Outside of basic accounting finance you should really consider risk unless the you're dealing with a kind of security like treasury bills.
However, as long as there is enough historical data to establish a loan default rate, it should be relatively simple to calculate risk and the required amount of interest required by people taking out the loans in order for the loan giver to still make a profit.
There is a whole concept in finance where risks are put into two categories of risks specific to an investment and market risks. Risks specific to an individual investment are basically negligible when you make enough loans. Which is the idea behind the collateralized debt obligations (CDOs).
You are correct risk is always a big factor. We believe good investors can see how this platform can help them diversify.
Before investing ask yourself.
Do I understand what I just put my money?
If for any reason you do not understand it to the last detail, you probably should do more homework. Take a look at what the big firms, banks, and insurance companies are looking at. Some of the important metrics that lower risk are (time) experience by the owner.
Do they make enough to pay me back? (DSCR) use this calculation if you need the calculator I have it
Is that business industry risky?
Who is their main client?
This is just the surface. We are not recommending or discouraging anyone we are just making the information available. We believe it is worth looking in to this platform is relatively new in the US. Since the Jobs Act of 2010 was passed it deregulated the business lending. That by default opened the doors to new forms of investing as well.
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