The CFO of peer-to-peer lender Wellesley & Co. insists the business is sustainable and profitable, despite reports suggesting it is "battling to stay afloat."The Daily Mail reported earlier this month that the peer-to-peer property lender, set up by Graham Wellesley, the Earl of Cowley, was in a "perilous state" after accounts showed it was in need of a cash injection. The Financial Times also raised alarm bells.Accountants BDO said two months ago that the business' survival was dependant on "raising further capital," despite a 2.5 million investment as recently as September.Wellesley tried to raise 1.5 million at the start of the year on crowdfunding platform Seedrs, but the Telegraph reported on Monday that the company has abandoned its funding drive after attracting just 200,000 in pledges.Alasdair Lenman, Wellesley's CFO, insists the business is in a strong position. He told Business Insider: "We do not need to raise more equity for any reason other than to accelerate growth rates."'One man's loss is another man's investment'Lenman was brought in last July along with a new chief risk officer to help right the ship after a difficult 2015. Accounts filed just before Christmas show the business made a pre-tax loss of 3.2 million in 2015.Lenman says Wellesley made a profit in the second half of 2016 under his stewardship, saying: "In order to become profitable, it's actually quite simple, all we need to do is slow down our rate of growth and make sure we keep our impairments at their current low levels ' 1.2% of our loan book ever to the end of 2015."Lenman said Wellesley is targeting growth of between 10-20% this year and currently has a positive net asset value of 1 million."In that context, we've decided to pause our crowdfunding campaign because it has not achieved the scale we would like it to," Lenman said. "The problem is that a relatively small number of retail investors would add quite a lot of complexity into the business. We'd end up with a different class of shareholders for example. Without making a material difference to the speed at which we grow at."Wellesley invested in an expensive TV advertising campaign in 2015, which helped attract over 12,000 investors and over 150 million. But the marketing drive cost 6.1 million and helped push the business into the red.Some in the industry believe Wellesley's big upfront investment in advertising did not deliver the level of return the business had projected but Lenman told BI: "The business absolutely always knew that in order to get up and running and achieve scale, it would have to make some kind of upfront investment. The business expected to, if you like, make a loss ' one man's loss is another man's investment ' and the great thing is we've been able to get to a scale where you run a sustainable and profitable."'We are not displeased at the place where we find ourselves'Wellesley also appears to have underestimated losses from its loan book. The company earned net interest of 13.5 million from its loans in 2015 but had impairments of 3.3 million. That wiped out the company's entire provision fund, a siloed pile of cash meant to act as a buffer for losses. This is worrying because,with just 1 million in shareholder funds and profits, Wellesley appears to have little margin for making similar errors moving forward.Lenman downplayed issues with impairments, saying that losses had "peaked" and were in fact relatively small compared to industry norms.He said: "We expect over time that as we develop and evolve over time that that level will reduce but we are not displeased at the place where we find ourselves, which is where the loss rate itself has peak at 1.2% or so."He added: "The business has brought in both myself and Steven [Bell, chief risk officer] in the last 12 months. Steven really does have a broad strategic role that's about building the long-term, sustainable future of the business and it's not just about impairments. It really isn't."The Telegraph reported on Monday that Wellesley is "courting City investors" but Lenman insists it is under no pressure to raise money. He said: "It's still a conversation that we're open to. If we can find the right investor, who shares the same values as we do, then we can have a conversation. But if we can't, then that's absolutely fine too."A review of the business, published in early December by the company, states Wellesley has 500,000 in shareholder capital.Lenman said Wellesley's priority for 2017 was building deeper relationships with both borrowers and lenders. He said: "Number one is our lending and it's about making sure we build deep, lasting relationships with high-quality borrowers who are building what we describe as middle-sized houses in middle Britain. It's all about building those relationships for a sustainable, long-term future. That's our single biggest priority."The second thing that we need to do is make sure where we build high-quality relationships on the borrower side, we continue to build high-quality relationships with our investors. My personal responsibility for that is to improve the quality of our disclosure."Wellesley was founded in 2013 by Graham Wellesley, a former City trader. Its platform connects investors with medium-sized developers looking to borrow between 2 million and 20 million to fund the building of residential properties. It has lent close to 140 million since inception.SEE ALSO:Chancellor hails 'vote of confidence' in UK economy as Funding Circle raises 82 millionDON'T MISS:Fintech unicorn Funding Circle is getting an extra 40 million of UK government money to lend to businessesSEE ALSO:Finance watchdog CEO: Peer-to-peer's evolution poses 'big challenges' for 'transparency and fairness'Join the conversation about this storyNOW WATCH: How Donald Trump used bankruptcy to stay rich
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