Ten Marketplace Lending Options for Accredited Investors

Last month Ryan provided this great rundown of marketplace lending investment options for non-accredited investors. Today, we will do the same thing but provide some options for accredited investors.

Before we get started let’s get clear on the definition of an accredited investor. This is from the SEC’s investor website:

An accredited investor includes anyone who:

  • earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
  • has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).

If you fit that description then you have many more investment options available to you. In this article I am going to run through ten different options across the three asset classes of real estate, small business loans and consumer loans. I am excluding Lending Club and Prosper from this review even though as an accredited investor you also have access to these platforms. They were covered in Ryan’s post mentioned above. Also, I am not covering any funds or aggregator sites – these are all platforms that originate their own loans.

I should also point out that this article is for information purposes only. I am not providing investment advice here nor am I recommending any of these investments.

Real Estate

There are more real estate options than any other category. Real estate is the largest asset class by far and one that has attracted a wide range of individual investors for many decades. So, it is not surprising that when it comes to marketplace lending it is leading the way as far as investor options go.

  1. LendingHome (https://www.lendinghome.com/)

LendingHome launched in 2014 but quickly established themselves as the leader in the category. They are the only real estate crowdfunding platform to have reached $1 billion in total loans issued, a milestone they crossed in December, 2016 just two and half years after launching. They are focused on fix & flip properties and they fund all the loans off their own balance sheet before making them available on the marketplace, greatly reducing the time your money will sit idle. Target yield for investors is in the 8-10% range.
Minimum investment: $50,000
Minimum per loan: $5,000

  1. PeerStreet (https://www.peerstreet.com/)

PeerStreet were founded just 18 months ago but they are already making a name for themselves. They are also focused on the fix & flip market providing loans ranging from 6-24 months in length. They target 6-12% returns and they maintain a conservative maximum LTV (loan-to-value) of 75%. They are integrated with both Betterment and WealthFront through Quovo. One of their claims to fame is that they have Dr. Michael Burry (the famous hedge fund manager played by Christian Bale in The Big Short) as an investor and an advisor on their board. I report on my personal investment in PeerStreet in my quarterly update.
Minimum investment: $1,000
Minimum per loan: $1,000

  1. Sharestates (https://www.sharestates.com/)

Sharestates has offered both debt and equity investments, although the vast majority of their deals are for debt. These deals are similar to other platforms with loan terms typically 6-24 months targeting 8-12% returns. They have funded close to $450 million with an average return to investors of 10.67%. Sharestates is run by real estate veterans and despite only launching the business two years ago they have been profitable for over a year now.
Minimum investment: $1,000
Minimum per loan: $1,000 for first five loans, then $5,000

  1. RealtyMogul (https://www.realtymogul.com/)

RealtyMogul is one of the most established players in the space having launched in 2013. They have done around $260 million in deals and today they focus primarily on commercial property. Shopping malls, office buildings, industrial parks and multi family homes are some of the deals you will see on RealtyMogul. They offer both debt and equity investments and as of this writing on their platform there was primarily equity investments available. They have over 100,000 registered investors and they are also one of the few companies that offers a product, called MogulREIT, for non-accredited investors.
Minimum investment: $1,000 (for MogulREIT I)
Minimum per deal: varies (typically range from $5,000 – $25,000).

  1. Patch of Land (https://patchofland.com/)

Patch of Land is 100% focused on debt deals tied to mainly residential properties but with a small number of commercial properties as well. They also launched in 2013 and have originated over $300 million in loans over more than 500 deals with an average realized rate of return of 11.18%. Loans can range from 30 days to 3 years but the vast majority of loans on the platform are 12 or 18 month loans.
Minimum investment: $5,000
Minimum per loan: $5,000

  1. RealtyShares (https://www.realtyshares.com/)

RealtyShares is a “full stack” capital provider, meaning they offer both debt and equity deals on a single project for borrowers. They have done some large deals including this $5.9 million deal for a 132-unit apartment complex in Ohio. They are another established platform having begun operations in 2013 with over $300 million invested on their platform across 550 projects. They have almost 100,000 investors registered on their platform.
Minimum investment: $5,000
Minimum per loan: Usually $5,000, sometimes as low as $1,000.

Small Business

There are fewer opportunities for small business but below are three leading companies offering opportunities for accredited investors.

