: £250,000 (min) to £5,000,000 (max)

 

Loan Term

Range: 3 months to 3 years (loan dependent)

 

Visit ArchOver Website

 

The ArchOver loan book is smaller than many mainstream P2P platforms. To-date, 28 businesses have secured loans from investors. ArchOver’s smaller loan book is reflective of the P2P platform’s rigorous due diligence and security processes. These processes are designed to allow only the most creditworthy UK businesses on to the ArchOver platform, minimising the risk of default.
ArchOver has had no borrower defaults, no late payments and no losses to date. This is much to do with their zero-tolerance policy towards late payments and their monthly reporting requirements. However, past performance is not a reliable indicator of future performance.

 

Security

Strict credit analysis and multiple tiers of protection have helped ArchOver grow to a £31m loan book in just two years.

Secured & Insured loans are secured against a company’s Accounts Receivable (AR), the money owed for the goods and services the business delivers to its customers. The ARs are insured by ArchOver’s partners Coface against late or non-payment. Secured & Assigned loans are secured on contracted recurring revenues of established and profitable businesses with loyal clients, looking for a loan to help them expand.

There are three steps involved in ArchOver’s security procedures from a loan application being submitted, through to its approval and then monitoring during the loan term.
 
Step 1: Credit Analysis
Before a loan is approved by the ArchOver Credit Committee, the ArchOver Credit Team reviews the business that is borrowing funds. The team examines:
  • Debtor history
  • Historic accounts
  • Management accounts
  • Projections
  • Available security
For Secured & Insured loans, the Credit Team also seeks to leverage the credit insurance market’s knowledge of the Borrower’s clients and their creditworthiness by getting a credit insurance quote to cover the business’s Accounts Receivable. The insurer granting a Borrower a policy is testament to the strength of the Borrower’s clients.
For Secured & Assigned loans, the Credit Team also reviews the potential borrower’s historic levels of monthly recurring revenue and analyses the rate of client churn.
 
Step 2: Underwriting & Insurance
When ArchOver approves a loan application and successfully funds it, an all-asset charge is taken over the company’s assets and filed at Companies House, with the Borrower’s revenues flowing through controlled bank accounts owned by ArchOver once the loan is live. This is the same for every loan facilitated by ArchOver.
Secured & Insured

For Secured & Insured, a primary component is the charge taken over the company’s assets, with emphasis on the Accounts Receivable (AR) asset. ArchOver allows the business to borrow up to 90% of the value of its ARs. Once the loan is made, the business must maintain its ARs at a minimum of 111% of the value of the amount borrowed (lent). A second tier of security is administered, where the ARs are insured by global AA+ rated insurance firm, Coface. The insurance firm pays out on  default or late payments by firms listed on the ARs.

Secured & Assigned
For Secured & Assigned, ArchOver allows a business to borrow up to 20% of the contracted recurring revenue which has been achieved in the most recent year. As with Secured & Insured, ArchOver takes an all-asset charge over the company’s assets, filed at Companies House, with Borrower revenues flowing through controlled bank accounts owned by ArchOver. In addition, ArchOver takes assignment of the Borrower’s recurring revenue contracts as security, meaning that ArchOver is the beneficial owner of those contracts and has the ability to dispose of them to a third party if necessary.
ArchOver manages the security and insurance on behalf of the investors.
Step 3: Monthly Monitoring
Each month during the loan term, ArchOver monitors both the asset value and the monthly management accounts against forecasts. They require all Borrowers to submit the previous month’s management accounts for review, and have a zero-tolerance policy on late reporting, as well as late payment. This process is integral to the overall due diligence process and ensures that ArchOver can act in a timely fashion if the loan is looking like it may be compromised.

Investments & Returns

At present, there are two loans available to invest in across the ArchOver platform. To invest in this loan, you need to complete the following:
  • Register a secure personal account to browse investment opportunities
  • Complete profile for KYC/AML checks
  • Pledge funds
 
 
Specialist Window Restoration Contractor
Amount required:  £350,000
Funded to-date:  £321,000
Protection:  Secured & Insured
Interest rate:  7%
Term:  2 years
Payments:  Monthly
Funding close:  17th March 2017
 
 
Import/Export business  that provides support to SMEs 
Amount required:  £500,000
Funded to-date:  £133,000
Protection:  Secured & Insured
Interest rate:  8.5%
Term:  3 years
Payments:  Monthly
Funding close:  28th March 2017
Contained in the investment opportunity page are key pieces of information, such as the financial performance of the business, key people involved and the security package.

 

register Orca Account

 

Conclusion

By lending to UK businesses across ArchOver, you can earn a fixed rate of up to 8.5% p.a, depending on the borrower(s) you choose to invest in. One of the primary benefits of investing across ArchOver is the security package the P2P platform implements; they provide two tiers of protection over your investment, asset backed and business asset insurance for all Secured & Insured loans, and asset backed and assignment of contracts for all Secured & Assigned. One thing to be wary of is the small loan book. ArchOver has lent to an average of 14 borrowers per year since inception. The level of diversity that you can achieve is minimal, you’re only ever likely to gain exposure to a couple of loans at a time, so be sure to conduct thorough due diligence on each loan before investing.
 
Risk Warning: peer-to-peer lending is not a savings product, you are not covered by the Financial Services Compensation Scheme. Your capital is at risk.

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