Investing Reviews

October Review: P2P Lending Platform for Investing in SMEs

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October is a popular Peer-to-Peer (P2P) lending platform that began life in France, and was originally named Lendix.

The platform operates in France, Italy, Spain, and the Netherlands. October is registered with the French market authority (ORIAS).

Like most P2P lending platforms, October allows focuses on a market segment and not broad-based lending activities.

The company aims its loans at small and medium-sized enterprises that need to borrow in Euros. It is careful in its selection of which loan applications to accept, and by the time an investor can buy into a loan, significant amounts of due diligence have taken place.

October states that the ratio of loans that are submitted v. the number of funded projects is just 0.6%. This is a very low amount, which is a testament to how selective the company is when it comes to what kind of projects it will accept.

The rise of P2P lending platforms has been helpful not only to businesses but also to investors who want to take advantage of the high-interest rates that many loans carry. In the past, banks have been able to control this market and make large returns on their loan portfolios.

Today, this has changed, especially in the European Economic Area (EEA), and Switzerland. While there are some P2P platforms that operate in the USA, the regulatory framework is an impediment to this kind of lending. The EEA is far easier by comparison, and a number of P2P lending platforms have taken root in the EEA.

OctoberOctober -  Visit
Product TypePeer to Peer Lending
Potential Return4.12% - 5.98% In 2019
FeesNo Fees
Min Investment€20
Available to European Union

Visit October

October Makes P2P Business Lending Simple

There aren’t a lot of amazing opportunities out there when it comes to fixed-income investments. Central banks have stomped interest rates into the ground for more than a decade, which has left many investments with little to no return on capital (depending on how it is measured, as much as 1/3 of European government debt has a negative yield—investors pay to lend!).

October Website

The terrible situation in the fixed income market has swung open the doors for platforms like October. The company has been very successful in creating a business model that allows companies to access cash at good rates, while rewarding investors who want to take on the other side of the lending equation.

October has an online platform that offers investors many details about the loans they can buy. It is easy to navigate, and October is one of the only business P2P lending sites that has a dedicated app, instead of a mobile-friendly website that may offer limited functionality.

How does October Work?

October works by providing business loans, which are known on the platform as “projects”, to both private investors and institutions. The platform works across a wide variety of sectors, with the average loan value around €460,000, although the value of the loans it brokers varies widely from the average figure.

  • Most of October’s projects are offered in France, and there have been more than 15 projects per month that investors have been able to participate in funding.
  • October offers projects of several hundreds of thousands of Euros (sometimes up into millions of euros) in 4 nations (France, Italy, Spain, Netherlands). The company is planning to expand into Germany in the near future.
  • Private lenders can lend from €20 up to €2,000 per project and there is a monthly repayment of part of the capital, with interest. Lenders can invest in new projects to diversify their investments as much as possible, which is a very good idea.
  • October offers investors rates that tend to be in the single digits, with a rather long loan repayment period.

Factors such as Project Volume, Project Size, Default Rate, and Reactivity Rate will help to determine the actual performance of a loan portfolio on the platform, but most investors have been able to receive an average of 6.50% per year.

The average duration of a loan on October is 45 months, but terms vary from 6 at 60 months, with interest rates range from 2.5% and 9.5%, which is lower than other P2P lending platforms, although October does have a very strict application process for borrowers.

One of the nice things about October is the low amount that can be put into a debt offering, which makes creating a diversified loan portfolio easy, regardless of how much money an investor has. With a minimum of just €20, an investor with €500 could have a portfolio that has 25 separate loans.

How it Works

How to: Open an Account

Opening an account with October is pretty easy and quick, as long as you are in the EEA or Switzerland. You just have to visit the company’s website and answer some easy questions to complete your identity verification.

The sign-up process for a new account should take no more than 15 minutes. Popular projects can become fully funded in less than 10 minutes.

Simple Signup
Simple Signup Process

Once you get through the account opening process, there are two ways to add funds to your new account:

  • A credit or debit card with 3D Secure is faster but the amount you can deposit will depend on your card’s limit
  • A bank transfer is slower but unlimited

Once you fund your account, you will be able to lend on projects, As mentioned the lowest amount that can be invested on a project is €20 and the highest is €2000. Originally the maximum was €1,000 but a new law allows people to now invest €2,000. October requires that customers lend multiples of €20.