  1. Funding Circle (https://www.fundingcircle.com/us/)

The world leader in marketplace lending for small business loans offers US accredited investors a solid option. Loan terms range from 12 – 60 months and interest rates from 5.49% – 27.79%. Loans are rated from A+ for least risky down to D grade. They have a marketplace where you can browse the loans on offer or you can setup automated investing strategies based on loan grade. As I wrote this there were 12 loans available on their marketplace. Funding Circle provides financials and other details about each company although they don’t provide the company name. Funding Circle has been around in the USA since 2013, they were founded in the UK in 2010.
Minimum investment: $50,000
Minimum per loan: $500

  1. Streetshares (https://streetshares.com/)

Streetshares is a relatively new small business lender, they launched in 2014, and they are focused primarily on providing funding for military and veteran community businesses. Run by two veterans they provide three different products: term loans (3 – 36 months), lines of credit ($5,000 – $100,000) and government contract financing (for companies dealing with federal or state government contracts). Their investor marketplace allows for accredited investors to transparently participate on the same terms as StreetShares, who co-invests in every loan off their own balance sheet. They have an automated marketplace where investors can choose high risk, low risk or every loan. For non-accredited investors they also have their Veteran Business Bonds that yield a fixed 5%.
Minimum investment: $25
Minimum per loan: $25

  1. P2Binvestor (https://www.p2bi.com/)

P2Binvestor, or P2Bi for short, is an asset backed lender providing revolving lines of credit typically backed by accounts receivables. These lines of credit range from $250,000 to as much as $10 million. These investments are the most liquid of any in this roundup, just 60 days, because the accounts receivables backing these lines of credit have a very quick payback. Interest rates range from 9% to 14%. They have an investor marketplace where there are currently three deals on offer to investors as of this writing. Full disclosure: I am on the Advisory Board of P2Bi and have been investing on their platform since they launched.
Minimum investment: none
Minimum per loan: none

Consumer

You will notice that consumer loans are not well represented on this list. That is because almost all of the companies in this space are 100% focused on institutional investors.

  1. Upstart (https://www.upstart.com/)

Upstart has been something of a quiet achiever when compared to some of their well-established competitors. Founded by ex-Googlers they have a very data-centric approach to their business. One of the things that makes Upstart unique is they were the first platform to look at a borrower’s education and factor that into the lending decision. Interest rates range from 6.37% – 29.99% APR, loan terms are three or five years and amounts range from $1,000 – $50,000. Their investor marketplace is somewhat rudimentary when compared to Lending Club and Prosper. They only offer automated investing across the entire platform – the only selection you can make is whether to do three year or five year loans. You are basically investing as a passive investor.
Minimum investment: $100
Minimum per loan: $100

Addendum: There is one other platform that deserves an honorable mention: YieldStreet. They don’t fit neatly into any category because they do a little of all three categories above and they actually add a fourth category: litigation finance. They are focused on individual accredited investors and they recently crossed $100 million in total loans funded. I have been intrigued by them for some time and so I recently interviewed their CEO on the Lend Academy Podcast that will be published tomorrow.

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Eric
Eric
Apr. 30, 2017 8:39 am

Great article. Do you know if P2BInvestor is invitation-only? It said something on the website about that. I also tried to register as an accredited investor but got a “Not Authorized” error.

Eric
Eric
May. 22, 2017 3:14 pm
Reply to  Peter Renton

Thanks Peter. I contacted P2BInvestor on May 4 after trying a few times using a Chrome browser to register. I received a 403 error and pointed that out to their team (it was a bug). They even responded “that was actually a problem for everyone, thank you for reporting it.”
Sydney said that someone from Invest Relations would get back to me. I followed up on May 10 and told me to hold tight. Then today May 22 I got this message: “As you know, we onboard investors via Rule 506(b) so pre-existing relationships are critical. At this time, our investor marketplace is full and we are not onboarding any new investors we have gained relationships with recently. When we have capacity, we will certainly reach out to you and continue the conversations.” The message on May 22 didn’t even have a contact person’s name on it.

So ironic that the message came from an email address with the name “Investor Success.”

I’m pretty disappointed. This doesn’t seem professional to me.

Diana
Diana
Aug. 17, 2017 7:17 am
Reply to  Eric

Hi Eric,

Any updates around this?

David Chen
May. 1, 2017 10:37 am

Thanks for sharing this. I have heard of some of these before, but it is nice to see 10 of them listed together with someone else’s opinion on them.

Dave Saunders
Dave Saunders
May. 3, 2017 4:07 pm

Most interesting to see what is not included in the list. The likes of ApplePie, Equire.co & Groundfloor.

QVP1
QVP1
May. 4, 2017 11:17 am

Don’t forget Fundrise as well.

https://fundrise.com/investments

Stuart Hoffman
Stuart Hoffman
Dec. 27, 2017 4:29 am

Hi Peter,

Thank you for your article.

As to P2BI, do you have any suggestions regarding the relationship/referral requirement? I just received a lengthy email saying that without a current referral they cannot activate an investor account at this time. If there is someone I could go meet in person I would, but I do not know who is already a P2BI investor. Thanks for any advice.

Stuart

John
Oct. 13, 2018 1:13 pm

Very nice and informative article!
you have shared awesome list of ten marketplace lending options. From my experience, I can say that Upstart and Patch of Land are best lending options.
Thanks for sharing!

Frank
Frank
Jun. 19, 2020 4:37 pm

UpStart no longer is open to accredited investors. It’s been taken over by institutional investors. : (