How the “Easy Invest” works?
To release such a unique product on the market, Debitum had to change the structure of loan issuing for financing. Let’s dive deeper into a scheme – start from the very beginning and understand the whole process.
Providing assets. As a first step, our partner Loan Originator (LO) will provide loans to Final borrowers (business loans, invoice finance, agro-loans, leasing services). At the same time, LO and Debitum SPV will sign a credit line agreement (guaranteed by loans provided to final borrowers) under which SPV will provide credit to LO based on sales of claim of rights on Debitum. Each month Debitum and LO will make sure that there are enough loans as a guarantee for the credit line. The Loan Originator will still administrate the loans (collect payments, perform debt collection).
Debitum SPV – Limited liability company registered in Latvia, a subsidiary of Debitum created with a specific purpose to finance Debitum Partners – Loan Originators. There is no other debt in the SPV, no OPEX and wages thus it reduces the risk that SPV has any other liabilities except for Debitum investors.
After the agreement is signed and the pool of loans as security provided, Debitum SPV will upload assets (claim of right to loan) to the Debitum platform for sale – assets mirror loan tranches provided by Debitum SPV to LO.
Funding. Investors will use the platform to deposit and invest (purchase the asset). With one investment, the investor automatically will invest in many loans. Debitum will collect funds invested and transfer funds to Debitum SPV. Debitum SPV will transfer funds to Loan Originator received from the Debitum platform.
Repayments. Final borrowers will partially or fully repay their loans while investment is active. Loan Originator will always pay monthly interest and bullet principal according to the credit line to Debitum SPV. When all required payments are made, the credit line will be closed, and there will be no more liabilities from LO towards Debitum SPV. Debitum SPV will transfer the required amounts received from LO to the Debitum platform for distribution among investors. After that, the asset will be closed.
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.