The estimated default rate is our estimate of the percentage of loans made on our Platform that would fail and the capital and interest not be paid back. In the unsecured lending environment these rates may be higher than in those that are backed by assets. However, there are still risks of default on those who borrow with assets backing the transactions.
In the case of default, the asset would be repossessed and either sold or re-leased. In the time it takes to repossess the asset and then to re-lease or sell it, there would be no lease payments being made to the lessor. We would still expect loan interest to be paid by a lessor but it could create a ‘void period’ in the payments to Lenders if the lessor is unable to make such payments. (If there is no lessor there may be a considerable time before recovery of any funds).
In this case the loan would go into default and we would institute our default procedures. Therefore, although the default rate may be less with an asset backed transaction versus an unsecured loan, there is a risk of loss, either because of the void period or because of the value of the asset being reduced.
Because of the asset backed nature of our loans and the other security we attach to such loans, (personal guarantees etc.), we believe our default rate will be low.
The default rates that we predict are based on empirical knowledge of the industries in which we operate and the transactions which we, as a management team have historically been involved with. Past performance, while useful as a guideline, is however not a guarantee that future default rates will be, and you must be fully aware of the risks involved.
Current default rates are (as at August 2017):
Percentage of all loans completed by volume:
Percentage of outstanding loan book by volume: