No investments are free from risks. Loans are generally safer investments than equities. However, there will be situations where the borrowers are unable to pay on time or may become insolvent, resulting in their inability to repay the loan. In such situations, steps will be taken to recover the amount outstanding. These debt recovery provisions are set out in our Platform Terms. It is important that investors exercise caution and diversify their investments widely, so that any defaults by borrowers would account for only an acceptable percentage of their total investment portfolio.
Convertible Loans, by nature, have higher risks than Regular Repayment Loans and Single Repayment Loans as they are or may be convertible into shares of the borrowers. The value of the shares will be determined by the performance and profitability of the borrowers.
Invoice financing is predicated on the credit risk of the client’s customer (i.e. third-party buyer). Typically, the third-party buyer will be of a better-quality credit risk than the client. This allows the client to access funds at a lower rate than if they were to take a working capital loan using its own credit standing. While the third-party buyer’s credit quality may be better, there could be situations where the third-party buyer may not pay the invoice (e.g. insolvency of the third-party buyer).