Debitum Network – a leader in interest rates for Invoice Financing loans

High yield assets are definitely one of the top reasons that attract investors. The second one would be assets that are secure. After the 2008 crisis, most Central Banks slashed interest rates to zero or even below it. Keeping money in savings accounts became an unprofitable way to handle your money, despite a safe one. Alternative finance/investment platforms both P2P and P2B started growing like mushrooms after rain. They started offering above-average returns, in most cases higher than one can expect to get investing in most popular options such as stocks, hedge/mutual funds, or indexes. Debitum Network is not an exception as it offers some of the highest interest rates among investment platforms for loans in Invoice Financing category

Overview of alternative investment platforms

P2PMarketData gives us an overview of the major players in alternative investments (P2P/P2B. There are currently around 80 well-established investment platforms around the world. Most of them specialize and accept/originate specific types of loans as assets for investment. They basically fall within three major categories:

  1. Consumer loans (33 platforms)
  2. Real estate loans (22 platforms)
  3. Business loans (28 platforms)

We can see that the distribution of these three types of loans among platforms are almost equal. Statistics regarding returns vary and it would be difficult to say the exact percentage for each platform as; not all are secured loans or have buyback guarantees, interest rates on assets vary and they change. 

Let’s say you choose Lending Club, which is a top P2P lending platform in the world. They provide unsecured consumer loans for investment with various returns based on the risk category. What it actually means is that you can make 15% or you can lose all your money if you invest in loans that default and become uncollectible (this week one of the leaders in UK P2P platforms Funding Secure went bankrupt).  

A leader in business loans Funding Circle (in the UK) also offers investment in unsecured business loans (development loans secured by property and land). The expected returns with the platform would be up to 7%. Taking into account, that most loans are unsecured, the returns are really low. 

A lot of other investment platforms both in consumer and real estate will offer returns of around 8%-13% annually. But there is one but!

Expected Returns differ from real ones

It is obvious that returns depend on risk levels. If the platforms do not have an implemented buyback guarantee, the expected returns can be radically different from the real ones. Lending Club has shared some stats on their website and you can see for yourself how greatly adjusted annualized returns differ from the projected interest rates under specific risk categories. Defaulted loans can drag your real returns down up to 3-6 times. 

Source: https://www.lendingclub.com/info/demand-and-credit-profile.action

For the sake of being discreet, we are not going to name specific names, but there are platforms that have default rates of 30%. It means that investing in these types of loans you are basically buying a lottery ticket. You may get lucky and earn around 20% annually, or lose all of your money. You have to do a thorough and time-consuming analysis before you can make the right picks for investment.  

Debitum Network returns and conditions 

Currently, Lifetime Invested Interest Rate on Debitum Network platform is 9.20%. Most of our investors get even better returns. How is that? Well, you can exclusively invest in 9.50%-10% assets and your returns will be higher than the average. Additionally, most of the loans on the platform have a buyback guarantee. In case, a borrower defaults on his obligations, the broker who issued the loan will have to buy it back with the outstanding principal and interest. Thus, the returns are real. Very few platforms will offer that returns with a buyback guarantee. Due to the guarantee, there has not been a single default on Debitum Network. 

Furthermore, not only most of the assets have a buyback guarantee, but each asset will have a specific penalty rate, which an investor is going to earn, in case the borrower is late with repayments by more than 15 days (15 days is a grace period when no penalty is charged to a borrower). Penalty rates vary from 2% to 4.5%. It means you are able to earn beyond the platform average of 9.20%. Very few platforms will offer a penalty rate for late loans. 

Thus, taking into account a current Lifetime Invested Interest Rate, a buyback guarantee, and a penalty rate, we can state that Debitum Network has the highest interest rates in Invoice Financing category. Take a look at how interest rates (earned) fluctuated since the launch last September, till the beginning of October this year. Have in mind, that these are the rates investors really received, (not adjusted) and there were no factors that could reduce them (no defaults due to the protection by a buyback guarantee).

Top asset of the week

The asset is from our partner and loan originator Factris. The borrowing company is a producer of electricity which has more than 340 thousand EUR in revenue, more than 60 employees and has been in business for more than 7 years. The Purchaser of the invoice is a manufacturer of petroleum products. It has more than 4 billion EUR in revenues, employs more than 1000 people, and has been in business for more than 28 years. Like what you see? Be sure to add it to your portfolio. 


Disclaimer: Investments in financial products are subject to market risk and any investment should only be done with risk capital. The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

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