28 February 2020
Cómo investigar y analizar una plataforma P2P
Whether you are thinking of starting to invest in P2P loans, or if you are already an experienced investor, this interests you.
Today we have a very special guest on our Blog: P2P Empire , the only P2P loan platform comparison website that conducts in-depth research on European P2P loan platforms.
PeerBerry is delighted to participate in all the projects and initiatives of our investors. We are a responsible organization. Based on our own performance and values, we strive to be a leading example of transparency and accountability within the P2P industry.
Enjoy reading!
P2P Empire: How to Conduct Due Diligence of a P2P Platform
Do you know where you’re investing your money? Have you ever read a P2P lending platform’s terms and conditions before depositing your money?
When it comes to real estate purchases or stock trading, investors will usually spend a great deal of time researching and analyzing before investing their money. But, this rule doesn’t usually apply to the unregulated investing that is P2P lending, where it’s arguably even more important!
We want to change that and put the power back into the hands of the investor.
This article has been brought to you by P2P Empire, the only P2P lending comparison platform that conducts in-depth due diligence about European P2P lending sites. Have a look at their latest PeerBerry review.
In this article, we show investors how they can assess the risk of a certain P2P platform before investing on it. And, we’ll be showing you how you can use facts and figures, rather than subjective opinions, when doing so.
Right, then, let’s dive straight into it!
1. Website Check
When you visit a P2P lending site for the first time, you might be presented with appealing return rates.
While the average interest is certainly something you should bear in mind, it’s not the only thing you should look at when evaluating the safety of a platform.
To get a better idea of a company’s legitimacy and protection scheme, we suggest looking at the following factors:
Contact Information
Does the website offer you the possibility to get in touch with members of the team?
Why is this important?
Investing can be stressful and confusing, especially when using a new and unfamiliar platform. It’s likely you’ll have various questions when investing, so it’s a good idea to reach out to platforms’ customer service teams before investing your money, if only to see how they respond.
What you should be looking for:
You should be looking for quick response times and helpful, detailed answers to your queries.
Company’s Address
Another thing to look out for is the address. Is the business registered at a real or virtual address?
Why is this important?
Having a dedicated office allows investors to visit the premises, increasing their trust in the company. Also, if a company has office space and employees, they’re far less likely to be able to vanish with investors’ money.
What you should be looking for:
Check business registries and cross-reference the data with the information available on the P2P platform’s website. You can also use Google Maps to get an idea of where the office is located. You can easily spot a virtual address because when you search for it, you might find that another 20 or more businesses are registered under the same address.
FAQ Section
Can you find answers to your questions within the FAQ section or on the company’s blog?
Why is this important?
If a company has taken the time to answer FAQs, it’s likely that they’re more dedicated to helping their customers than others.
What you should be looking for:
A good FAQ section should help you understand the risks and securities connected to P2P lending on a particular platform. The platform should also have FAQs about their features and new user requirements.
Statistics
Does the website offer a dedicated statistics page with relevant and accurate data?
Why is this important?
So many platforms are not transparent with their data, and when this is the case, it’s usually bad news! Knowledge of the stats allows investors to gauge a platform’s reliability, popularity and so much more!
What you should be looking for:
Check all P2P lending platforms you’re considering investing on for statistics like the year the platform was founded, the number of investors using the platform and the average portfolio size.
Finances
Does the website report their financial reports, or those of their loan originators?
Why is this important?
It’s important to know the financial situation of the platform that deals with your money because platforms that share their financial reports are considered to be more transparent than those that don’t.
What you should be looking for:
Firstly, look at the platform’s net profit at the end of a fiscal year. Secondly, check to see if your investments are backed by a buyback guarantee provided by the loan originator, you should look at the platform’s financial reports. It’s important to evaluate whether the loan originator’s assets are able to cover the buyback guarantee during an economic downturn.
It’s worth noting that many platforms aren’t profitable within the first few years of operations, as they prioritize growth over profitability. So, don’t panic if you notice that a young platform’s profits look a little negative.
Protection
Can you find information about the protection of your investments? How is your money secured?
Why is this important?
This one’s a bit of a no-brainer.
Every platform has a different protection scheme in place and it’s important to understand which schemes your chosen platform uses so that you can calculate the risk and return ratio and gauge whether that platform’s right for you.
What you should be looking for:
Every platform should educate their users about the steps they take when completing their own due diligence. Some platforms gather information from third-parties and check them internally, others do their due diligence in-house. You should also look for information about the collateral or loan-to-value that comes with every investment.
Overall Website Check
When assessing a platform by looking at its website, you should be ensuring that the website is able to answer the basic questions you have.
If you are in doubt or need any more information, we suggest getting in touch with the platform and testing their customer support.
At the end of the day, the platform is dealing with your hard-earned money and so the P2P platform should be able to address all of your questions.
