Author Archives: MPI

EstateGuru secures its first institutional credit line from a German bank

By News, Peer-to-Peer Lending, Real estate, , , ,

EstateGuru New Logo

EstateGuru, the European leading cross-border marketplace for short-term property loans has secured its first institutional credit line to be invested into loans originated in the Baltic market.

EstateGuru CEO and co-founder Marek Pärtel comments:

“Establishing the EstateGuru – Varengold cooperation is a proof of having found a mutually beneficial cooperation model between a traditional financial institution and a fintech company. This is a clear sign that building a diversified portfolio of property backed loans is a very appealing instrument for institutional investors. Our Pan-European retail investor base is still the main source of capital. However, establishing a cooperation with Varengold Bank and other institutional investors enables EstateGuru to grow faster by offering a wider variety of property backed loans to our entire investor base and raise the flexibility of loan terms to our borrowers. Without a doubt it is an important milestone for EstateGuru in moving closer to our goal of becoming the leading provider of flexible property backed finance solutions in Europe. We still see many SME-s and property developers who are struggling to get property backed finance from traditional financial institutions due to highly regulated and lengthy processes. EstateGuru has a clear vision and roadmap to bridge the gaps left open in the property finance industry.”

EststeGuru COO Mihkel Stamm adds:

“Establishing a cooperation with Varengold Bank is an unprecedented assurance of the quality of EstateGuru’s business processes. The due diligence process was thorough and lengthy, during which Varengold’s representatives were convinced of EstateGuru’s product, procedures and the people behind the business.“

Since the establishment in 2014 EstateGuru’s investor base of over 11 000 investors have funded in excess of €50 million of secured property loans in Estonia, Latvia, Lithuania, Finland and Spain with zero losses to investors to date. With the recent developments, including entering 2 new markets in 2018 Q1, establishing an institutional credit line and an ongoing equity round, the firm is setting goals for the next European markets, to establish its Pan-European reach in coming years.

About Varengold Bank AG

Varengold Bank AG is a German private bank, headquartered in Hamburg. Varengold is the leading provider of products and services to the Marketplace Lending Industry

Founded in 1995 as an asset management boutique seeking to offer individual and high-performing financial products for private and institutional clients. In 2013, Varengold was granted a commercial banking license when it transformed into to fully fledged commercial bank.

Varengold Bank AG is registered with the German Federal Financial Supervisory Authority (BaFin) under number 109 520 and has been listed at Deutsche Börse in Frankfurt since the 20th of March 2007 (ISIN DE0005479307, WKN 547930). Varengold Bank AG is also connected to the Compensatory Fund of German Banks (EdB).

EBV Finance joins Mintos and you can now invest in low-risk VAT receivables

By News, Peer-to-Peer Lending, , , , ,

Mintos logo

The leading VAT refund provider in Central and Eastern Europe has joined Mintos. EBV Finance offers fast VAT and excise duty refund services to transportation companies in Europe. You can now invest in VAT receivables from European governments and earn returns of up to 9%.

Established in 2009, EBV Finance is an international company lead by a team of factoring experts. Based in Lithuania, it offers fast VAT and excise duty refund services to transportation companies, which have applied for VAT and excise duty refunds from governments in Europe. EBV Finance issues VAT refunds from 31 European countries, the main receivables come from Belgium, Luxembourg, France, Germany and Austria.

The process of tax refunds can be burdensome, taking up to eight months and can lead to frozen working capital. EBV Finance is a great solution to get access to the refunds in just two days. Once EBV Finance has approved the loan, it takes over the carrier’s application with the government. EBV Finance is a specialist in tax administration and is able to receive the tax refunds faster than it would have taken its clients.

“We are very glad to offer investors on Mintos the opportunity to invest in VAT receivables from European governments. EBV Finance’s loan portfolio is unique. Because the governments are legally obliged to refund the VAT and excise duties to the company, the risk of a default on the payment is virtually non-existent. This means investors can earn great risk-adjusted return,” says Martins Sulte, CEO and Co-founder of Mintos.

The average loan listed on Mintos is EUR 1 000 with a repayment period of up to 9 months. For EBV Finance loans you can expect a net annual return of up to 9%.

EBV Finance will keep 10% of each loan placed on Mintos on its balance sheet, to keep its interests aligned with those of investors. The company ensures a buyback guarantee for all loans that are delinquent for more than 60 days.

