How it works?
Project Listing
Businesses seeking funding undergo a rigorous verification process and 40-points risk assessment of the business to ensure they meet the platform's standards for financial health and credibility. This process includes an evaluation of the company's financial statements, operational history, market position, and collateral value. Only businesses that pass this stringent verification process are allowed to list their projects on 8lends.
Example: A retail company applies for a loan on 8lends. The platform's verification team reviews the company's financial statements, checks its credit history, assesses the value of its inventory (proposed as collateral), and evaluates its market position. After successfully passing verification process, the company is approved to list its project for funding.
Collateral
Loans on the 8lends platform are secured with real-world assets, providing stable and reliable collateral.
Mechanism:
Tangible Assets:
Loans are backed by physical assets, ensuring that there is a tangible value securing the investment.
Example:
A manufacturing company secures a $200,000 loan with its machinery valued at $250,000. This collateral reduces the risk for investors by providing a fallback in case of default.
Collateral Valuation:
Valuations are conducted by Maclear to determine the accurate market value of the collateral, ensuring it meets the loan requirements.
Example:
A logistics company offers its fleet of trucks as collateral. Maclear evaluates and appraises the fleet to ensure it adequately covers the loan amount.
Collateral Management:
The platform manages and monitors the collateral throughout the loan term to ensure it remains sufficient and unencumbered.
Example:
Periodic checks on a retail company’s inventory offered as collateral ensure that it maintains its value and is not sold off.
Example: A manufacturing company seeking a $100,000 loan offers its machinery and equipment as collateral. The value of this collateral is assessed and verified during the project listing process. If the company defaults on its loan, the collateral can be seized and liquidated to repay the investors, minimizing their financial risk.
Investment Process
Investors can browse and invest in vetted projects on the 8lends platform. Each project listing includes detailed information about the business, the purpose of the loan, the terms, the collateral, and the risk assessment. Investors can select projects that align with their investment goals and risk tolerance.
Example: An investor looking for a high-yield opportunity finds a project listed by a logistics company seeking a $50,000 loan. The project details include the company's financial health, the collateral offered (fleet of trucks), the interest rate (15% APR), and the loan term (12 months). The investor decides to fund $10,000 of the loan, confident in the transparency and security provided by 8lends.
Loan Repayment
Borrowers repay their loans with interest over the agreed term. The repayment is distributed to investors according to their contributions. In case of borrower default, the insurance pool compensates the investors, ensuring their capital is protected.
Example: The logistics company successfully secures its $50,000 loan and begins its operations. Over the next 12 months, the company makes regular interest payments, which are distributed to the investors. At the end of the loan term, the principal amount is repaid. If the company had defaulted, the insurance pool would have activated, and the investors would have been compensated from the pool, up to the insured amount.
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