Startup Heavyfinance* has launched a platform for lor loans backed by heavy machinery, the first of this kind in the p2p environment as far as we know. The loans are backed by machinery in Lithuania (currently, the company plans to add Latvia, Portugal, Spain and Bulgaria and other EU countries), but the platform is open to investors internationally.
CEO and co-founder Laimonas Noreika told P2P-Banking: “First of all, every farmer, lumberjack and construction company has some heavy-duty vehicles that usually are not taken into account when traditional financial institutions evaluate their risk level. Consequently, those small and medium businesses cannot get loans, even though they have many assets to use as collateral in case of a default. Furthermore, prices of heavy equipment are extremely stable due to the nature of this highly international market. Used combine harvesters, tractors, excavators and other heavy-duty vehicles can easily be exported to foreign countries and transportation costs are relatively low compared to the size of the transaction. ”
Lainmonas has a lot of experience in the p2p environment as he co-founded Finbee* in 2015, a Lithuanian platform for consumer and business loans.
Main parameters of the loans on Heavyfinance* are:
- Interest rates from 9% to 14%
- minimum investment 100 EUR
- loan terms usually between 4 months and 3 years
- no fees for investors
- secondary market
- machinery is insured and serves as security for the loans
Investors can choose to invest in loans depending on the risk they are willing to take. Risk levels are indicated by letters A (lower risk), B (medium risk) and C (higher risk). Consequently, while you could earn up to 14% interest rate by investing in C risk level loan, A risk level loan would bring you around 10-12% interest rate depending on the amount you’ll invest.
Talking about the risk assessment in more detail, these are the main criterias the platform looks at:
- Financial statement for past 2 years;
- Balance sheet;
- Cash flow statement;
- Reputation of business owner;
- Loan-to-value ratio
Regarding the COVID-19 pandemic situation Laimonas stated: “It is safe to say that the agricultural sector was one of the least negatively affected. One of the challenges we noted was a limited supply of heavy-duty vehicles and farm equipment parts due to the shutdown of some production facilities and the disruption of supply chains. …”
HeavyFinance is supervised by The Central Bank of Lithuania under the track of crowdfunding platform operators.