Lending Works Review – My Experiences After 6+ Years Investing

Lending works review

Lending Works Review

** Lending Works review updated July 12th, 2021 **

I made my first deposit in Lending Works on July 16th, 2015. The interest rate drops and statistic changes made me rethink my investment strategy which I’ll explain in the review.

Lending Works offers peer to peer investment options that pre-Covid, were a good choice, but now things have changed.

Read more below for my unbiased exclusive Lending Works review.

My Current Investment Amount: Click here
My rate of return: 5.1% (Net return before tax)
Est. Annual Returns:Up to 4.5%
My Risk Rating *:
Launched:January 2014
Early Exit:
Provision Fund:
ISA Available:
Loan Types:Consumer loans
Loan Security:Personal Guarantees
Lender Fees:Exit fees and negative % rates
Min Investment:Regular account & ISA: £100, ISA: £100
Time to Become Invested:Varies based upon demand but can be about 10 days.
Management Time:
FCA Regulation:Full
Cashback Offer:
New lenders: £50 bonus when you invest £1,000+ investment in regular or ISA account
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* This opinion risk rating factors in types of loans offered, interest rates, platform history, default numbers and my own investing experience. My risk rating explained.

How Do I Sign Up?

Receive £50 cashback when you invest £1,000. Their website doesn’t show any details of the offer but as long as you use my link, you will receive the cashback. Deposit £1,000 and once it is all invested, you’ll receive your cashback within a week. (Lending Works pays me a small referral fee when you open an account through one of my links. This fee comes at no expense to you and when you sign up for an account through my website, it allows me to continue to operate this website).

Lending Works Review: What You Need To Know

  • Very easy to use and hands-off with two lending products
  • Auto reinvest
  • Shield fund used to fund borrower bad debt
  • Offers ISA
  • Exit options with lower or zero exit fees (exit based on economic conditions)
  • Previous negative interest rates due to Covid-19
  • Loan matching times can fluctuate
  • Early loan repayments can lead to cash drag due to matching times
  • £10 min needed to reinvest interest payments
  • Borrower APR % has been rising (increased risk?)
  • 0.6% early exit fee for legacy products (new investments will see fee drop to 0.5% for 5-year product with zero fee for 3-year product)
  • Reinvestment funds prioritized over new investments

Lending Works advertises that they offer peer to peer loans to creditworthy borrowers. Lending Works was unique in that not only did it have a provision Shield fund which is paid for by loan borrowers, third-party purchased insurance was also used to protect against defaults due to borrower job loss, accidents, sickness, death, fraud, and cybercrime. This insurance was dropped in 2019 because it was deemed as economically unviable but the Shield fund still remains.

Equivalent Competitors


Lending Works Review: My experiences so far….

I made my first deposit in Lending Works in July 2015 and was happily investing through them for over six years.

My Lending Works account setup was very simple after passing the identification verification checks. I opted for the five-year Growth product with automatic interest reinvestment. It’s an easy set-and-forget website.

Covid-19 has severely affected Lending Works’s business as arrears from borrowers have increased. When Lending Works announced they would be charging lenders’ negative interest rates to fund the Shield Fund, I was annoyed but I’d rather this happen than the company closing its doors.

There are some downsides to investing in Lending Works during normal market conditions, one being that it can take some time before your investment is deployed depending on how much lending money is ahead of yours in the queue. This queue is always based upon lending and borrowing demand and supply and varies due to the pause on new lending that had been in effect for months.

The queue time is always transparently displayed under the Offers Tab on your investor dashboard.

Reinvestment money is always placed in priority over new deposits. New investment money deployment times vary based on demand and supply. Pre-Covid, these times ranged from 1 to 20 days but reinvestments are prioritized over new investments.

Lending Works has great reviews from borrowers which is good to see. This means Lending Works is taking good care of its borrowers.

I do expect Lending Works borrower late payments and bad debt to increase due to Covid-19 but this bad debt will hopefully be covered by the Shield fund.

As far as going forward, I will continue to withdraw any repaid capital and interest until the negative interest rates are ceased. It makes no sense to continue to reinvest at this point.

