Lending Loop Review: My honest opinion about this P2P lending platform

Lending Loop Review

Looking for opportunities to diversify from the stock market?

Lending Loop provides high returns and the opportunity to support small and medium businesses in your neighboring communities.

Is Lending Loop safe?

I’ve been an investor in Lending Loop for around 1.5 years and I have had a positive experience thus far.

I’ve only experienced the lending side of the business so I can’t comment on the borrowing side. In this post, I will discuss an overview of the program, the pros and cons, my Lending Loop portfolio, and my investing strategy including my mistakes and key learnings.

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Lending Loop Review

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What is Lending Loop?

Lending Loop is Canada’s first and only regulated peer-to-peer (P2P) lending platform.

Often small and medium sized businesses can’t attain loans from banks because their business revenue is irregular or the amount they require is too small to justify the administration costs to issue the loans. Lending Loop provides the platform for individual investors to lend money to local businesses.

Lending Loop is available to everyone in Canada except Quebec because its laws don’t allow for these types of services.

Between its inception in the last quarter of 2015 and September 2018, 7282 investors have lent money on this platform and $27 million loans have been funded.

How does Lending Loop work?

  1. The business applies to Lending Loop to get a loan.
  2. Lending Loop evaluates the application.
  3. If the application is approved, Lending Loop assigns a credit rating which corresponds to an interest rate (ranging from “A+” with a rate between 5.9-7.5% to “E” with a rate between 24.01-26.5%) on the loan and there is an agreed upon term (between 3 months to 5 years).
  4. The loan is placed on the marketplace and lenders have the opportunity to fund the loan.
  5. If the loan generates enough funding, the loan is finalized.
  6. The business receives the funds.
  7. Every month, the business pays the lenders the monthly repayment including a portion of the principal and interest.

Lending Loop

What fees are involved?

Lending Loop charges a 1.5% service fee when the investor receives payment on a loan (e.g. 10% interest on a loan is actually 8.5% interest after the 1.5% service fee is applied.). There might also be a collection fee charged if the loan undergoes collection efforts.

How to set up a Lending Loop account

  1. Fill in your basic information and take an investor preference survey, which takes around 15 minutes.
  2. Input your bank account details to connect your bank account with your new Lending Loop account
  3. Deposit a minimum of $200 into your new Lending Loop account, which should take around 1 week for Lending Loop to receive
  4. If you want to invest over $10,000 per year with Lending Loop, you can also apply to become an eligible investor or an accredited investor which will require additional proof of income or net worth.

Now that you know what Lending Loop entails, here are pros and cons about the program.

Lending Loop pros

  • Diversifies investments from the stock and real estate markets
  • Supports local businesses

Lending Loop Returns

  • Generates potentially higher returns than other investment vehicles
  • Allows for a small $25 minimum investment in a single loan
  • Has a clean, user-friendly platform that provides easy access to portfolio information, payment schedules etc.
  • Manages the collections process if the loan is delinquent

Lending Loop cons

  • Doesn’t have a TFSA or RRSP account option so your returns will be taxed (You will get a T5 for investment income that you will need to file for your taxes)
  • Doesn’t provide a forum to discuss loans (There is this subreddit but there are many discussion limitations)
  • Has a short supply of available loans so you might have money sitting in your account (which could be earning interest elsewhere) for weeks before it is used. There is also the additional time it takes to get the loan funded and if the loans undergo collection.
  • No option for selling your loan position so your funds get tied up for the full duration of the term

My Lending Loop portfolio

I’ve invested around $3800 in the platform. My weighted average gross yield is 12.3%. I’ve participated in around 120 loans. So far I’ve been lucky that only a few of my loans have been charged-off. I’ve lost around $100 total. My maximum exposure – % of my portfolio that is my single, largest loan (principal portion) – is 2% of my portfolio.

Investing strategies

There are different strategies you can use depending on your preferences and goals:

Lending Loop Review 2019

Risk level

If you’re more cautious, you will want to stick with A and B loans. If you want to take more risk, you can include C, D and E loans in your portfolio.

If you want to take a more balanced approach, you can invest in B and C loans or a combination of A to E loans like an index fund.

I focus on a hybrid cautious and balanced approach with a mix of mostly A, B and C loans.

Loan amount

You will want to assign a small loan amount to investments you’re interested in to minimize your exposure to charge-offs. That amount might be $500 or $25 or some other number in between. It depends on your comfort level with balancing risk vs. reward.

Initially I invested $100-150 per loan, but I’ve since scaled back to $25 per loan to minimize my exposure. In hindsight, I should have invested $25 per loan in the beginning, especially as I was just starting to familiarize myself with the platform.

Loan Term

If liquidity is important to you, you will want to invest in the shorter term loans. The vast majority of loans I’ve seen on the marketplace are 2-4 years. I try to stick to the 3 year and under loans.


If you prefer a hands-off approach, you might want to consider Lending Loop’s auto-lend feature where investors can choose from a low to high risk profile and have their funds automatically invested. This pairs well with Lending Loop’s auto-deposit feature whereby investors can set up automatic regular deposits from their bank account into their Lending Loop account.

If you would like to be hands-on and analyze each loan, I recommend that you create a plan that you can apply like clockwork when a new loan becomes available.

I am more hands-on and this is my strategy.

When I get the email from Lending Loop that a new loan is available and it is an A, B or C loan, I check the marketplace to evaluate the loan immediately as the best loans often get filled within 48 hours.

The first thing I check is have I invested with this company previously. One mistake I made is investing in multiple loans with the same company and thus increasing my exposure to charge-offs.

If I haven’t invested with this company, I quickly analyze the loan details:

  • Do I recognize the brand?
  • Is it a franchise with a support system?
  • Is the rationale for funding well thought out and shows how the funding will strategically position the company for growth?
  • Are there red flags in the financial statements?
  • Are there personal or corporate guarantees signed?
  • Has anyone asked a compelling question that I also want to know the answer to?
  • Do I have questions for the company?
  • How has the company responded to the question?

Lendingloop Review

I also quickly look up the company online and check their consumer and better business bureau rating.

If the loan meets my criteria, I invest $25. If the loan exceeds my criteria, I invest $50. This whole process takes me around 5 minutes.


You should consider how much money you want to allocate to your Lending Loop account and what you want to do with your returned principal and accompanying interest.

As in the event of a downturn in the economy, I expect more delinquent loans, I only invest with money that I can afford to lose. Lending Loop makes up less than 5% of our investments.

With that said, I’m very happy with my returns. I am continuing to reinvest my returned principal and accompanying interest in more Lending Loop loans.

If you have a Lending Loop account, what’s been your experience thus far?

If you don’t have a Lending Loop account and you’re interested in signing up for one, click here to get $25 once you lend $1500 to businesses on the platform.

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