EBV Finance has the largest VAT refund portfolio in the Baltic states. Per year, EBV Finance has refunded more than EUR 80 million and this number is growing at a rapid pace. In 2017, the revenue for the company was EUR 3 million and the net profit was around EUR 1.5 million. The company has made a profit every year since its inception in 2009.

Since its establishment, EBV Finance has acquired more than 1 200 clients including DSV, DHL, Hellmann Worldwide Logistics and many others large international transport groups. EBV Finance works with well-known fuel suppliers such as Circle K, ESSO, Total and others.

Currently, EBV Finance operates in nine countries in Europe: Germany, Poland, Sweden, Finland, Denmark, Spain, Lithuania, Latvia and Estonia and plans to enter new markets in the near future.

1pm now offers on Mintos p2p lending marketplace the chance to select loans based on risk categories

By News, Peer-to-Peer Lending, , , , , ,

Mintos logo

1pm is the latest loan originator to offer Mintos investors the opportunity to select its loans for investment based on loan risk categories. The inclusion of the risk categories will allow you to make a more informed investment decision and, therefore, increase your chances of success.

1pm was the first loan originator from the United Kingdom to launch on Mintos, offering its business loans for investment. Now you can select your investments in its loans based on its five risk categories which assess the likelihood of the borrower defaulting on their loan. The link between the borrower default rate and the risk categories is based on real-world statistics collected by a variety of credit agencies. These agencies collect extensive global credit reporting information and compare the company’s who default based on industry and size amongst other factors to forecast which company’s are the most likely to default within the next 12 months.

Category Scoring EABDR*
Very low risk 71 – 100 0.09%
Low risk 51 – 70 0.30%
Moderate risk 30 – 50 0.46%
High risk 21 – 29 2.32%
Very high risk 1 – 20 8.37%

*Expected Annual Bad Debt Rate

1pm bases its risk categories on the size of the business determined by the criteria of Companies House – a United Kingdom government department which incorporates and dissolves limited companies, examines and stores company information and makes it available for the public. Other factors taken into consideration when assessing the creditworthiness of a borrower is information on the business, commercial track records, directors, consumer track records, financial trend information, payment performance, company size, age of business, industry sector, geographical region and management and owners of the business.

The inclusion of the risk categories will allow you to make a more informed investment decision and increase your chances of success.

1pm was founded in 2000 and listed on the London Stock Exchange in 2006. The company offers many finance solutions to SMEs within the United Kingdom including asset and vehicle finance, hire purchase, commercial loans and invoice financing. It is dedicated to helping the United Kingdom’s economy grow by providing finance to businesses. The company joined Mintos in February 2018.

Lendo has published its latest operational results

By News, Peer-to-Peer Lending, , , ,

Mintos logo

Georgian non-bank loan originator Lendo has published its operational results for the first quarter of 2018. According to the figures, Lendo is now the leading non-bank lender in Georgia in terms of loan volumes and portfolio size. As of the first quarter of 2018, Lendo disbursed more than EUR 90 million worth of loans since its inception.

Due to the changes in regulation in Georgia in 2017, Lendo focused on instalment loans, which has provided the company with a steady growth of its loan portfolio and income stream. As a result, the company’s revenue has exceeded levels reached before the interest rate restrictions were implemented.

Lendo offers its unsecured consumer loans through its established network of branches across the largest cities in Georgia. Lendo is a well-known brand in Georgia and employs almost 200 employees. The company prides itself on its friendly customer service and as a result had more than 130 000 active clients as at March 31, 2018.

Lendo will publish its audited 2017 financial statements in June 2018.

Lendo has also reactivated its cashback campaign on Mintos peer-to-peer lending marketplace. If you invest on Mintos in Lendo’s loans with a maturity of 9 months or more between May 2, 2018, and May 16, 2018, you can earn a cashback of 1.5%.

If you want to earn the cashback, you need to be enrolled in the campaign before you make the investment. Only investments made on the Mintos primary market qualify.

EstateGuru peer-to-peer cross-border lending marketplace overview

By Peer-to-Peer Lending, Real estate, , , , ,

 

EstateGuru New Logo

NEW: The peer-to-peer lending marketplace EstateGuru offers now a 0.5% bonus on all your investments made in the first 3 months. To receive it, you must register, comply with the terms and conditions and start investing. The bonus will be added to your investment account after the loan has been funded and transfered to the borrower.