When Did Lending Works Launch?

Lending Works was founded in 2012 and started offering peer to peer lending in January 2014.

In July 2020, an announcement was made that Lending Works is to be acquired by Antriva Capital with Nicholas Harding remaining as Lending Work’s CEO:

“The deal sees Intriva acquire 100% of the equity in Lending Works, subject to regulatory approval. Intriva has further committed to providing significant additional funding and capital to support the growth of the business following completion.”

This acquisition was completed in 2021.

What Is Lending Works?

Lending Works is a UK based peer to peer lending company where investors lend money to personal unsecured loans to individuals. Investors are then paid interest returns based on two products, a three-year (Flexible) and five-year (Growth) product.

What makes Lending Works different from other peer to peer lending companies is their approach to risk management. Lending Works attempts to reduce risk using their Shield fund which dedicates a portion of uses a reserve fund to cover borrower late payments protect against some forms of borrower default such as loss of employment, accident and sickness and death.

Lending Works was acquired by Intriva Capital in July 2020. Intriva is expected to provide Lending Works with a capital injection and brings operational experience growing a consumer lending business. Lending Work’s CEO, Nicholas Harding will continue to run the business.

What Are The New Changes That Began January 1st, 2020

On November 28th, 2019, Lending Works announced some changes to bolster its business.

Interest rates became variable and will adjust as needed to support the Shield provision fund. Lending Works Shield fund is a provision fund designed to cover borrowers’ late payments and defaults. This fund is designed to cover all lenders equally, similar to Ratesetter’s provision fund. Interest rates were changed to variable instead of fixed in order to support the Shield fund.

Lending Works Shield fund now purposefully holds a much lower cash reserve. A Lending Works representative told me the Shield fund has been declining because of rising late payments and defaults, however, Lending Works is continuously adjusting its credit criteria. Lending Works states they are cutting out its loan book low performing areas. Lending Works doesn’t publish any in-depth stats on loan late payments or defaults on its website.

The changes to Lending Works interest the rates will affect all previous loans meaning older loans will be paid out at the lower rates.

Under normal market conditions, approximately £100,000 per week of borrower loan repayments are dedicated to the Shield fund. The Shield fund expects to receive over £5.4m in future payments.

Insurance was removed. Lending Works used to buy third party insurance to cover some of its potential borrower default issues but this insurance became too expensive. In many cases, the insurance could only be claimed upon if Lending Works was in contact with the defaulted borrower and many times, borrowers who are late payers disappear. This insurance was a selling point of Lending Works’s original business model but its usage and effectiveness is unknown.

My thoughts on the changes: Changes seem to be the norm now in peer to peer lending. At first, I was concerned to see how low the cash balance in the Shield fund had become (£922,000 as of May 2020), but I learned of Lending Works new system of a Shield fund allocation plan versus of having idle Shield fund money. This money that would have been idle is now used to pay investors but can be diverted towards bad debt and late payments as needed.

As long as Lending Works is transparent about this fund and how it is being utilised, I’m more comfortable with the reported low fund cash balance. I will be interested to see this process at work due to the Covid-19 virus and the expected increases in borrower late payments.

The reduction in Lending Works lender interest rates makes sense to preserve investors’ capital and returns.

I’m keeping a watchful eye on the rising average weighted APR% borrowers are paying. With this rise in APR’s, this should result in more allocations to the Shield fund and more revenue for Lending Works as it attempts to reach a profitable level.

I’m disappointed at the lack of statistical information Lending Works supplies on defaults. Statistics updates will now be provided on a quarterly basis (as per FCA regulations) rather than monthly. I hope this is something the company will address in the future as I’m a big advocate for more transparency.

I do like the fact Lending Works makes its entire loan book available for download on its statistics page.

What Investing Products Does Lending Works Offer?

Lending Works offers two simple investing products. New customers saw the new products take effect on July 23rd, 2019 while existing customers saw the changes on August 6th, 2019.

Existing money within the three-year product will remain as is while all five-year product investments will be moved to the updated Growth product.

Growth (five-year product)

  • Ideal for longer-term investors
  • Money is invested across personal consumer loans from 2 to 60 months in length
  • 0.5% fee for early exit (exit never guaranteed)
  • All existing five-year investments will be moved to the updated product

The Growth product is the same as the current five-year product except the selling fee is being reduced from 0.6% to 0.5%. It’s important to understand exit is based on demand and supply and not guaranteed.


  • Ideal for shorter-term investors
  • Money is invested across personal consumer loans from 2 to 60 months in length
  • Zero fees for early exit (exit never guaranteed)
  • All existing three-year investments will NOT be moved to the updated product but all new investments and repayments will be updated to new product

The Flexible product is similar to the existing three-year product but the biggest welcome change is the removal of exit fees should you want to access your money early. Lending Works is predicting investors will be able to exit in 48 hours providing there is demand for the loans. The exit time will always depend on demand and supply and is not guaranteed.

Important to note that existing investment in the three-year product prior to July 23rd will stay as is and the exit fee of 0.6% will remain. Any new investments or reinvestments will fall under the updated product.

Investors can set their account to automatically withdraw repayments to their bank accounts for income or automatically reinvest repayments and interest.

Both updated products are available in ISA and regular variants.

Is Lending Works Regulated? 

Yes, by the Financial Conduct Authority #722801 under full permissions granted December 10th, 2016. Investments made through Lending Works are not covered under the FSCS (Financial Services Compensation Scheme).

FCA regulation is nothing like the FSCS, which covers consumers when they deposit money in banks. The FCA reports to the UK government and has the ability to pursue criminal action against companies that violate its standards and codes of conduct.

Lending Works’s Company Financial Health

Lending Works lost £1.87m for the 2019 tax year. The firm’s total losses are now just shy of £10m. Accounts for 2020 haven’t been posted yet. You can view the company accounts here.

Who Can Open An Account?

Any UK resident or non-resident with a UK bank account.

What’s The Signup Process Like?

New account applicants will need to pass the usual identification verification checks. I found the account opening process to be painless.

How Are Deposits Made?

Via debit card or bank transfer

What’s The Minimum Investment?

£100 on regular or ISA accounts

Does Lending Works Offer An Innovative Finance ISA?

Yes. The ISA includes the same two products as the standard accounts.

How Much Interest Does Lending Works Pay Lenders?

During normal market conditions, lender return rates are variable and will update weekly. Normal annual rates are projected to be 4% (Growth product) and 4.5% (Flexible product) but that doesn’t account for the negative interest rate period you might have experienced due to Covid economic conditions..

How Does The Negative Interest Rate Work?

Lending Works subtracts negative interest payments monthly from all lenders’ accounts but the actual amount of lost interest isn’t easy to understand. Lending Works has stated that they expect to charge each lender an amount that is reviewed every three months.

Currently, loans from 2017 are seeing a -7% drop in returns and loans from 2018, a -3% drop.

This interest rate charge then contributes towards to Shield Provision Fund in order to make sure there is sufficient coverage for the increasing levels of defaults.

Lending Works told me that the first three months will likely be the worst in regards to how much money is withdrawn from your lending account. In November 2020, I saw a reduction of 0.4% of my capital.

Lending Works told me this negative interest period is temporary but they couldn’t tell me when it would end.

When Is Interest Paid?

Currently, there is no interest being paid. During normal market conditions, interest payments are made to you when the borrower makes payments so therefore payments are staggered throughout the month.

What Are the Lending Works’ Bad Debt Rates? 

Lending Works replaced their bad debt numbers with an expected annual loss rate table. The expected rate is between 2.5 and 4.4% but I would expect these numbers to change due to the Covid-19 economic conditions.

Lending Works statistics page shows an interactive lifetime bad debt graph that looks like this:

Lending Works review

While this graph is interesting, I’m an advocate for greater transparency and would prefer if the actual bad debt numbers were displayed on the statistics page with more in-depth stats.

You can view the loan statistics here.

What Are The Fees? 

Negative Interest Rates: Lending Works subtracts negative interest payments monthly from all lenders’ accounts. Lending Works has stated that they expect to charge 2% to each lender with this amount being reviewed every three months.

Flexible Product: No fee

Growth Product: 0.5% exit fee. You may be charged an interest rate differential fee if current lender rates are higher than the lender rates of your portfolio of loans. Lending Works doesn’t explain how this fee is calculated.

I tested the Growth product exit market on July 12th, 2021 and here are the results:

Lending Works Review

As you can see it would cost me 9.18% to partially sell my loans. The transaction fee (0.5%) is small but the interest shortfall fee (where current lender rates are higher than the lender rates of your portfolio of loans) is hefty.

How Long Are The Investment Terms?

Your money will be invested in loans from 2 to 60 months in length. Both the Flexible (free exit) and Growth (0.5% access fee minimum) products allow sale if buyer demand exists.

How Are Loans Paid Back?

During normal market conditions, principal and interest are paid monthly.

What Security Does Lending Works Require From Borrowers?

None because currently, all loans are unsecured. You can read how Lending Works screens its borrowers to manage risk here.

Is There A Secondary Exit Market?

Yes but only during normal market conditions where Lending Works will try to sell your loan pieces to other investors. The Flexible product has a fee-free exit and the Growth product has a 0.5% exit fee of the amount you are selling.

Exiting is never guaranteed and can only occur if there is demand from other lenders wanting to buy loans.

Because of the Covid-19 situation, Lending Works froze all loan exits for several months to prevent a run on money which could have caused the company to fail. Now, this freeze has been lifted.

Be aware that if you have money invested in both the Growth and the Flexible account, you cannot place more than one loan amount up for sale at one time. I’m currently testing the exit times and will report back once complete.

What Are The Main Risks?

Company failure: If Lending Works were to fail, they have a 3rd party in place to facilitate continued borrower to lender loan payments. Company failure can be costly to investors as the administration process is lengthy and expensive. If a company fails, there’s no guarantee of return of capital, especially when loans are unsecured.

Borrower default: Since all loans are unsecured, defaults are a concern. Lending Works attempts to lower the risk by strict borrowing requirements and default insurance.

Economic downturn: Any downturn in the UK’s economy could affect borrowers’ ability to repay their loans.

Borrower Quality: If Lending Works lowers its requirement and lends to lower-quality borrowers, default rates could rise.

Is There A Provision Fund?

Yes. Borrowers pay a risk-assessed fee that is added to the Shield fund allocation and is designed to cover their payments should they fall behind or default. This Shield fund is used discretionarily and doesn’t guarantee payouts on defaulted loans but is expected to cover £5mm or 10% of Lending Works’ loan book.

The Shield fund cash balance is adjusted as needed depending on forecasted default rates.

Am I Lending To Lending Works The Platform Or To Borrowers?

All loan agreements are directly between lenders and borrowers.

What Happens If Lending Works Goes Out Of Business?

The FCA (Financial Conduct Authority) requires Lending Works to have a sufficient wind-down plan in place should it cease to operate. Lending Works has an agreement with Link Financial which would manage all loan payments to maturity.

The biggest issue with company failure is that the expense of the trustee and administration could significantly reduce the amount of recovered money paid to peer to peer lenders.

If Lending Works were to go out of business, there is an agreement with a third-party service provider to manage all loan agreements so interest payments are maintained. In addition to this, an administration company would work on behalf of the creditors (people owed money by Lending Works) and customers (borrowers) to recover as much money as possible. It’s important to know that we (lenders) are not considered creditors.

All monies in investor Cash accounts are ringfenced inside a Barclays UK account.

Be aware that the administration process involved in a company wind-down is expensive and lengthy and there’s no guarantee you would get your money back.

Though an unlikely occurrence, there are many unknowns that can occur when a peer to peer company goes out of business.

You can read about Lending Works’s wind-up plan here.


Shield Fund

The Lending Works Shield is a contingency fund that allocates money to cover existing and future late borrower late payments and defaults. The Shield is funded by a portion of loan arrangement fees and borrower interest and is topped up daily as payments are made.

