Today we will have an interview with Nik Sinickis, CEO at Loanch, and learn more about how Loanch helps people make money by investing in loans. 

Nick thank you for joining today, please tell us how Loanch works and what investment opportunities do the platform offers.

Hi, thank you for having me!

Sure

At Loanch, our primary focus revolves around providing investors with opportunities in the realm of short-term, small-size consumer loans. We specialize in facilitating investments in these swift, accessible financial instruments, tailoring our platform to cater to individuals seeking high liquidity and quick turnover. 

The loan types on our platform are short-term loans that offer investors an opportunity for quick and highly liquid investments and instalment loans. Short-term loans with an IR of up to 13.6% typically have a maximum duration of 30 days, making them suitable for investors seeking rapid turnover of their funds. On the other hand, instalment loans with a rate of up to 13.5% provide a more diverse investment opportunity. These loans can span periods ranging from 30 to more than 90 days, although rarely exceeding 100 days. With instalment loans, investors receive principal and interest payments on a monthly basis according to the loan schedule.

It's essential to note that all loans offered on Loanch come with a 30-day buyback obligation. This means that in the event of borrower default or non-payment, the platform commits to repurchasing the loan within 30 days, providing an additional layer of protection for investors. An investor earns the interest on any overdue days also. This buyback obligation further enhances the security of investments, assuring investors that even in the face of unforeseen circumstances, they have a safeguard in place. This feature applies uniformly to both short-term and instalment loans, underscoring Loanch's commitment to mitigating risks and ensuring a secure investment environment for all users.

Investment is performed via issuing the assignment agreement - that is the investor is purchasing the Right of Claim under the Loan Agreement entered between a lender and a borrower. Speaking of borrowers, they are individuals. Since these are short-term and relatively short-term consumer loans, they are unsecured, however as mentioned all loans are covered by a buyback obligation. 

Loanch also has an Auto-Invest feature! The name speaks for itself – it gives an Investor the possibility to choose the criteria based on which the system will automatically invest the funds afterwards. Everyone could try it since the minimum amount of investment in each loan using Auto-Invest is just 10 euros.

Although it is indeed Auto-Investing and does not require additional involvement after an easy setup, there are a few customizable parameters that can be changed within a couple of clicks: investment interval, portfolio size, country, interest rate et

Currently there are two loan originators (hereinafter - LOs) onboarded on Loanch - Tambadana, a licensed lender from Malaysia specialising in short-term consumer loans and SH - Tech operating through Ammana. Tambadana, also known as Wawasan Cojaya by its business name,  underwent significant transformations in 2023, including a change in ownership, restructuring, and rebranding. These changes encompassed a complete overhaul of top management and strategic direction, resulting in a revitalised growth plan upon integration into the Loanch platform. As for Ammana, it operates as a peer-to-peer marketplace facilitating loan disbursements on behalf of its superlenders. SH Tech, one of the superlenders currently, was established in 2021. We list the loans that were issued by this joint co-operation of Sh-Tech and Ammana. 

Loanch constantly seeks strong Business Partners in order to offer better diversification for our investors. As a result, we currently operate with several Asian LOs that are offering solid returns to our Investors. At this stage Loanch is considering expanding its LO network and is not affiliated with any of them.

How do you decide which Loan originators to onboard?

Sure we evaluate lenders based on the following key aspects

Legal Setup and Compliance:

Loanch ensures that all lending partners undergo rigorous checks, evaluating their legal setup and compliance. This includes verifying the existence of a license and assessing adherence to regulatory practices, processes, and interest rate limits. Publicity monitoring is conducted to identify any "unscrupulous" practices among lenders that could jeopardize their licensing status.

Risk Management Practices:

To mitigate risks, Loanch scrutinizes lenders' risk management practices, credit policies, and KYC (Know Your Customer) procedures. This involves studying market risk management approaches, monitoring market practices, and reviewing KYC procedures, including checks against government databases. Continuous testing of risk models and credit policies is a standard requirement for lenders on the platform.

