Flender is a p2p lending platform that offers loans for Irish small and medium enterprises.
Since they started in 2015, they’ve raised more than 9 million EUR in loans and generated for their 6000+ investors an average return of 10.4%.
The loan amounts range from 15.000 EUR to 150.000 EUR and the loan terms are up to 3 years.
- Loan types: Business loans
- Loan terms: up to 3 years
- Interest rates: 9.1% to 15.9%
- Fees: no fees
- Minimum investment: 50 EUR
- Currency: EUR
- Secondary market: no
- Auto-invest: yes
- Buyback guarantee: no
- Bonus: 5% bonus on all investments made in the first 30 days (with the link below)
Investing in Flender loans
You’ll need to put at least 50 EUR in any project you invest in. There is no upper limit on how much you can invest in a loan.
Each loan is rated with a credit ranking from A+ to V. Flender analyses the borrowers’ creditworthiness in-house and also uses the credit information obtained from Credit Safe and Stubbs Gazette.
Based on the credit rating, for each loan, an interest rate is given. And this is where it gets interesting.
Even though it says that for a B rated credit the lender interest rate is 10.5%, it’s not completely true. You receive interest payments each month along with a part of the principal invested. 10.5% is the expected return if you reinvest all the interest payments on new loans as soon as they’re paid to you.
Let me explain better.
One of the loans I’ve invested has an interest rate of 10.5% and its loan term is 36 months. I’ve invested 50 EUR and I’m expected to receive a total of 8.51 EUR in interest during the 3 years period. The 8.51 EUR is only 17% return on my initial 50 EUR investment. That’s just a 5.7% return per year, which is a lot lower than the advertised 10.5%.
Flender is saying that I should reach a 10.5% annual return if I reinvest the monthly repayments into new loans. Because along with the interest payments I also receive each month a part of the investment principal, that is feasible.
Nevertheless, the advertised interest rates are a bit confusing, to say the least.
For the 10.5% loan described earlier, I receive each month 1.61 EUR in interest + principal. Since the minimum investment in a loan is 50 EUR, I won’t be able to reinvest that payment into a new loan, unless I’ve invested either a larger sum or into more loans. To reach the minimum 50 EUR in payments each month, I’ll need to invest in Flender at least 1500 EUR, which is not that large. I just need to keep in mind that’s the minimum sum I need to invest in order to get the advertised returns.
Currently, I’ve only invested 150 EUR in 3 different loans, but I’ll add more as soon as more loans are available.
Why invest in Flender
Even though their advertised interest rates are a bit distorted, investing in this platform still offers an average return of more than 10% per year.
The loans don’t come with a buyback guarantee, but the default rate so far is less than 0.2%. With a bit of diversification, spreading my funds into multiple loans, the investments here are pretty safe.
Most of the business lending platforms I’m invested in are based in the Baltic countries (Envestio, Crowdestor, TFG Crowd, Kuetzal, Grupeer, Crowdestate). Investing in Irish business loans provides diversification for my portfolio.
I can use the auto-invest tool, weirdly named AutoFlend, and let my portfolio run on autopilot. I only need to set up the credit ratings I’m interested in, the loan terms and the maximum amount to invest.
There are no fees for investing on the platform. This should be the norm on all p2p lending platforms, but you do find every once in a while the odd one that asks for a small percentage before they let you give them your money.
Flender doesn’t tax your income so you can handle your tax returns by yourself in your home country.
Why not invest in Flender
The loans don’t come with a buyback guarantee. There are other platforms out there that do offer a buyback, and this makes it a bit easier to invest in (Envestio, TFG Crowd, Grupeer, Kuetzal).
There’s no secondary market, so it’s impossible to withdraw from your investments before the loan matures.
The returns are decent, 10%+ returns are good enough, but they don’t come close to the 13-21% returns advertised on the Baltics p2p lending platforms.
And I also find really confusing and a bit misleading their advertised interest rates. At least they could do is to change the naming into lender return or something similar.
You can only withdraw money from your account once a month (in any day of the month). I think they do this in order to minimize the fees they pay to the payment processor. It’s still a bit odd.
Who can join Flender
Flender is open to investors from all over the world. You’ll need an ID and proof of address to pass the verification process, and the process is very smooth.
Summary on Flender
Flender is a mature crowdlending platform offering decent returns for its investors. The low default rates suffered so far makes up a bit for the lack of buyback guarantee.
It does lack a secondary market or a way to exit my investment early, but I do plan to invest long-term, so it doesn’t really bother me yet.
I don’t like their misleading “interest rate” concept. Their advertised interest rate is more of an expected annual return, in lack of a better term.
All things considered, it’s a good platform for diversifying my portfolio.
If you wish to join Flender, you can use my referral link and receive a 5% bonus for any investments you make in the first 30 days.
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