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Loan platform roundup: March 2020
03/04/2020
Loan platform roundup: March 2020
Best month ever turned into worst month ever.

I wasn’t surprised when Monethera temporarily(?) shut down operations. But Grupeer blowing up as a scam – now, that was a shock. Beyond the financial impact, my faith in humanity also took a heavy blow, not to mention my faith in Baltic crowdfunding.

I think it’s time for other platforms to act in unison in order to separate themselves from the scammers and restore trust. Talk is not enough, action is required. I have a suggestion, which will shortly be covered in a separate post.

This post will focus on the immediate impact of another disaster, CoViD-19, on specific crowdfunding platforms. But first let’s look at my numbers.

Distribution and profit (loss)

Thanks to discount purchases on Mintos, this month could have been my most profitable ever in crowdfunding… but then Grupeer came along. To be transparent with my readers, I’ve written off my entire Grupeer account balance as loss, but in reality I hope to recover at least some of it.

I also registered loss on Fast Invest after selling my remaining investments for a very disproportionate fee. We still don’t know if Fast Invest can be trusted as a legit platform, but I personally don’t trust them to handle the combined heat from scams and coronavirus.

If you wish to join any of my remaining platforms, here are bonus sign-up links.

As expected, there was no affiliate income this month.

Response to corona

Most platforms have switched to remote work, cut costs, and announced closer supervision of loans / LOs. Here is a quick summary of the specific impact on every platform, and its approach to dealing with the crisis.

Mintos

In addition to coronavirus and the residual impact of scams, Mintos is also plagued by a string of issues with its loan originators. Many investors are frantically trying to leave the platform by selling their loans at steep discounts. Remaining investors (such as myself) are taking advantage of discounts, leaving the primary market dried up.

Many loan originators are forced to raise interest rates to unprecedented levels to draw in investments. But investors no longer trust those interest rates: They know that Mintos originators buy back their high-interest loans. This whole situation is putting additional liquidity risk on loan originators and investors alike, in an already-shitty market situation.

Mintos must improve its due diligence to prevent further cases of surprise license revocations. If it’s impossible to foresee regulatory action in certain countries where regulators are hellbent on killing high-interest lenders, then those countries or lenders should not be listed on Mintos. Period.

On the bright side, Mintos is proactive and professional in adjusting to the crisis and addressing investors’ concerns. Here are the publications and steps taken so far:
Overview of pandemic impact
Webinar with CEO (summary)
Additional loan extensions
Statements from LOs
Secondary market fee (to maintain Mintos income – and drive people back to the primary market?)
Summary of all news

In other good news, Mintos has officially applied for EMI and Investment Firm licensing.

Peerberry

It’s hard to compare without a statistics page, but my impression is that PB is less negatively influenced than Mintos. Late loans and interest rates have both gone up, but remain within reasonable realms.

Important improvements were introduced this month:
Group guarantee by Aventus and Gofingo
About page was updated to show all team members
– Promise of a “radical website overhaul” to improve performance and transparency

Three articles were published to address coronavirus concerns:
– Summary of PB’s adjustments
– Overview of Aventus risk management
– Financial position of LOs

Communication with PeerBerry remains excellent. I asked about the NAR calculation, and received explanation which actually included an Excel file!

Crowdestate

Crowdestate seems to favour a case-by-case treatment of coronavirus implications. Borrowers with overdue loans will need to submit monthly reports, and be allowed to suggest deferred payment schedules.

I was a bit surprised to see projects being listed as usual, albeit with decreased frequency. I hope that Crowdestate is not underestimating the impact of the crisis. On the one hand, long-term projects are less influenced. On the other, no one can really predict the impact on future real estate prices.

The CEO addressed investors regarding the crisis with this video message. There is also a overview of Q1.

EvoEstate

As a relatively young platform with limited traffic, and significant exposure to Spain (where a major outbreak is ongoing), EvoEstate is in a bit of a disadvantage entering this crisis. However, being a small and agile team allows them to minimise costs to the point where they can sit around doing nothing for over a year if needed, and still stay in business.

So EvoEstate is indeed laying low. No new skin in the game projects will be listed in coming weeks, as the platform operators themselves are investing into discounted secondary market loans. Personally, my concern is not with the immediate impact but with the long-term implications: How long will it take for tourism to recover (for holiday rentals)? How much will real estate prices go down?

EvoEstate is still missing two important things, in general and especially in these difficult times: Specific project updates, and a display of upcoming payments and/or an overview of the entire portfolio status.

Loan originators address the crisis
How to prepare for defaults (not specific to the crisis, but an interesting read)

Lenndy

Lenndy only released one message regarding the crisis. Risk management is briefly addressed, but the message mostly deals with the slight increase to interest rates. Honestly? I’m not impressed. Lenndy’s passive approach to life is inappropriate in times of crisis.

Crowdestor

Due to the project variety, some of Crowdestor’s borrowers are heavily influenced by the lockdown (restaurants, stores, exhibitions, festivals), and some less (construction, forestation, transportation). I’m still not sure where energy projects fit on this range, in light of the drop in oil prices.

Anyway, Crowdestor rightfully assumes that the rolling impact of the crisis can reach every industry, and thus announced a leniency period for all borrowers until the end of June, during which late payments will not lead to legal action. This decision was later reintroduced as part of a user vote, which includes other options for delaying payment.

I very much like Crowderstor’s honest look at reality, and its transparent and user-facing communication. I only hope they don’t expect the crisis to suddenly disappear in X amount of time, and will remain flexible in their long-term treatment of borrowers.

In addition to two public statements, Crowdestor launched an official Facebook group to enhance communication with investors and provide project-specific updates.
Statement 1
Statement 2
Official Facebook group

Fast Invest

Fast Invest only mentioned the crisis in a short email. As usual, their communication is shallow, highlighting the positive (higher interest rates) while largely ignoring risks. This is the last month when Fast Invest is included in my portfolio reports. Farewell, mysterious platform.


That’s it for this month. While I do feel over-exposed to Baltic platforms in light of recent events, I hope that all the scams were weeded out of my portfolio, and that financial risk will not result in major catastrophes in the immediate future.

This post is not meant as investment counselling. I am just a fellow investor sharing his personal investment journey.

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