Crowd2Fund reports zero losses on reopened secondary market
Crowd2Fund investors have seen no losses on loans purchased on the Small Business Exchange secondary market, which reopened on 20 June 2022 after a two year pause.
The business lender said that 451 secondary market transactions were successfully completed last year, from 1,129 applications. The platform is now considering an expansion of its auto-invest product, which would include secondary market purchases.
“Surprisingly, we have seen much greater demand on the buy side than the sell side of the secondary market,” Crowd2Fund said, in a blog on the company’s website.
Read more: Plend joins fintechs calling for more clarity on the future of open banking
“No loans purchased on the secondary market have resulted in losses either through defaults or write-offs for investors since reopening.
“This is due to the checks and review processes that have been established when investors submit loans to be listed.”
Crowd2Fund added that after an initial peak, activity on the Small Business Exchange stabilised and approximately 418 investors have now completed the secondary market appropriateness test. The lender plans to encourage more investors to use the exchange by increasing its marketing and extending the types of listings available on the marketplace.
Read more: What will P2P look like in 2023?
“The automated checks and measured variables will be extended to allow further automated accuracy of risk assessment and pricing for businesses that may be an Equifax D grade,” Crowd2Fund said.
“These automated checks will also be applied to the primary market to optimise the primary market review process.
“The user experience will be further enhanced with automated restrictions rather than manual rejections for investors on loans that will be rejected automatically. If losses do occur the re-pricing algorithms will be assessed and adjusted appropriately along with an analysis of why the loan got approved for listing in the first place.
“Finally, we will potentially look to extend our auto-invest feature to include items on the secondary market giving more opportunity to diversify and also creating additional liquidity for investors who are looking to sell.”
Read more: VPC Specialty Lending proposes wind-down