Quite interesting that we are starting to see a number of non-performing loans starting to appear. I wonder if this is a trend - will also be interesting to see how successful they are in recovering Directors personal guarantees.
Funny you mention that, I have seen 2-3 unpaids in the last few weeks on my "portfolio" of loans. To date, they have been collected, but once unpaids start to appear, you can expect more to follow.
I have seen LinkedFinance providing loans to borrowers that do not appear to have repayment capacity based on the financial information disclosed and when I questioned on it, the response was that there was headroom in the borrower's overdraft limit, or forecasts showed ability to repay (despite these forecasts not being published for the rest of us to see). Make of that what you will !
Likewise, LinkedFinance seem quite happy to do follow up loans for borrowers within reasonably short periods of time. It strikes me as a little odd that a borrower would not have planned their borrowing requirements for longer periods of time (ie 9-12 months ahead) and also, that LinkedFinance or any other credit provider, would not have some sort of restriction on how regular loan applications will be considered, given certain circumstances.
As for pursuing guarantors for the debt when the loan defaults, history has shown us that most guarantees do not result in repayment of the amount due, and given the likelihood that the directors / shareholders of these small businesses will have most likely put all they had into keeping their business afload, I would not be hopeful.
If you want to put money into P2P lending, then lots of diversification and even more common sense has to be the approach. That strategy isn't really any different to the approach we should take when investing in equities etc. Thereafter, you pays your money and you takes your chances