Collection Model and Legal Collection:

Loanch evaluates the effectiveness of lenders' collection processes, ensuring alignment with regulatory requirements. This includes monitoring recovery metrics up to 90 days overdue loans. If a lender fails to meet recovery standards within a specified timeframe, their portfolio is removed from the platform.

Growth Plan:

As part of the due diligence process for new lenders, Loanch assesses their growth plans, forecasting loan issuance and profitability. This proactive approach helps ensure that new lending partners can manage their growth effectively.

How do you monitor Loan originator performance and what you will do if you notice red flags?

On a monthly basis we request the following metrics from the originators to check for compliance:

• Equity ratio 
• Non-performing repeated loans ratio ( ratio of total outstanding principal of loans that are more than 60 days overdue in each month of a 3-month vintage period to the total principal amounts disbursed during that same period
• Regular monitoring of loan performance is conducted, examining early indicators and various stages of delinquency of e.g.,1, 10, 15, 30, 60, 90 days. Lenders are expected to actively manage risk through adjustments to model cutoff scores and changes in credit policies. The NPL 90+ metric is closely monitored, with regular monthly assessments. The process also includes monitoring recovery metrics of up to 90 days overdue loans.

If a lender fails to meet the required level of these metrics within a specified timeframe, their uninvested portfolio is to be removed from the platform until this is done.

On top of that we request statistics for the following activity:

• History of sum of disbursed loans, unpaid principal and received amounts (principal + interest + fines/fees) by month;
• On a quarterly basis we request the following data to assess the overall health of the originator:
• Profit and loss statement
• Balance sheet

What are other tools and processes Loanch is using to protect investors? 

Loanch only accepts lenders who provide a 30-day buyback obligation, which is shorter than the usual 60-day one.

Also, here is a list of our impending updates:

• 2FA: At this moment we are on the verge of implementing 2FA which will be available in the few upcoming weeks. This option is non-compulsory but it will surely become an important layer of insurance.
• Enhanced Risk Disclaimers: Additional notifications throughout the website to continually remind users of the inherent risks associated with investing.
• Investor Risk Assessment: A questionnaire and test designed to evaluate an investor's financial situation and investment experience. This assessment aims to provide guidance and recommendations to enhance their understanding of risks and improve risk management.

As soon as each of these major changes is implemented, we will notify our users about additional security levels at Loanch.

Please tell us more about Loanch's future plans and how you will make investments in loans more convenient and safer.

Loanch plans to enhance transparency by providing a statistics page. This page will include crucial metrics such as the timeline for loans funded, categorized by loan types and lending companies, and a detailed table showcasing the performance of loan types from specific lenders, with a focus on late payments. These statistics aim to boost confidence in the products offered at Loanch.

Moreover, we are dedicated to expanding our network of lenders to offer a more diverse range of investment opportunities. This will not only contribute to the portfolio diversification for investors but also ensure a sufficient supply of investment options to meet the diverse preferences of our user base.

In addition to broadening our lender network, we are actively exploring the introduction of more products. This includes offering loans with different durations, sizes, and repayment structures. Our goal is to provide investors with a broader spectrum of choices that align with their unique investment strategies, potentially including options with higher interest rates. 

Lastly, the implementation of a Secondary Market is in the pipeline. This feature will allow investors to enhance their flexibility by providing the ability to liquidate assets and adjust positions in response to changing circumstances.

Nick, thank you very much for joining and answering all the questions, I believe after reading this Loanch existing and new inventors feel safer and more keen to invest.

Dear investors, I hope you now understand better how Loanch works and how it helps you protect your investments, but remember when investing there are always risks of losing all funds thus you should always conduct your own analysis. 

Start investing on Loanch and make up to 13.6 % p.a. and rate your experience and leave a review - Loanch review.   

Have a good day and we wish you successful investing!