EstateGuru is a leading Nordic online peer-to-peer lending platform established by property and FinTech professionals facilitating short- and mid-term property loans. The cross-border marketplace offers flexible terms for borrowers and premium interest to its investors. The loans of EUR 50 000- 3 000 000 facilitated through the EstateGuru platform are secured against property with a maximum LTV of 75%.

The mission of EstateGuru is to provide hassle free and flexible financing to property developers and entrepreneurs and property backed investment opportunities to its international investor base.

To date EstateGuru has been growing more than 300% a year and has established itself in Estonia, Latvia and Lithuania with more than 314 loans issued amounting to over €51 million. To date, EstateGuru has more than 11200 investors of different profile from 45 countries.

In the near future EstateGuru is launching the platform in Spain, Ireland and the UK.

How does it work?

A property owner, developer or entrepreneur proposes a business case for which they need funding. The professional team at EstateGuru will examine the application, and commission an independent valuation by a recognized third party.

If the independent review of the value of security, and the analysis of EstateGuru team’s due diligence, including of the borrower business plan and exit strategy is positive, the loan will be opened for investment. Within ten days of funding being successfully achieved through the platform, EstateGuru will set a charge on the property, releasing the funds to the borrower.

At EstateGuru Lenders earn interest on a monthly basis through the term of the loan, at rates that exceed most of the standard investment vehicles. Borrowers can quickly and efficiently raise competitively priced capital to bring their projects to life. Asset backed investing and borrowing has never been easier.

Who is eligible to invest?

You must be at least 18 years old and have a bank account any of the EEA member states or in Switzerland in order to lend through EstateGuru. EstateGuru also have to perform certain “know your customer” checks on you before you can start investing.

Using this referral link when you signup you will receive a 0.5% bonus of the total amount invested within the first three months.

What type of projects can be founded on EstateGuru?

Real estate projects in Estonia, Latvia or Lithuania which are approved by our team can access funding through EstateGuru. However, there is no limitation on the type of projects that can be submitted for approval. As long as the project has a property element to it and the property is capable of being used as security for the debt, please feel free to submit it for approval.

Investing

EstateGuru makes it easy for investors to access a variety of real estate investments with a relatively small amount of capital. The minimum amount for investment is €50, which enables to create a diversified portfolio. All loans are secured with a mortgage.

The minimum investment amount is €50 and no fees apply to investors. All expenses are covered by the borrower.

Both manual and auto-investment are availabile. Auto Invest is a feature that allows you to invest your funds automatically in all loans available for investing on the EstateGuru platform.

The main keywords for the Auto Invest feature are comfort, speed and automatization.

• Auto Invest ensures you will not miss an investment opportunity due to high demand and the investment will be placed based on your chosen criteria automatically, without you having to stress about it;

• Auto Invest enables you to build a diversified portfolio, in which all the projects are chosen by a professional team who stands for the success of your investments;

• Auto Invest enables you to reinvest your income at the earliest opportunity. This way you start earning interest on committed funds as soon as possible.

EstateGuru in numbers

  • Money lent: 52 579 833 EUR
  • Total value of propertie funded: 101 878 932 EUR
  • Number of funded loans: 324
  • Number of repaid loans: 127
  • Number of loans in default: 2
  • Recovered loans: 1
  • Registered investors from 45 countries: 11 638
  • Historical annual return of repaid loans since 2014: 12.44%

PeerBerry peer-to-peer lending marketplace overview

By Peer-to-Peer Lending, , , , , , , , , , , ,

PeerBerry logo

PeerBerry launched on the 1st of November 2017 with loans originated primarily by Aventus Group and its subsidiaries. Since, they have started adding other credible European loan originators to diversify the investment opportunities. PeerBerry strongly believes that passive income guarantees stable economy and better lifestyle hence their mission is to bring passive income to everyone.

Aventus Group is an international successful payday lender, founded in 2009. Profitable from its first year of operations, Aventus Group has created the team of experienced specialists and now holding strong positions in the Czech Republic, Latvia, Poland, Georgia, Ukraine, Kazakhstan and Moldova. The company puts a strong emphasis on responsible lending. Aventus Group brings to PeerBerry 3 leading loan originators from across Europe.

PeerBerry is a peer-to-peer marketplace for private lenders to invest into loans originating from non-banking lenders – the Aventus Group and its daughter companies. Portfolios of non-banking borrower requests mainly consist of short-term consumer loan requests across Europe. Unlike traditional banking they offer private investors access to the non-banking lending sector.

