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The coronavirus pandemic caused madness and mayhem in our modern markets. Small to medium sized businesses were laid to waste as governments repeatedly shut down cities. Commerce was halted as supply chains around the world were hindered. To help business owners and citizens different governments rolled out relief packages that included but were not limited to tax breaks, credit holidays and a small sum of money to keep the economy moving.
Peer-to-peer lending is a new age fintech innovation that uses the features of microfinance to power lending markets. In most recessions, credit markets are always the first to go. Instead, we saw that most asset classes that were already on thin ice. Airlines went out of business, the price of oil dropped into the minus and property rentals around the globe plummeted. Leaving many of us wondering what will happen to peer-to-peer lending markets? Many peer-to-peer lending services had to get creative with the way they would respond to the covid induced recession.
The Covid-19 Test
Credit holidays, to put simply, gave borrowers a three-month grace period to not pay their loans. Considering this, some peer-to-peer platforms successfully restructured their debt plans with their borrowers – mitigating damage from the recession. Many platforms were forced to dip into their accumulated profits to maintain the liquidity between their borrowers and lenders. Still others were unable to overcome the challenges. RateSetter, Kuetzal, Envestio, Grupeer and Lendy—all supposedly legitimate, safe, and respectable platforms pre-pandemic—crumbled into bankruptcy under the economic pressure to their lending ecosystems.
Covid-19 was like a test. Where there are losers, there are winners. Those who could withstand the turmoil and pressure that the virus brought proved themselves to be businesses with competent management and a real value service. Mintos, Reinvest24 and Swaper rose above difficult times and established themselves as market leaders by pushing through and even being profitable for their investors.
The Winners
Everybody who knows peer-to-peer lending knows Mintos. Mintos had undergone a few problematic loan originators at the end of 2019, just as covid-19 was becoming a global pandemic. And yet, Mintos has processed an additional 2 billion euros in loans since the beginning of 2020. Mintos is already a titan in the peer-to-peer lending industry. They hold the top position of being the easiest and friendliest platform to invest in peer-to-peer. Due to their competent risk analysis, competitive returns and easy to use platform Mintos has only seen monumental growth.
Reinvest24, is a much newer platform with a much different approach to peer-to-peer lending. Reinvest24 does not sell loan contracts, rather, it exchanges capital for temporary real estate equity. The platform believes that this exchange is a more ingenious and risk averse way to lend utilizing microfinance. Due to this reality, Reinvest24 also saw massive growth due investors wanting to enter safer markets that did not experience such high levels of volatility during the pandemic. Since it’s inception in late 2019, Reinvest24 has processed over 12 million euros in loans with a zero percent default rate.
Swaper is a completely automated investment service. Investors receive a fixed amount of interest of 14 percent. There is no manual investing on Swaper and all loans are consumer loans. Swaper, much like the other two has substantially grew since the beginning of the covid-19 pandemic. They from went 130,000+ EUR in the beginning of the pandemic in funded loans to 230,000+ EUR in funded loans. Swaper will have soon doubled their investor size, marketplace size and interest yield for their investors. Swaper also has a zero percent default rate making it a relatively safe investment platform.
Conclusion
The key takeaway from this piece is that the investment platform that you opt for should be able to withstand dramatic market movement. The reality is if it was not Covid that shut down these faulty platforms then something else would have. Investors need to do their own due diligence and vet their own investments. There are many platforms that do act in good faith, like Mintos, Reinvest24, Swaper and the only way to find them is by being rigorous and consistent with your research methods. Find more successful peer-to-peer platforms on P2PIncome.com
