P2PIncome | Lending Platforms that Performed Well During Covid
In this guide we will look at the platforms that had the most exceptional performance during the COVID pandemic. Due to COVID fear and hysteria around the globe, governments were forced to shut down their cities and economies. The damage done was severe. As we pick up the pieces, we review the peer-to-peer lending platforms that performed well during the age of Covid.
The interesting thing about this recession was seeing how P2P performed. In most recessions, credit markets are always the first to go. When people run out of money, paying back debt becomes almost impossible. Many peer-to-peer lending platforms collapsed under the pressure. Unable to receive payments from their borrowers rendered them bankrupt. Many investors during 2020 were the victims of major losses.
Platforms like Ratesetters, Grupeer and Monethera were all considered very reputable and secure peer-to-peer lending services. As the recession hit, all of these platforms halted deposits and withdrawals. The platforms began liquidating soon after and investors had lost millions.
The thing about COVID is that it could have been perceived as one big test for P2P. Those who could not stand the weather were washed away. But those who stood tall through the storm solidified themselves as top-tier peer-to-peer lending platforms.
The best performing P2P platforms were:
- PeerBerry
- October
- Reinvest24
- Swaper
All of these platforms have impeccable track records and the most interesting part is that they have made themselves even more profitable during the pandemic. These four platforms, as well as a few others, were able to create an ecosystem within their own platforms that was not as affected by market movements and sentiments. Let's take a closer look at these platforms to see what makes them so impressive.
PeerBerry
PeerBerry was a top performer during the COVID pandemic. During the crisis, PeerBerry was able to maximize profits, issue loans and manage their system so that it could continue to have a healthy flow. PeerBerry has funded more loans in 2020 and 2021 than it had since it's founding. PeerBerry has close to zero fees and close to zero default rates making it quite an enticing place to invest in.
PeerBerry was founded by a well-established lending organization called Aventus Group. Prior to PeerBerry, Aventus offered their loans on Mintos' marketplace. Mintos is one of the largest and most successful peer-to-peer lending service ever created. Aventus foresaw that they could build a platform as profitable and successful as Mintos. PeerBerry is a long way from being the new Mintos, but it's in the right direction.
PeerBerry has a 10 EUR minimum to invest on their platform and the yearly returns range from 9 to 12 percent. The borrowers on PeerBerry come from different loan originators who are located all over Eastern and Western Europe. The loan originators vet the borrowers and pre-fund the loans. Retail investors on PeerBerry are only offered a significant minority of the loan value. Otherwise, the lending ecosystem is completely funded and managed by Aventus, PeerBerry and their partner loan originators.
This method safeguards investors from making bad decisions and pushes the majority of the liability on the loan originators. PeerBerry also has multiple site features that place them a level above most peer-to-peer lending platforms. PeerBerry has the most sophisticated buyback guarantee protocol in the industry. It's dual-layered and essentially protects funds for both borrowers and lenders. PeerBerry has only one objective and that is to make money.
October
October is a Western peer-to-peer lending platform that deals with business loans. October brings every day retail investors with small to medium sized enterprises(SMEs) in Europe. October is a well-established platform with a very impressive track record. During COVID, October was one of the few platforms that could roll out state guarantees, where investors and borrowers were backed by certain Europe governments.
October is something akin to a greater European project. October has close ties with the EU and the bank of Europe. The platform requires a 20 EUR minimum investment and yearly returns range from 3 to 8 percent. Although the interest is rather low on October, the platform has never lost any of their investors capital. If you were to lose money on October you would essentially be the first investors to do so.
All the loans on October are small business loans and the loan amounts range from 50,000 EUR to 500,000 EUR. The types of businesses are cafes, little shops, restaurants and start up companies. October goes through an extensive borrower check to ensure that the borrowers are reliable and capable of paying back their loans.
October does not offer a secondary market, auto-investing tool or buyback guarantee. Their philosophy is that investors should be well-versed in what they are investing into. October provides a large degree of resources and expect their investors to do their proper due diligence. October itself invests a lot of manpower and money to ensure that the projects they have are safe and expect their investors to have a similar attitude. October is ultimately a European Project that wishes to close the financial disparity in society that divides us.
ReInvest24
Reinvest24 is a relatively new peer-to-peer lending platform. Reinvest24 became a company on the eve of COVID. Which meant quite a few challenges, one of them, opening a business in a climate where everyone is losing money. Reinvest24 sells temporary equity in exchange for capital to fund real estate businesses. Investors receive two types of interest on Reinvest24, rental dividends and capital gains.
One of the things we really like about Reinvest24 is that their business models makes a lot of sense. It's clearly laid out and explained by the members of Reinvest24. The model, although seemingly complex, is actually very straightforward and easy to follow on their site. We have seen models on many other consumer loan based P2P lending sites that are difficult to understand. Investors are expected to simply invest in an auto-investing function and almost magically make money. We would caution against peer-to-peer lending models of this kind as they could easily be pyramid schemes.
