Crowd2Fund raises rates to boost liquidity
Crowd2Fund has raised its target interest rates to up to 16 per cent to attract more investors.
The peer-to-peer business lending platform said that loans are now being offered with interest rates ranging between 12 per cent and 16 per cent.
“This is to reflect the market rate and also to allow us to incentivise investors thus driving more liquidity into the marketplace,” Crowd2Fund said in a blog post on its website.
Read more: Crowd2Fund strengthens board to support next phase of growth
However, it plans to broaden this out and list lower risk deals as the platform scales.
Crowd2Fund also said that it has modified its credit policy, effective from 1 August 2022, to “reflect the current market and help protect investors from potential losses and maximise their earnings.”
It has improved its internal credit risk indicator to include more data on both statutory and management accounts, tangible net worth, net gearing and the ability for a business to service the loan.
It said this provides a better measure of business performance, making it easier for Crowd2Fund to price the loan accurately.
The firm has ramped up its pre-screening processes, including mandatory video calls with each applicant, to boost the security of the platform.
Read more: Crowd2Fund insists it is still on ‘path to profitability’
It added that it has expanded its due diligence checklist that the credit risk team uses to assess borrowers, adding more checks for each business.
The updated credit policy also included the launch of its secondary market – called the small business exchange – which it said is a “game-changer” for the platform.
“There is a macro argument here that post-Covid, a secondary market for a small business exchange when scaled up can really create liquidity for small businesses that isn’t really available post-Covid,” Chris Hancock, founder and chief executive of Crowd2Fund, recently told Peer2Peer Finance News.
“A secondary market can be a useful tool post-Covid for small businesses.
“The Crowd2Fund platform was built and designed to have a secondary market in mind that allows investors to access their capital and trade their investments. There is an element of gamification with the trading but also diversification so people can diversify their portfolios and deploy more capital into the secondary market.”