A new study by independent research house Equity Development concludes that ArchOver's ‘secured and insured' proposition puts its business model "towards the top when it comes to lender protection." To date, ArchOver has suffered no late payments, write-offs or bad debts.
The author of the report, analyst Paul Hill, predicts that ArchOver "will become much more prominent in the industry, particularly as more lenders enjoy the estimated 5% through-cycle yields (post costs/defaults) - reassured in the knowledge that their cash is protected by the firm's ‘secured and insured' model, combining detailed credit-vetting, collateral backing and third party insurance."
Mr Hill also states that, for SME borrowers, who typically are having to wait 71 days for invoices to be paid, "ArchOver offers a far cheaper and less bureaucratic alternative to invoice financing which can be expensive and administratively burdensome."
Referring to recent criticism of the P2P sector, Mr Hill warns that "it's important not to arbitrarily tarnish all operators with the same brush, solely because of a few bad apples." He concludes that "although P2P's reputation has undoubtedly been dented over the past year or so, we are nonetheless confident that it has a prosperous future, involving plenty of years (if not decades) of strong growth. Advances in technology will continue to keep costs down, while low interest rates should further spur lenders to seek better returns, as well as encourage borrowers to look for cheaper and more flexible debt."
He goes on to praise the industry for "cutting out expensive middlemen (e.g. banks and invoice financiers), implementing next generation credit checking software and automating cumbersome back-office functions."
Commenting on the Equity Development report, ArchOver's CEO Angus Dent said: "It's always encouraging to receive independent endorsement for the sector and, of course, for ArchOver's business model. In particular, the report is right to highlight the tendency of some observers to lump together all P2P operators as if they are offering identical products and services. This is simply not true and is misleading for borrowers and lenders alike."
"The report also identifies ArchOver's ‘sweet spot' which is to help those cash-strapped SMEs who are being forced down the expensive road to invoice financing. We have recently passed the £22m mark in business loans and are targeting another £40m in 2017, rising to £120m by 2020."