Investors have a similar possibility to diversify their investments in dozens of business loans as on the p2p lending side. You can invest in business loans manually or by setting up a Loan Allocator. Loans can also be bought and sold on the secondary market. Business loans have at least an entrepreneur’s personal guarantee and often a collateral such as real estate or enterprise mortgage. Fellow Finance always provides a comprehensive description of the company applying for a loan together with a loan purpose description. Before a loan application is published for investors at the marketplace, the company must have an adequate credit rating, collateral and/or entrepreneur's own personal guarantee as well as a positive overall estimate of the applicant's solvency.
The second business investment option is invoice funding. From the investor's point of view, invoice funding is investing in companies’ 14-90 days trade receivables. Invoice funding is a short-term business loan where a trade receivable is used to secure the loan. Invoice funding offers rapid invested capital circulation. The average loan duration of invoice funding is usually 30 days. As the interest rate is between 6-10%, invoice funding offers attractive high returns compared to any other short-term investment product on market. Further, credit risk is not transferred to investors but it is retained by the company financing the bill. Investors have credit risk towards the company that took a loan against the invoice receivable. Fellow Finance does credit rating for both parties.
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