A new player in the peer-to-peer lending sector is offering investors up to 7.08% with a repayment “guarantee” attached.

Orchard Lending Club (OLC) has been spun out of the AIM-listed Orchard Funding Group PLC, which has a market cap of £22.74m. The relationship between the two entities is instrumental to the P2P offering. The parent company will act to “guarantee” the repayment of investor capital, even in the instance of borrower default. OLC sees this as a key selling point for the platform, stating that “no other peer-to-peer lender in the world offers a similar guarantee”.

A company spokesperson tells AltFi that every defaulted loan will be bought back at par, meaning that investors will not lose principal, although they may miss out on interest payments. The platform does not currently publish information on how much capital has been set aside to fund the buy-back guarantee scheme, but has advised us that it will monitor lending commitments and will stop offering the guarantee as soon as it reaches a limit that Orchard Funding Group is unable to manage. Were this to happen, OLC would continue to honour previous claims.

The loans to which investors on the platform will be exposed are made to professional practices and schools and their clients. These include professional fee funding, which enables lawyers and accountants to offer credit to their business customers; premium finance, which allows insurance brokers to do the same, thereby spreading the cost of insurance premiums; school fee funding and working capital for professional practices and schools.

OLC says that it specialises in “heavily-regulated” industries that are historically “unlikely” to default. The platform shares its founders with a pair of established companies in the professional practice and school funding sectors. These are Bexhill UK Limited and Orchard Funding Limited, which have been operating space for 16 and 8 years respectively. These two companies will handle origination responsibilities for the new P2P platform, in much the way that Dragonfly Property Finance fuels the new Octopus Choice offering. In this sense, OLC is for now a kind of front-end investment portal, which simply plugs investors into the existing deal flow of Bexhill and Orchard Funding. But the platform tells us that it will begin originating its own deal flow in time.