Loans are usually previewed for a few days before they go live, allowing you time to review the details and make a decision on your level of interest in the project. You can also receive an email and push notification via the October app when the project is live, at which point you must make your move if you want to participate in funding it.

Also, it can take some time for you to reach portfolio diversification and get all the funds you have invested. New projects are added at the rate of 2-3 a week with varying interest rates. So if you want to achieve a diverse portfolio at 7% average, you might be waiting for a while for the right projects to come along.

You can offset this by keeping your October funds in another platform that pays interest, and just transfer money in when you need to.

October: The Platform

October has a strong loan selection process, low default rates, and a clear process in place to manage recoveries. All that said, it does not have a provision fund in place, nor does the company currently offer lender insurance. However, Some Italian projects are now subject to a guarantee.

What do Investors need to start lending with October?

  • Fill in all the online forms that the platform provides
  • Confirm the data in the email the company sends
  • Upload documents needed to confirm identity

Once all that has been accomplished, you will be able to fund your new account, and start building up your loan portfolio.

Dashboard

Costs and Service

October has no entry fees or management fees for lenders. Any company that obtains a loan from the platform will have to pay fees, based on a number of factors. From a lender’s perspective, October is a dead-simple platform that allows direct investment in pre-screened P2P business loans.

Repayment

Early repayments will result in a 4% bonus for the lenders.

October’s contracts provide early repayment clauses for borrowers. While many other platforms do not impose early repayment fees, most borrowers who use October will have to pay 4% of their outstanding principal for early repayment of the loan.

October splits the fee with investors. It will give 2% to the lender, and keep 2%. There are some projects that are exempt from this early repayment fee, which would be agreed to when the loan is made.

Taxation

October complies with any and all tax laws. You will have to supply any information that October needs for taxation purposes.

Security

Transactions are secured via Lemon Way. In the event that October goes bankrupt, Lemon Way would ensure that repayments continue. Lemon Way is a French payments platform that has been in business since 2007. it has a good reputation and recently raised €25 million to expand its operations.

Returns

October is a rapidly growing P2P business lending platform. The company reported in February 2019 that October had helped finance 524 projects worth € 242,000,000, with 14,800 lenders. October doesn’t list an overall default rate, but it does give an all-inclusive interest rate for all the loans that it has helped broker.

Returns take from their Statistics Page
Returns take from their Statistics Page

Over the last five years, an investor would have received a return of 4.18% on their investments in the total loan portfolio, with defaults and other encumbrances costing 1.80%. This figure is somewhat misleading, as investing in the entire portfolio may not be feasible.

Available Projects
Available Projects

The Interface

The user interface October built is efficient and easy to use for research. Each project will display the interest rates and term, but it also offers the following information:

  • A presentation of the company
  • A presentation of the loan project
  • An analysis with the strengths and weaknesses
  • Financial analysis with the balance sheet of the company

To lend, you just enter the amount you want to lend to, and then you will be presented with a simulation of the interest you will receive over the term of the loan. Once you are satisfied with the details, you will have to sign your contract electronically.

A code will then be sent by SMS, and you will be able to review the performance of the loan on the website, or app. The app that October offers is available on both iOS and Android.

Detailed Project Information
Detailed Project Information

October – Service and Support

October offers several ways to get in touch, as well as a number of online assets that can probably resolve any simple issues. Here is a list of its contact and support options:

  • Lender FAQ
  • Facebook page
  • Twitter page
  • Informational blog
  • Customer service available at: 01 82 8328 00
  • Contact via email at: contact@october.eu
  • Live chat via the home page. Chat allows you to connect with a person from
  • October live (during EU business hours)or to leave a message. In the second case, October will respond quickly.

Other P2P Lending Platforms

October isn’t the only P2P business lending platform out there. Every P2P lending platform will have advantages, and it could make sense to invest with more than one for a number of reasons. Here are two other P2P business lending platforms that have become popular, and could make sense as a part of your P2P lending strategy.

Bondora

Bondora is another P2P lending platform that deals with business loans. Like October, the loans that are available for investors on Bondora are unsecured, and Bondora does not offer a buyback program for troubled loans.

One nice thing that Bondora does offer is an investment called Go&Grow, which combines the higher interest rates of P2P lending with the liquidity of a money market account. You can put money into a Go&Grow investment account, and earn more than 6% per year (at the time of writing).

Go&Grow accounts also offer immediate liquidity, which is great if you want a place to park extra investment capital, and not go without a return while you wait for other opportunities.

