Understanding Loan Performance

Investing in Wellesley involves matching lenders with borrowers whose loans are secured on property. It is important to understand that as part of lending to small businesses and individuals, a percentage will be unable to repay their loan. This means that lenders capital is at risk.

Loan Performance

At Wellesley, we only participate in asset backed lending, which means that the total value of the loan is secured against an asset. If a borrower does not repay a loan, we can sell the asset to seek to recover any shortfall.

There are many stages a loan must go through before it is in default, and even at this stage it does not necessarily mean that Wellesley or its lenders will experience a loss, as a loan can be recovered from a default.

What is a loan performing within terms?

This is a loan which is performing within the original terms and conditions set down when the loan was granted. Any payments of principal or interest have been made on time and we expect the loan to be fully repaid within the original agreed timescale. 

What is a loan performing outside original approved terms?

This is a loan where any payments of principal and interest were made on time but some other condition of the loan has been breached by the borrower and we have agreed to amend it. The most common example of loans in this category are developments which have taken longer than originally expected to build or sell and where the maturity date of the loan has been extended to accommodate this. Loans in this category are still loans where we are comfortable with the credit risk and performance and expect to be repaid in full. 

What does a loan that is non-performing with a full recovery forecast mean?

This is a loan that has failed to make a contractual payment to the firm, or which has breached the terms and conditions of the loan without the agreement of the firm. However, we still expect to recover all of our principal debt and interest. With asset backed lending it is often the case that we will be able to make a full recovery of our debt by taking control of the underlying assets and selling them. 

What does a loan that is non-performing with loss forecast mean?

This is a loan that has failed to make a contractual payment to the firm, or which has breached the terms and conditions of the loan without the agreement of the firm. However, in these instances, we do not expect to recover all of our principal debt and interest even when we sell all of the underlying assets. This normally only happens when something has gone seriously wrong with the underlying development, or there has been a severe downturn in the overall market, and the value of the underlying asset has deteriorated considerably. In such cases the firm will incur a loss and not all of the capital and interest owed by the borrower will be repaid. A provision is charged on loans where we expect to make a loss. 

 

Investment through Wellesley involves lending to individuals or companies and therefore your capital is at risk and interest payments are not guaranteed if the borrower defaults. It is important to remember that historic loan default rates are not necessarily indicative of future default rates.

Wellesley Secured Finance Plc (the Issuer) was established as a special purpose vehicle for the sole purpose of issuing asset backed securities. Wellesley Secured Finance Plc is not part of Wellesley Group Limited. Wellesley Secured Finance Plcis not authorised or regulated by the Financial Conduct Authority. Wellesley Secured Finance Plc are not covered by the Financial Services Compensation Scheme.

The Wellesley Mini-Bonds are issued by Wellesley Finance Plc, a company incorporated in England and Wales with its registered office at 6th Floor, St Albans House, 57/59 Haymarket, London SW1Y 4QX. The information contained in this webpage which relates to Wellesley Mini-Bonds has been approved as a financial promotion for UK publication by BDO LLP, 55 Baker Street, London W1U 7EU (FRN: 229378) which is authorised by the Financial Conduct Authority to conduct investment business.

The Wellesley Property Bond is issued by Wellesley Secured Finance Plc (10565816) whose registered office is at 35 Great St. Helen’s, London EC3A 6AP. The information contained in this webpage which relates to the Wellesley Property Bond financial promotion has been approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by The Share Centre Limited. The Share Centre Limited is authorised and regulated by the Financial Conduct Authority and is entered in the register under 146768.

Wellesley is the singular name for the following collective of companies, Wellesley Group Limited (09811856), Wellesley & Co Limited (07981279) and Wellesley Finance Plc (08331511). Wellesley & Co Limited is authorised and regulated by the Financial Conduct Authority (FCA) (Registration Number 655503). Wellesley & Co Limited is not covered by the Financial Services Compensation Scheme. Wellesley Finance Plc is not authorised or regulated by the Financial Conduct Authority. Wellesley Finance Plc and Wellesley Secured Finance Plc are not covered by the Financial Services Compensation Scheme.

Wellesley & Co Limited and Wellesley Finance Plc are registered in England and Wales and their registered office is at St Albans House, 57/59 Haymarket, London SW1Y 4QX. The trading address for both Wellesley & Co Limited and Wellesley Finance Plc is St Albans House, 57/59 Haymarket, London, SW1Y 4QX. The registered address for Wellesley Secured Finance Plc is at 35 Great St. Helen’s, London EC3A 6AP.