Always make sure that the lenders you are investing with are clearly showcasing who they are lending to and why. The minimum investment on Reinvest24 is a 100 EUR and yearly returns range from 11 to 15 percent, which is considerably high considering the investments on Reinvest24 are fairly low-risk. There is a little bit of cash drag on Reinvest24, as they only have a high-end projects. COVID was hard for everybody, but regardless of the recession and pandemic, Reinvest24 has been highly profitable for investors and has experienced zero loan defaults.
The one major criticism of Reinvest24 is the absence of an auto-investing tool. That means you'll have to select each listing manually. That can be time-consuming, though it does encourage greater diligence.
Swaper
Swaper was founded in Estonia in 2018 by their loan Originator Wandoo Finance. Then Swaper wassold to Marina Tjulinova, who is currently in charge of Swaper. Marina is a legal and financial giant and has been behind Swaper's success for some time. Swaper was largely unaffected by COVID, likely because of it's small loan amounts and very high liquidity.
Swaper is a completely automated investment service that promises investors a 14 percent return or 16 percent for investments over 5000 EUR. Swaper only issues loans from Wandoo Finance and all loans are short-term consumer loans that range between 50 to 1000 EUR and must be paid back within 30 days. Swaper does come with buyback guarantees, but loans are unsecured and there is no manual selection, only auto-investing.
Buyback guarantees are insured by Swaper and not the loan originator, which is different to most other platforms.
Market Type
Consumer Loans
Average Returns
9 - 12%
Minimum Investment
EUR 10
Signup Bonus
0.5%
Registered users
70,000
Total funds invested
EUR 1.8 Billion
Default rate
7%
Regulating entity
Self-Regulated/EU Compliant
Buyback guarantee
Secondary market
Payment methods
Bank Transfer, Bank Card, TransferWise
Withdrawal methods
Bank Transfer, Bank Card, TransferWise
PeerBerry is an excellent P2P platform to its 100 percent successful fund recovery track record. They offer slightly below market interest rates in exchange for a guarantee users will never lose their funds.
Market Type
Business Loans
Average Returns
3 - 7%
Minimum Investment
EUR 20
Signup Bonus
EUR 20
Registered users
43,000
Total funds invested
EUR 1 Billion
Default rate
3%
Regulating entity
Self-Regulated/EU Compliant
Buyback guarantee
Secondary market
Payment methods
Bank Card, Bank Transfer, TransferWise
Withdrawal methods
Bank Card, Bank Transfer, TransferWise
October specializes in small risk business loans specifically to SME's in Europe. October has a great track record of fund recoveries, a solid mission and a very strong foundation. October's business and risk strategy is worth the time to read.
Market Type
Mortgage Loans
Average Returns
12 - 17%
Minimum Investment
EUR 100
Signup Bonus
EUR 10
Registered users
25,000
Total funds invested
EUR 40 Million
Default rate
0%
Regulating entity
Self-Regulated/EU Compliant
Buyback guarantee
Secondary market
Payment methods
Bank Transfer, Bank Card, TransferWise
Withdrawal methods
Bank Transfer, Bank Card, TransferWise
Reinvest24 is an equity backed real estate rental P2P lender. Though they are a much smaller P2P lending platform in comparison to the top P2P lenders. They deserve a high place on the list because of their attention to detail and successful execution of business goals.
Market Type
Consumer Loans
Average Returns
14 - 16%
Minimum Investment
EUR 10
Signup Bonus
None
Registered users
6000
Total funds invested
EUR 400 Million
Default rate
Undisclosed
Regulating entity
Self-Regulated/EU Compliant
Buyback guarantee
Secondary market
Payment methods
Bank Transfer
Withdrawal methods
Bank Transfer
Swaper only offers auto investing in unsecured consumer loans in Poland and Spain. Swaper is a subsidiary of Wandoo Finance Group, a loan originator that also services the loans on Swaper's platform. Swaper advertises a 14% IRR and premium investors who have invested over 5000 EUR receive an IRR of 16%.
The Old and the New
October is a far older platform than PeerBerry, Reinvest24 and Swaper. It's been around for twice as long as PeerBerry and Swaper. Every year in fintech technology is like five years in the real world, as that's just the pace of which things are moving in.
PeerBerry and Reinvest24 are far more sophisticated in terms of what they can give to their online investors. October, although respectable and praise worthy does not provide the same level of sophistication. In comparison, Reinvest24's approach to real estate investing and selling temporary equity or PeerBerry's impressive dual-layered buyback guarantee, October seems like a weaker platform.
But the truth is, what October lacks in infrastructure they make up for in politics. During COVID, October was able to manage their entire ecosystem perfectly because several governments stepped in to shield the platform's borrowers and lenders from the crippling recession. And when it comes to safety of your funds, there is no greater guarantor than the government.
Verdict
COVID was difficult, there is no other way around it. All forms of businesses collapsed, entire economies were deleted due to the harsh restrictions imposed by governmental policy. Whether the means justified the end is a topic for another day and perhaps a different platform.
The reality of peer-to-peer lending is that some platforms showed us that P2P is a great way to invest and stay outside the standard market fluctuations. Over the course of the pandemic, PeerBerry was able to double their volume of loans and investors. During their growth and expansion, they were still able to maintain the borrowers and lenders on their platform. PeerBerry stands above others because of the clarity the management team has. They are not strangers to the lending business and PeerBerry is setting the example for future platforms.