Squirrel Money P2P

[Saamee]

Swung back today > Borrowers this afternoon now waiting for Investors Funds!!


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[icyfire]

Swung back today > Borrowers this afternoon now waiting for Investors Funds!!

great news, in that case I'd better deposit some more money

[Saamee]

Just noticed the Reserve Fund has fallen under 3% now at 2.92% - 1st time i have sighted it below that level.

Although their Loan book is now over $7.1M they must have Written off quite a few Loans at the end of the Month \ Financial Year....

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[Bjauck]

I don't fully understand how it operates. It has been operating for more than a year now, so I don't think Squirrel is obliged to keep the reserve fund at 4%. Perhaps it is naturally decreasing to a lower % without write-offs?

[Saamee]

I don't fully understand how it operates. It has been operating for more than a year now, so I don't think Squirrel is obliged to keep the reserve fund at 4%. Perhaps it is naturally decreasing to a lower % without write-offs?

Yes your right now it is floating and will move downwards more. It did take a large drop over the Weekend.

[icyfire]

I think that it's been hovering around the 208-209k mark for a few months.
On their website it says: "What happens if the Reserve Fund runs out?

Our expected loss rate on the existing loan book is 1.3%, however we are currently reserving at 1.9% which provides 1.5x coverage over the expected loss rate each year."

[Investor]

I don't fully understand how it operates. It has been operating for more than a year now, so I don't think Squirrel is obliged to keep the reserve fund at 4%. Perhaps it is naturally decreasing to a lower % without write-offs?

Squirrel decides what percentage of loan income is allocated into the fund, currently 1.9%. Correct, they have no obligation in terms of the fund's balance. They chose to start it off with $200k of their own funds and now periodically decide what % of loan income to allocate to it based on predicted losses.

[baldricknz]

Does the current reserve fund of $208k still include the $200k from Squirrel? If it does, wouldn't this indicate that the expected loss rate is actually closer to 2% (not 1.17%) if the reserve levy is currently 1.94%?

[mfd]

Does the current reserve fund of $208k still include the $200k from Squirrel? If it does, wouldn't this indicate that the expected loss rate is actually closer to 2% (not 1.17%) if the reserve levy is currently 1.94%?

The site suggests a 2016 bad debt rate of 0.6% (0% for 2017, I think it's the bad debt on loans issued in that year). If I understand it correctly, the loan book will grow quicker than the reserve fund (when a loan is made it immediately adds to the book but only dribbles into the reserve fund as payments are made), so it's not surprising to see the coverage ratio dropping as the loan book grows, now that Squirrel don't have to keep it topped up.

https://www.squirrelmoney.co.nz/platform-statistics/

[Saamee]

Does the current reserve fund of $208k still include the $200k from Squirrel? If it does, wouldn't this indicate that the expected loss rate is actually closer to 2% (not 1.17%) if the reserve levy is currently 1.94%?

Yes it does. As the loan book grows the Reserve Fund Levy will decrease accordingly. Plus it will get depleted quicker as and when Loans are Written Off.

I get uncomfortable seeing the Reserve Fund getting lower and lower - felt happier when it was sitting @ 4% over the 1st year of their trading...