Bondora ReviewBondora -  Visit
Product TypePeer to Peer Lending
Potential Return6.75 - 10%+ 
Fees€1 Fee to Withdraw
Min Investment€1
Available to European Union, Switzerland or Norway

Visit Bondora

You can read our full Bondora review here.

FundingCircle

FundingCircle has been around for almost a decade and offers similar investment products to both October and Bondora. Like most P2P business lending platforms, the loans that are available on FundingCircle aren’t secured (for the most part), and offer much higher interest rates than regular deposits.

While FundingCircle was an early mover in the P2P business lending space, it may not be as competitive today. Some users state that they earn between 5% and 6% per year with the platform, which is less than Bondora’s Go&Grow program.

However, FundingCircle has a great reputation on TrustPilot and does offer much higher interest rates than many other forms of debt. Given how new the P2P lending space is, it makes sense to spread out your investment capital, and FundingCircle could be a good platform to include in your P2P lending mix.

October: The Rundown

October is a good P2P business lending platform, and its dedicated app will be of interest to investors who live a mobile life. As an EU-focused P2P lending platform, October has great multi-lingual customer service agents available via online chat, which is a great feature.

The platform does not charge any fees for lenders, and it provides a good level of information about each project, as well as being transparent about the performance of the platform. The interface on both the web and mobile app makes it as easy to both review projects and make investments.

From the standpoint of use, October has a great platform. The question for an investor is whether or not the kind of structure that October uses is a good fit for their investing goals. There basically no way to sell a loan once you invest in it, and this may be a hindrance for investors that want more liquidity in their debt portfolio.

Pros

  • Simplicity: the website and dedicated app look great – information is clearly displayed and interfaces are easy to use
  • The signup process is easy: identity verification is quick, and credit-card top-up allows fast account funding
  • Track record is good: the low amount of losses to default is reassuring
  • Updates: useful weekly email summaries are sent to investors
  • Customer service is great: the platform has numerous support resources

Cons

  • Rates are lower than other platforms: averaging 6.70% for 2019 (as of November) but 4.64% since 2015
  • Lacking auto-invest feature: you have to handpick each loan
  • Potential for cash drag while you wait for the projects to come online
  • No default protection or provision fund
  • No secondary market: once you buy, you are in for the term of the loan

The Takeaway

The P2P business lending space is growing, and October is a good option if you don’t mind taking a hands-on approach to P2P portfolio building.

There is a possibility of cash drag with October, they typically publish 5 new projects per week which are usually financed quickly. You will have to keep an eye out for their email which lists the new opportunities and make a decision to invest or not.

It might be a good idea to use October in concert with a few other P2P lending platforms, both to spread the risk out, and take advantage of the auto-investing features that other platforms offer.

October certainly does have a place in the P2P business lending space, and it has done a great job of creating an interface that is easy to use and gives investors a range of useful information about the projects they can support.

Another thing to consider is the direction of interest rates. October will allow investors to lock-in interest rates for a few years, which may make sense in the current economic environment. Central banks seem to be close to a new cutting cycle, which could make the current lending environment more of an opportunity than many realize.

There are no real problems with October, and it appears to be a legitimate P2P business lending platform that has established itself over the last five years in a brand new industry.

Visit October

October

8.4

Ease of Use

9.0/10

Returns

7.0/10

Reputation

8.0/10

Customer Support

9.0/10

Design

9.0/10

Pros

  • Great Website & App
  • Good Track Record
  • Good Customer Service
  • Easy Registration
  • Good Transparency

Cons

  • Rates lower than competitors
  • No Auto-Invest
  • Cash Drag Possibility
  • No buyback guarantee
  • No Secondary Market
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Nicholas is an experienced Finance Journalist who has written for a number of prominent online publications. He grew up in Ann Arbor, Michigan with a father that would read him the Wall St. Journal along side of other bed-time fare. He has traveled extensively, and been lucky enough to study a changing global economy in person. Nicholas spent many years in the Southern Cone of South America, sometimes in the middle of the countryside where livestock starts its journey to all points of the globe. Today he is thoroughly bemused with the stance that Central Banks have taken in the wake of the 2008 meltdown. There is no telling what will come out of the global financial system next, but he is glad that he lives somewhere that gold can be bought and sold readily! nick@moneycheck.com


Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank or credit card issuer and have not been reviewed, approved or otherwise endorsed by any of these entities.


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