2. Team Check
It’s easy to make a visually-appealing website, and the aesthetics of a website is quite often an inaccurate representation of its reliability. When avoiding fraudulent behaviour, make sure you check a company’s management team’s and shareholders’ backgrounds.
About Us Page
Does the P2P lending site have a dedicated team page, where at least one member from the management team is introduced?
Why is this important?
Would you give a stranger your hard-earned money if they promised you yearly returns of over 10%? We hope not!
If you’re not completing accurate due diligence on a P2P lending sites’ management team, you’re effectively throwing your money at strangers. You should at least know the basics about the people who are dealing with your money.
What you should be looking for:
Look for the CEO or founder of the company. Does the website introduce the key employees and their roles within the team?
Does the CEO or founder have a LinkedIn profile, where you can access information about their activity and previous job experiences?
Why is this important?
It’s important to see that the CEO has enough experience and a proper education to lead a P2P lending platform. At the end of the day, they’re making the decisions that could result in gains or losses to your funds. If they don’t have a LinkedIn profile at all, this could be a potential red flag.
What you should be looking for:
Firstly, look at how long the CEO has been working with the company. Secondly, check their previous job roles. And thirdly, have a look at the CEO’s activity on LinkedIn. Do they publish articles or share valuable industry content? Active CEOs spread the word about the company to build their authority within the industry, and it’s the CEOs of these platforms that you want to be investing with.
Business Register
Is the CEO or founder mentioned in one of the company’s business registers?
Why is this important?
Having a look at the business register might give you some additional data that you won’t find on the website. Ideally, the business register will support all the claims made on the P2P lending platform.
What you should be looking for:
Look at whether you can find out more about the company’s owners. The CEO might run the company, but they’re not always responsible for all strategic decisions. The owners might have a big influence over what happens within the platform. Find out who the legal owner is and complete Google searches on them to see whether they’re connected with any fraudulent behaviour.
Public Relations
Does the management of the company engage with their investors via social media and other means of communication?
Why is this important?
A large number of investors exchange their experiences with the P2P community on various social media platforms. Spreading misleading information amongst users is very easy nowadays. Instead of letting self-proclaimed finance experts share their “gut feelings”, P2P lending platforms should communicate the news on social media to avoid spreading unconfirmed information.
What you should be looking for:
Look at company’s updates on Facebook, Twitter or LinkedIn. Does the company have a blog, where they communicate their latest news? When searching these mediums, look for good as well as bad news. Transparent communication between platforms and their investors helps investors gain trust and authority within the industry.
Age of the Company
When did the founders establish the P2P lending platform?
Why is this important?
The age of the platform is important because, if the platform has been around for a number of years, it has essentially proven the reliability of its business model. Having a successful track record and a loyal base of investors helps investors gain more trust within the P2P lending community.
What you should be looking for:
Look at the date the platform was established. Check the platform’s statistics. Did the company manage to attract more investors or fund more loans than its competition during the same period? Have a look at the overall growth of the platform and evaluate whether it’s realistic. You can always compare the data to similar P2P lending platforms.
Change in Management
Were there any recent changes in the company’s management?
Why is this important?
Changes in management happens for a reason. New management might have different goals and visions, which can have both positive and negative effects on the company.
What you should be looking for:
Have a look at whether you can find reasons for the management change. A quick Google search will help you gain more information about the new people in charge. Have a look at their past and evaluate whether they have enough experience to run the company.
3. Terms and Conditions Check
Last but not least, it’s important that investors check a company’s terms and conditions before accepting them. This is of particular importance during an economic downturn.
There are usually many different clauses that have an effect on your investments. There is, however, one thing all of the P2P lending platforms have in common, and that’s that none of them hold any responsibility when it comes to investment losses.
Here are a few clauses that you should pay attention to:
Do the terms and conditions mention a price list, which is nowhere to find on the website?
Have a look at the company’s price list to be fully informed about the fees connected to P2P investing.
Can the platform amend its terms and conditions without notifying the user?
A platform should always inform the user in a timely manner about any changes that might affect the terms of the website.
Does the platform provide individual loan agreements?
In most cases, you as an investor purchase the claim against the borrower. The platform should provide you with a loan agreement with all the details that you as well as the borrower agree on.
Is the platform reliable for the accuracy of information about loan originators and borrowers on their website?
Some platforms mention that they aren’t liable for the information about the loan originators as well as the borrowers. This is a little harsh as the platform should make sure that the information they present is accurate.
It’s also good practice to cross-reference the information in the T&Cs with the data presented on the website.
Doing all of this is very time-consuming. Luckily there are P2P lending comparison websites like P2P Empire, which do the heavy lifting for you.
This website promotes and enables safe investing when monitoring and reviewing P2P lending sites in order to provide investors like you with the latest and most accurate data.