Who is eligible to invest?

Individuals and companies from within European Union can become investors at PeerBerry. Join us: complete a short registration form and activate your investor account by depositing initial funds. Keep in mind that you must be at least 18 years old, and that we only accept deposits from credit, payment or electronic money institutions within the European Union.

In what currencies can investments be made?

Investor Account can be opened only in EUR, but they accept deposits in all currencies. Payments received in currencies other than EUR will be converted to EUR according to the Swedbank currency exchange rates.

How can funds be transfered?

You can transfer money to your investor account from your bank account registered in European Union. Transfers in EUR can be done easily and at low cost using SEPA (Single Euro Payments Area) transfers.

Investing

Both manual and auto-investment are availabile. All loans come with a 60 days buyback guarantee. PeerBerry will buyback loans (principal amount and accrued interest for full term), if a borrower is over 60 days late with the repayment.

Auto Invest automatically implements your chosen investment strategy. After you have entered your investment criteria, Auto Invest will automatically invest in suitable loans. You can access Auto Invest at any time and follow your portfolio activity in real time to make sure it is working according to your investment goals. Auto Invest is a very efficient tool for saving time spent on investing activities.

You can pause or cancel Auto Invest at any time.

Once you have confirmed your investment criteria, Auto Invest will review loan listings and invest funds in loans that meet your preferences. Auto Invest will continue to automatically analyze and invest in suitable new loans as soon as they are listed. If you change any Auto Invest setting, all available loan listings will be rechecked to make sure they meet your investment criteria.

Can investors cancel the investments?

For investments to long term loans investors have an option to use “Sell back”. Sell back means that you will get invested money into particular loan and counted interest after 14 days the Sell back option is activated. For this service extra fee will be charged. Unfortunatelly, approved investments to short term loans cannot be cancelled. To get your funds back you need to wait until the loan agreement is closed or a Buyback Guarantee is activated.

Loan originators

Pujcka7

Pujcka7 has been operating on the Czech Republic market since 2012. The company is a member of the APNÚ (Association of Non-Bank Loans Providers). Pujcka7 pays great attention to the assessment of clients’ finances and commitments. Since the beginning more than 70 000 satisfied clients have put trust in their services. Not in vain the company is recognized as one of the most favorable non-bank loans lenders in Czech market.

Key figures of Pujcka7:

Amount of issued loans in 2017: 94.038.637 CZK;

Revenue in 2017: 45.074.452 CZK;

Active portfolio at the end of 2017 (where overdue is less than 90 days): 21.456.509 CZK.

Smart Pożyczka

Smart Pożyczka was launched 4 years ago in Poland. From the beginning, the company has focused on innovative IT solutions and big data analysis for effective risk management. The company is proud of reliable clients and their feedback which encourages daily improvement. Over 60% of customers come back to Smart Pożyczka and use smart and simple way to take repeated loans.

Key figures of Smart Pożyczka:

Amount of issued loans in 2017: 54.291.475 PLN;

Revenue in 2017: 16.994.631 PLN;

Active portfolio at the end of 2017 (where overdue is less than 90 days): 11.899.558 PLN.

Pożyczka Plus

Pożyczka Plus is a consumer loan provider profitably operating in Poland since 2012. The company is a member of Loan Companies Association and has won numerous awards in the local market. Since launch, Pożyczka Plus has granted loans to over than 250 thousand customers. In past years the company increased its market share by 15%. The customers are highly satisfied with a trustworthy, innovative and fast service. Consequently, Pożyczka Plus is one of the most innovative lenders in Poland.

Key figures of Pożyczka Plus:

Amount of issued loans in 2017: 47.695.134 PLN;

Revenue in 2017: 14.929.806 PLN;

Active portfolio at the end of 2017 (where overdue is less than 90 days): 10.453.778 PLN.

SOSCredit

Despite strong competition in just a few years after launch SOSCredit has established itself as one of the key players in the Czech Republic and is highly rated by its clients. SOSCredit has managed to achieve this through innovative IT solutions that enable quick and reliable risk assessment and loan decisions in just 15 minutes. Customers love the speed, quality customer service and transparency with no hidden fees or commission.

Key figures of SOSCredit:

Amount of issued loans in 2017: 65.637.700 CZK;

Revenue in 2017: 37.728.388 CZK;

Active portfolio at the end of 2017 (where overdue is less than 90 days): 19.385.621 CZK.

Why smart people do stupid things with money?

