United Kingdom-based online business finance marketplace Platform Black is taking a unique step to assure investors about the safety of opportunities on its platform.
Beginning June 1 they will underwrite the first 10 percent of every auction on the platform, meaning they will take the first 10 percent of any capital loss realized by investors.
The assumption of risk is a rarity in the industry, Platform Black MD Caroline Langron said.
“Interestingly when you look around the industry, it is apparent that most marketplace lenders are intermediaries, not principles and therefore do not retain any credit risk. We feel there comes a time when we as an industry need to man up and put some skin in the game.
“This demonstrates our belief in our own underwriting and our commitment to treating investors fairly. Given that we have funding lines from as little as £5k to as high as £10 million, this could potentially be a considerable sum and has not been a decision taken lightly.”
Platform Black will also contribute one percent to every single invoice auctioned on their platform.
“I stand by my belief that if I wouldn’t put my own money into an auction, then I wouldn’t expect an investor to do so either, so from 1 July we will be the first to invest in every auction,” Langron added.