At times it would appear the Fund’s balance is a tiny amount of Lending Works’s loan book and one could be mistaken for thinking this fund wouldn’t cover much of the loan book. In actual fact, the fund is adjusted as needed in order to maintain investor interest returns.

This makes sense because if the fund held its projected £8.9m in cash, this idle money would reduce investor return rates. Due to Covid-19, the Shield fund is steadily increasing its cash balance in order to cover an expected rise in borrower late payments.

Ease of Use / Hands Off

Unlike some other peer to peer lending companies, Lending Works is very hands-off which means less time glued to a computer screen.

Free Exit On Flexible Product

For investors looking for a short-term investment, the Flexible product offers a free exit for new money invested but this is currently on pause due to Covind-19 economic conditions. Exit is never guaranteed as it’s based on demand and supply.

Auto Reinvest

Lending Works is a dream come true for those who want to be hands-off investors. Just choose from two simple reinvestment options and set and forget.

Highly Experienced Underwriting Team

It’s in Lending Works’s best interest to keep its defaults to a minimum and its experienced underwriting team tries to accomplish this by implementing high-quality borrower screening.

Withdrawals & Payments

Capital and interest payments are credited promptly. Withdrawals are prompt, usually showing in your bank account in a day or two.

The Website

It’s very easy to use and understand. Here is the Portfolio dashboard:

Lending Works review

Click Lender Settings on the right side and you will be taken to the page where you select your reinvestment options:

Lending Works review

Loan matching estimates are now shown on the dashboard page which is a really nice addition:

Lending Works review

Falling / Negative Return Rates

As is a common trend in many peer to peer lending companies, Lending Works dropped its lender rates to bolster its Shield fund and increase revenues. When lender return rates drop, the risk to reward increases.

In October 2020, Lending Work’s announced lenders would see a period of negative interest rate returns due to the increasing bad debt of the loan book due to Covid-19. Lending Work’s also stated that “…we still forecast that all retail investors will still earn positive returns across all annual cohorts of loans over the life of those investments and no customers are in a capital loss position”.

Negative interest is never a good deal for investors but maybe Lending Works needed to implement this condition for the business to survive.

The negative interest was eventually removed in the summer of 2021.

Sometimes A Delay In Deploying Money

Depending on changes in demand and supply, it can take some time for your new investments to be invested in loans. I’ve seen investment times range from two days to one month.

For example in December of 2018, investments were taking as long 30 days to deploy and in February 2020 times ranged from 1-7 days for the Flexible product and 7-14 for the Growth product. In my experience, five days has been my usual investment time. This delay in investing is known as “cash drag” meaning anytime your money isn’t earning you interest, it’s a drag on your returns.

Remember that queued reinvestments always take priority over new investments.

Because of the Covid-19 situation, Lending Works has frozen all loan deployments. I expect this freeze to be lifted once the economic conditions normalise.

Early Loan Repayments Can Lead To Cash Drag Due To Matching Times

Lending Works doesn’t offer lenders a way to limit how much money is placed into any single loan. So, for example, if you wanted to invest £5,000, that amount could be theoretically invested into two different £2,500 loans.

If a loan is repaid early, you could have a large portion of funds returned to the matching queue taking days to be reinvested. It is theoretically better to have 100 x £50 loans than two x £2,500 loans because the chances of your two loans being repaid early are much higher than the chances of 100 loans being repaid early.

The problem is in order to receive 100 x £50 loans, you would have to manually drip-feed £50 per day into your account which is a pain. Hopefully in future Lending Works will allow lenders to set how much maximum they would like to go into any single loan.

Lending Works does use their Protection Shield to diversify and equally cover lenders but it would be nice if, like Funding Circle, they offered lenders the ability to set their maximum allocation amounts to any single loan.

£10 min Needed To Reinvest Interest Payments

Lending Works changed their minimum investment requirement from £10 to £100 and their minimum reinvestment from £1 to £10.

What this means to you is if you have invested £1,000 in the five-year product paying 6.5% per year, you’ll receive £0.18 per day. This means it will take 56 days for you to earn £10 in interest. This further means that your money won’t be reinvested into the queue for 56 days and your returns could be reduced depending on the queue times.