By Smart money, , , , ,

Smart people

It’s a pretty good question, is not it? How do intelligent people manage to do things with money and after a while become totally disappointed with their “successes”?

I suggest you think a little bit!

And here I do not mean people without financial education or any other kind of education.

Let’s think of intelligent people who have completed a faculty or a master and who have obtained a job because of their competencies or who have developed a start-up that has become a “small profitable money machine”. How do they become totally disappointed with their own financial situations, even though they have earned a lot of money over the years?

Here are three of the most common reasons:

  • They have a disastrous financial behavior. Although there are people who have extraordinary professional, social or family behavior when it comes to financial behavior, they completely ignore it!

          They are implusive consumers, meaning “perfect” for traders. Buy anything at any price. If they like something, they put in a basket without considering how much money they have available until the next salary. “I even withdraw money from my credit card if I do not have any money left in my salary account”. You’ve heard of such people, right?

         The first step in changing financial behavior is definitely analyzing your own behavior. If it’s not one you can be proud of, you can change it. Instead, if you go like a ostrich – just put your head in the ground and deny your own financial situation – it takes only a short while until the frustrations and shortcomings will arise.

  • They omit the financial planning activity. They do not have financial goals, they have no clearly defined plans to follow, and this is why they do not take into account the financial planning activity. Surprisingly, all people know that without a plan whatever it is financial or any other type, the chances of success tend towards zero.
    To increase your chances of succeeding in what you propose, take a pen and a sheet, write down your short, medium, and long-term financial goals, make plans for action, and set up tight financial targets.

          If you want a house, set the amount of money you need, the detailed plan to get that amount, the intermediate targets delimited by clear terms and get to work. Without action, the results are always zero!

  • They do not have information, skills or financial skills. The result of not very profitable investments is often the lack of understanding of financial products and services and business investment in areas that they do not know.

          I’m sure you’ve heard questions like “I have 10,000 euros and I do not know what to invest in.” Or “What are the most profitable businesses?” Often, those who ask for such questions are people who lose money because of their lack of skills and entrepreneurial experience.

         Lack of understanding of financial products and services such as savings accounts, deposits, investment funds, shares or the Forex market can also cause a small amount of trouble if you do not understand how they work.

       Developing a “healthy” thinking, how the most important financial products and services work, and developing entrepreneurial skills can help you increase your personal income.

ViaInvest peer-to-peer lending marketplace overview

By Peer-to-Peer Lending, , , , , , ,

VIAINVEST is a peer-to-peer marketplace for private lenders to invest into loans originating from non-banking lenders – the VIA SMS Group and its daughter companies. Portfolios of non-banking borrower claims mainly consist of consumer loan requests across Europe.

Unlike traditional banking VIAINVEST offers private investors access to the non-banking lending sector through a simple process.

Borrowers request funding from the VIA SMS Group, the active contract automatically is then mirrored on VIAINVEST making it available for public investment. Each investor has full control of how much he wants to invest, to whom and in which loan. VIAINVEST guarantees a transparent investment environment and full investor support at any time.

VIAINVEST is a part of VIA SMS group – financial services provider operating across Europe. Since its founding in 2008 the company currently operates in 5 countries and has grown into one of the leading European consumer lenders. Company headquarters are located in Riga, Latvia.

ViaInvest in numbers

  • Total value of issued loans in 2017: 96 813 701 EUR
  • Net loan portfolio in 2017: 18 022 102 EUR (+23%)
  • Average size of issued loan: 349 EUR
  • Average annualized interest rate on loans to customers: 115%
  • Revenue in 2017: 20 122 313 (+22%)
  • Non-performing loans to total issued loans: 6.5%
  • Total number of employees around the world: 157
  • Registered investor: 4696
  • Average investor deposit: 4256 EUR
  • Average interest rate of investments: 10.2%

Who is eligible to invest?

Both private and legal entities are welcome to become investors at VIAINVEST. To begin private investments as an individual, you must be at least 18 years old, must complete the registration process and make the first deposit to your VIAINVEST investor account (VIAINVEST accepts payments only from banks within the European Union). If personal information stated in your investor profile matches the bank information of the person transferring funds to the VIAINVEST platform, the investor profile becomes active and you are able to start investing.

Similar requirements also apply to the legal entities – to start investing, the legal entity must register to open the investor account and make the first deposit. If the information provided upon registration matches the company information appearing when transferring funds, investor account is confirmed. Payments made by legal entities are also accepted if transferred from the bank operating within the European Union.

