Somo rated ‘exceptional’ by 4th Way
Bridging lender Somo has received a 3/3 Plus rating from 4th Way, a score reserved for those that the lending research agency considers to be ‘exceptional’.
It is 4th Way’s highest possible rating and was awarded after Somo released extensive data to the research firm for the first time.
Firms that receive 4th Way’s 3/3 Plus Rating are expected to make money through a severe recession and major property crash.
In the review, 4th Way head of research Neil Faulkner said Somo’s approach to mitigating risks when assessing borrowers was “beyond what I’m used to seeing in bridging lending”.
4th Way confirmed that over the past nine years “lenders have lost none of the money they put into any loans”. It credits Somo’s bad-debt recovery processes as part of the reason for that.
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Meanwhile, 4th Way added that the firm’s lending processes are “high quality, professional and appropriate for these kinds of loans” and that “its processes centre around looking for a margin of safety in worst-case scenarios and – very important for this kind of lending – a strong and realistic exit strategy for repaying the loan”.
Commenting on Somo’s key people, Faulkner’s review said, “my assessment is that this family business has all of the relevant skills and experience we’d expect to see in property lending and bad-debt recovery. It also has complementary skills, such as relevant legal backgrounds.”
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The review points out that Somo has a high minimum lending amount, at £5,000 per loan.
Lenders also have to have either invested in more than one unlisted company in the prior two years, have an income of at least £100,000, or savings and assets excluding their home worth £250,000, or have an up-to-date certificate from a regulated financial firm declaring competence to invest.
Somo is currently offering annual returns of up to 13.2 per cent per annum, although 4th Way states Somo lenders are currently earning 8.88 per cent.
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“The investment in our people and processes has certainly paid off and we’re delighted 4th Way considers us an ‘exceptional calculated risk-reward balance’,” Somo founder and chief executive Louis Alexander (pictured) said.
“We’ve always had confidence in our lending – our track record in terms of interest rates, bad debts and margin of safety is second to none – but I hope investors will be further reassured now we’ve received the highest rating possible from 4th Way.”
Somo recently became a patron lender of the National Association of Commercial Finance Brokers and last month announced it was boosting its upper rates to 12 per cent for at least another month, ahead of the platform’s tenth anniversary next year.
Read more: Somo hires new relationship director in Wales
