1PM recently announced that it was extending its Fintech reach by obtaining alternative funding from the Latvian loan crowdfunding site Mintos https://www.mintos.com

I thought site readers might be interested in my research findings. 

Mintos explained - in very basic terms,  finance companies ( "Lenders") from around the world grant loans to individuals and companies ( "Borrowers") at an agreed rate of interest - say 20%. The Lender then lists the loan on Mintos for individuals ( "Funders" ) to take over up to 90% of the loan at a reduced interest rate, of say, 13%. The Funder steps into the shoes of the Lender and gets the benefit of scheduled repayments and takes the risk of non-payment. A number of Lenders guarantee to repay Funders where a loan is in default for 60 days or more.

The benefit to Lenders - Taking a £10,000 one year loan as an example, with an interest rate of 30% charged to a Borrower and 8% paid to Funders I calculate that the Lender can make a return of 228% on its 10% of retained loan. The Lender is able to increase its loan book and obtain cheap financing.

Funders - By investing in a spread of Borrower loans with different maturity dates and different Lenders, Funders should be able to make better returns than with traditional savings products or P2P sites like RateSetter. The rule here is to only invest in loans with guaranteed buybacks from reputable Lenders. There are a few dodgy looking Lenders on the site. There are no Funder protections so if the Mintos platform failed I suspect you can say goodbye to your money.

Each Borrower loan listed gives basic details of the borrower and repayment schedule. There are very basic balance sheets in the case of corporate borrowers. I feel that the Borrowers are unlikely to be financially strong or credit worthy such information is of very limited use.

1PM has listed two loans on the site. They are not providing any repayment guarantee, the interest rate available is 8% and the terms of the loans are £32,094 payable in two months and £75,000 payable in 46 days. During the week less than 20 Funders have taken less than 2% of each available loan. I suspect that these may be "auto investments" made by the Mintos site rather than Funders actively choosing to invest but…

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