In what currencies can investments be made?

Investor Account can be opened only in EUR, but VIAINVEST accepts deposits in all currencies. Payments received in currencies other than EUR will be converted to EUR according to the Swedbank currency exchange rates.

How can funds be transfered

Deposits to the investor account can be easily made by transferring funds to the ViaInvest bank account.

For investor identification purposes the first payment must be transferred from the personal investor bank account operating within European Union. The payments are processed within 2 work days.

Investing

In order to begin investing investors need to meet the minimum 2 requirements:

There are two options how to make investments:

  • Manual investing – control what loan contracts you would like to invest into and how much:
    1. browse the loans contract listing currently listed on VIAINVEST in the primary market section and pick and choose how you want to build your portfolio,
    2. make full or partial investments into selected listings.
  • Auto-investing – save the time and invest into several loan contracts at once by letting the auto-invest feature to do the work for you:
    1. set the preferred criteria for your auto-invest portfolio,
    2. take your earnings and reinvest them into other loan contracts,
    3. fully automate the investment process without having to log in, manage your investments by changing auto-invest criteria or cancelling this option at any time.

All investments are made in EUR.

Tax issues

As income generated on VIAINVEST is a subject of Withholding Tax, VIAINVEST offers investors to choose 2 ways how these commitments can be handled:

1. Withholding Tax can be applied to the income generated on VIAINVEST within the platform. If the investor does not provide required documents and agrees that his income will be taxed within the platform, no additional actions are required. Income generated on the platform will be taxed according to the legislation of the loan origin country.

2. For Withholding Tax not to be applied to the income within the platform, the investor must take full responsibility of handling these commitments by himself and provide (upload to the investor profile) the copy of personal Tax Certificate issued by the tax authority of the country of investor’s residence. Tax Certificate must be provided before making any investments. If the certificate is not provided all earnings will be taxed in accordance with the appropriate Double Tax Treaty. If the Tax Certificate is uploaded after some investments are made, previously withheld taxes will not be returned to the investor. Only investments that are made after the upload of the Tax Certificate will not be taxed on the platform.

To provide appropriate Tax certificate, please note that income generated on VIAINVEST are paid to investors by loan originators, not the platform itself. Tax Certificate confirms the existence of Double Taxation Convention between the country of investor tax residence and loan origination country/-ies (in this case – Czech Republic, Spain, Latvia). Without a Tax Certificate all earnings will be taxed in accordance with the legislation of the loan origin country – if the loan origin country is Czech Republic – Withholding Tax is 15%, if Spain – 19%, if Latvia – 23%, Poland – 19% for private individuals and 20% for legal entities. Please note that there may be specific cases where Tax/Residence Certificate foresees that investors still need to pay a part of taxes on the platform.

It is required for investors to provide separate Tax/Residence Certificates for each loan origin country. Tax/Residence Certificate must confirm the existence of the treaty for the avoidance of double taxation concluded between the countries of loan origin and investor tax residence.

Future plans

  • Expanding the loan originator list: currently there are 4 loan originators: VIA SMS Ltd. (SIA VIA SMS) in Latvia, VIACONTO MINICREDIT, S.L. in Spain, Via SMS s.r.o. in Czech Republic and VIA SMS PL Sp. z o.o. in Poland. ViaInvest will be introducing a new loan originator from Sweden soon.
  • Planning on launching a VIAINVEST mobile app, in the near future

 

 

Bondora introduces fractional calculation starting 27 of april 2018

By News, Peer-to-Peer Lending, , , , , ,

Bondora logo

What is it?

This is a major update to Bondora system which will ensure an equal distribution of a loan repayment to investors. It’s easy to forget that the loan you funded with your investment is likely to be jointly funded alongside the investments of thousands of other investors – when a borrower makes a repayment to this loan, it’s important that each investors receives an equal amount of that repayment based on their total share of the loan. Even more so, this applies to payments received from our collection and recoveries process too.

What are the benefits to you?

  • The even distribution of debt servicing fees – Making it easier for you to manage and keep track.
  • Faster website and services – More specifically the overall speed of reporting, especially for users with a large number of loans.
  • More precise calculations – With results calculated up to 10 decimal points, ensuring fairness for everyone.

Why have Bondora changed this?

