Many investors with Blend Network will know that we have a secondary market feature that allows lenders to sell their loan parts prior to the loan maturity. In this user guide, we aim to answer your question around this feature and how to use it. So, here are some popular questions you may find interesting about our secondary market:
What is the secondary market?
The secondary market is a feature offered by Blend Network that allows investors to sell all or part of their loan to other investors prior to the loan maturity. For example, if you invested £5,000 on a loan with 18 months maturity and need £3,000 before your loan matures, you can list £3,000 in the secondary market and someone else might buy than loan part off you. While Blend Network cannot guarantee the liquidity in the secondary market, this feature is designed to offer potential liquidity to those lenders who want or need to exit their investment ahead of its maturity.
Can anyone use the secondary market?
Anyone who has invested on a loan with Blend Network can use the secondary market if the secondary market is available for that loan. However, please note that at times the secondary market may be unavailable for some loans (see next question as to why that may be).
Can all loans be traded in the secondary market?
No, sometimes the secondary market will not be available for some loans. For example, where an event that has taken place regarding the loan (for example a loan becomes non-performing from a missed payment, close to repayment, partial early repayment, etc…), Blend Network can decide, at its own discretion, not to allow that loan to trade on the secondary market. This is to avoid any asymmetric information between a seller and a prospective buyer. This is also to make sure loans are trading at a fair and appropriate price on the secondary market.
Is there any minimum or maximum loan amount that can be traded in the secondary market?
The minimum amount investors can trade on the secondary market is £1,000, the same amount as the minimum investment in the primary market. There is no maximum, lenders can list all of their loan part.
How much does it cost to use the secondary market?
Sellers will pay 0.6% (£6 for every £1,000) to use the secondary market, but we will only charge this upon the successful sale of the loan portion listed in the secondary market. The secondary market is free to use for buyers.
What price can a loan be sold at in the secondary market?
In accordance with P2P regulation set by the Financial Conduct Authority (FCA), sellers are not allowed to select their own price when they sell a loan part. Instead, sellers can sell their loan part at par value which is calculated by Blend Network automatically. This is to ensure all secondary market buyers are purchasing loans for a fair and appropriate price.
What information will potential buyers receive when looking at loan parts listed on the secondary market?
Potential buyers on the secondary market will have access to the documents made available to investors when the loan was initially listed on Blend Network. If there have been any changes to the loan (for example, an extended payment plan etc) then this information will be included to ensure potential buyers are aware of the position of the loan.
Do investors get notified of available loans in the secondary market?
No, investors need to keep an eye on their dashboard for available loans in the secondary market but won’t be notified through automatic push emails. This is to avoid jamming investors inboxes when we have a large volume of loans trading in the secondary market. If there are any other questions not covered in this basic guide, please refer to the FAQ section in our website by visiting www.blendnetwork.com/FAQ or contact a member of our team.
Your capital is at risk if you lend to businesses. P2P lending is not covered by the Financial Services Compensation Scheme. Investments are illiquid (the inability to sell assets quickly or without substantial loss in value). Past performance is not a reliable indicator of future results.
BLEND Loan Network Limited is authorised and regulated by the Financial Conduct Authority (Reg No: 913456)