The solution here is to invest at least £1872 at 6.5% per year. to receive £10 in interest each month. The more you invest, the quicker you’ll receive £10 in interest and reduce this issue.

Borrower APR %’s Are On The Rise

When Lending Works first launched in 2014, their average weighted APR (annual percentage rate) to borrowers was 7.7%. In 2021 this number has risen to over 13% This leads to the question of whether the borrowers are being perceived as riskier or whether this is a business operational decision to become profitable?

Exit Fees

During normal market conditions, Lending Works has a 0.5% exit fee on their Growth product plus you may also face additional fees if interest rates are higher than your current investments. For example, if the loans you wanted to sell were at 6.5% but the new rates were paying 7.5%, the 1% shortfall would be charged to you the seller as a fee. Lending Works doesn’t charge this fee when you exit from the Flexible product.

This 0.5% selling fee is for the five-year Growth product and for existing investments in the older three-year product.

If economic conditions become torubled (think Covid-19), Lending Works can freeze all loan exits but you can still withdraw any money you have in your holding account.

I tested the selling Growth product market in July 2021 and exit fees on my loans were between 7-10% which is costly.

Reinvestment Funds In Queue Prioritised Over New Investments

This thumbs down is for those depositing new funds or switching their received capital and interest from withdrawing to reinvest. Reinvestment money is always at the front of the lending queue. Not a big negative but if you move funds to your wallet to withdraw and later decide you want to reinvest, the funds will be moved to the back of the lending queue.

Statistics Are Limited

Lending Works does provide a loan statistics page but default information is limited. I’d like to see more transparency in this area but I do like that you can download the entire loan book to see details.

My Strategy

I began by investing a small amount in the five-year term and invested more as I became comfortable with the company. I’m less comfortable now lending through Lending Works as I expect consumer lending to see more bad debts due to Covid-19 and because Lending Works is still charging negative interest meaning lenders’ returns will be greatly reduced indefinitely.

I’m currently drawing down my investment as I think there are better places to invest.

The Lending Works Review Conclusion

After 6+ years of investing, I have high hopes that Lending Work’s will be able to ride through the Covid-19 storm which will likely see an increase in bad debts. The Intriva Capital acquisition should provide Lending Works with the capital it needs to continue operating. I was happy to see the Shield fund issue quickly addressed and plans were put in place to allocate future loan repayments to the fund.

Under normal market conditions, I was comfortable investing through Lending Works. But the negative interest rate conditions and some opaque practices during the Covid lockdown made me less comfortable with Lending Works so I’m currently withdrawing capital and interest as it is repaid.

Receive £50 cashback when you invest £1,000. Their website doesn’t show any details of the offer but as long as you use my link, you will receive the cashback. Deposit £1,000 and once it is all invested, you’ll receive your cashback within a week. (Lending Works pays me a small referral fee when you open an account through one of my links. This fee comes at no expense to you and when you sign up for an account through my website, it allows me to continue to operate this website).

I update this review as changes occur. If you notice any errors or omissions, I invite you to contact me and let me know.

If you enjoyed my Lending Works review and want to learn more about peer to peer lending, click here and receive my complimentary Top 5 Peer to Peer Lending Sites Report.

Disclaimers: I am not paid to write my reviews and I’m not employed by any of the companies I write about. In most cases, I have invested or continue to invest my own money through these companies. In order to keep the website financially viable, the sign-up links on this website are referral links and I do accept advertising in the form of banner ads. This advertising in no way influences my reviews and opinions. When you sign up for an account through my website, in some cases I receive a referral fee directly from the companies, at no cost to you. Your support enables me to continue to operate the Financial Thing website. You can read more about my referral links and banner advertising here.

** This Lending Works review is for information purposes only. This information is not financial advice and has been prepared without taking your objectives, financial situation or needs into account. You should consider its appropriateness for your circumstances. All investing carries risks. Opinions expressed in this review are opinions based on my own personal experiences. The FSCS does not cover peer to peer lending and your capital is at risk. Please don’t invest more than you can afford to lose. **



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