Crowdstacker, one of Britain's leading peer-to-peer sites founded by Karteek Patel, has allegedly taken out a loan with a property lender that was listed on its own platform, subsequently going into administration. Member of the Peer-to-Peer Finance Association (P2PFA) alongside companies such as Funding Circle and Zopa, the company borrowed £250,000 from Amicus Finance in 2016.
Meanwhile, Amicus, which had borrowed over £15m from Crowdstacker's “crowd” of users since 2015, went into administration in December, with investors owed millions of pounds. The reported loan and insolvency raised more questions about the transparency of P2P industry, which uses online platforms to match retail and professional investors with businesses and consumers seeking finance. The sector is currently under scrutiny as the amount lent through the platforms has increased. Crowdstacker secured a loan note of £250,000 from Amicus in April 2016, according to documents filed at Companies House. While it won't say what the loan was for, but the charge was still outstanding when Amicus appointed administrators in December. They said the debt was due for repayment or conversion into equity by 2020.
Amicus offered short-term loans to property developers and its pitch on Crowdstacker said it was a modern business with “old-fashioned values” and had won “over seven awards” in 2016. Lenders were offered a 5.43 per cent interest rate for an 18-month loan. Amicus was removed from the Crowdstacker platform last year as its financial troubles became evident. The latter said 70 per cent of the debts had been repaid to the “crowd”, but over £4m was still outstanding.
Crowdstacker is regulated by the Financial Conduct Authority (FCA) and has raised £55m to lend to small firms since it was founded five years ago. Its investments include Burning Night, a Leeds-based bar operator that also filed for administration just before Christmas.