You may notice that from time to time, the debt servicing fees applied to your investments in recoveries may not show an even amount each month. The Bondora engineering team has been working hard on an update to the system called ‘fractional ownership’ which will now make all loan repayment distributions equal across all payments for each investor.

Currently, the distribution is equal but the equality is achieved over multiple payments (by recording how ‘unfair’ the previous payment was and then correcting it the following time for the customers who received more or less). Now, such fluctuations with payments will be eliminated.

How does it work?

All calculations regarding past and future investor shares in the cash flows will be based on a loan schedule multiplied with their share (known as fractional ownership) with results calculated up to 10 decimal points. Payments to your Bondora account will also be made in amounts with up to 10 decimal points, however withdrawals to real cash are still limited to 2 decimal points as smaller increments are not yet supported by the traditional banking system (Not surprising…).

Thanks to this, even investors who own a €1 part of a €10,000 loan will always get their fair share of the repayment.

How will this affect your portfolio?

For a small number of investors, the present value of their portfolios will slightly change due to the added precision of the calculations. These changes are extremely small, nevertheless for those whose portfolio value decreases by any amount, Bondora will compensate them the difference.

The average compensation amount will be €0.25 and the largest being €25. With this in mind, the planned principal and interest amounts will also be recalculated in the cash flow reports to reflect these changes. This will be done automatically, so no action is needed from you.

The estimated release date for this update and the compensation is Friday 27th April.

What is Crowdfunding?

By Peer-to-Peer Lending, Smart money, , , ,

Crowdfunding

Crowdfunding is not a new concept, in fact, it’s been around for centuries. Investopedia describes it as:

“Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. Crowdfunding makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together, and has the potential to increase entrepreneurship by expanding the pool of investors from whom funds can be raised beyond the traditional circle of owners, relatives and venture capitalists.”

Which can be summarised as decentralizing the banking monopoly by bringing together investors and people in need of finance. It’s unique compared to the traditional method of raising capital (especially a start-up) because your funding options were limited to a small group of wealthy individuals and institutions – today the power is in the hands of the individuals.

3 types of crowdfunding

Whilst there are still many niches of crowdfunding, here are the top 3:

  • Donation Model – This is commonly used for charity projects, such as raising funds for medical costs, foreign aid or specific organizations. Those who donate do not receive anything in return as their motive is usually believing in the specific cause or wanting to help. Two of the biggest platforms in this space are www.justgiving.com and www.gofundme.com.
  • Reward Model – If someone has an idea for a product, they may release the prototype of this on a page like www.kickstarter.com and allow people to make pre-orders. No equity is given here and it gives the business owner the opportunity to ‘Kick-start’ their project with guaranteed customers in the pipeline.
  • Equity model – You’ve seen Shark Tank and Dragon’s Den right? Imagine this, but instead of a panel of 5 billionaire’s you have a panel of thousands of ordinary people willing to invest their hard earned money for a given percentage of a business. The end goal for investors is to receive an appreciation in their initial investment based on the future success of the company, for example, profits and dividends.

The bottom line for the success of each model is a secure and trusted platform that connects both end users. A huge benefit of using these platforms is that some have a screening process that validates the concept or project before posting, it’s then published in a clear and understandable way for everyone. From the perspective of the person looking to raise the funds, they have the advantage of reaching a vast market of investors with most of the marketing and PR taken care of by the platform itself.

What is the difference between Peer-to-Peer (P2P) lending and Crowdfunding?

In short, crowdfunding as an investment focuses on the equity based reward whereas P2P investments (occasionally referred to as ‘Debt Crowdfunding’) fund a share of a loan which can be issued for personal, business, real estate use and more. With crowdfunding, your investment grows if the company grows and in turn makes a profit. On the other hand, your P2P investments can start to generate a return for you very quickly as borrowers start to make their monthly repayments, returning your initial principal and also interest on a monthly basis.

Generally, P2P lending can be viewed as lower risk and does not require the investors to have any previous financial knowledge as most platforms take care of all the hard work of screening the borrowers for you.

What are the benefits of crowdfunding and P2P other than interest?

This form of micro-financing truly is something revolutionary. Giving the power back to the individuals to mass fund a project that they truly believe in has a positive snowball effect on the wider economy. Projects and borrowers that traditionally may not have been funded by the banks (and would therefore have been forgotten about) now have a unique chance, with the end result being:

  • More small companies
  • More jobs
  • More social mobility
  • Less social inequality
  • Integrated society
  • More value and control for investors

Source: Bondora.com

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