Among others, below are the most common potential risks:
- Non-payment by the Borrower.
The Borrower might fail to make any repayment. Once the Borrower is in default, SmartFunding will, on behalf of the Investors, commence recovery action. Despite all precautions, there exists nonetheless the risk that part or all of the debt is not recoverable, and that Investors may lose all of their invested capital.
- Liquidity Risk.
There is no secondary market for debt securities offered on SmartFunding’s platform. Investors therefore cannot sell or return their investments during the term of the debt securities.
- Changes in the Macro-Environment.
Changes in the macro economic situation could have a negative impact on the repayment ability of Borrowers. A slowdown in the economy or a change in interest rates might have an unexpected effect on the default rate, which in turn would reduce the total returns an Investor receives on his investment.
- Foreign Borrowers
If Investors subscribe to debt securities of a Borrower in a foreign jurisdiction, such investment will be subject to the laws and regulations of that jurisdiction. Investors may be subject to additional tax liabilities, transaction costs and capital controls.
- SmartFunding Bankruptcy
While we take utmost care and precaution to avoid cases of bankruptcy, there still exists the possibility that SmartFunding might be exposed to the risk. Such event has the potential to negatively affect repayment of funds to the Investors. However, we have adopted mitigation measures aimed to minimise the effect of this worst case scenario: