Our shield, castle and windmill rating system shows you the risk bands that we consider each loan falls into:
Business loans: rated 2-5
Property Bridging loans: rated 3-5
Green Energy loans:
The rating we allocate is how we view the risk of lending funds to any particular company. The higher the rating, the lower the perceived risk. In other words, “5” is awarded to the strongest borrowers.
When bidding in auctions or buying and selling loan parts in the Marketplace, investors may ask for a higher interest rate for loans with fewer shields to help compensate for the increased risk.
Please note: our team will have analysed the information provided by the borrower and asked relevant questions regarding their business and financials. However, we cannot and do not warrant that those statements are true, nor do we endorse or recommend the merits of any of the loan offered to investors. Before making any decision to investors you should consider that each and every loan carries the risk of loss of some or all of your money.
For each of our loans we use the information we have gathered to place it into a risk band (shields, castles and windmills) and for each risk band we have assigned an estimated annual default rate. This can be found on ourstatistics page.
This is an estimate of the average proportion of loans of this type that would fail within a year, based on a large number of loans of the same type. So a windmill default rate of 1% would indicate that of 100 such loans we would expect on average one such loan to fail each year. It does not mean that the first, or second loan you invest in will not fail, nor does it mean that more than one loan will not fail within a year – what it aims to estimate is the failure rate over a range of loans over a period of years.
While we are assigning our bands based on the data supplied by the borrowers, third party credit scores and a purpose build risk model, crowdlending is a new market and the amount of historic data is extremely limited. As such we expect that any current risk rating models are likely to require substantial revision in the coming years.