A leading Swiss P2P lending platform with an appealing offer for high-end investors
|Total Investments||CHF 700m+|
|Average annual interest||3-6%|
|Minimum Investment||CHF 500 per loan|
|Investment Fees||0.25%-2.73% repayment fee|
|Who’s eligible to invest||Swiss bank account holders|
|Investment Type||Personal, Business and Property Lending|
|Auto Invest Function||No|
|Investor Protection||Risk-pooling, collateral|
|Website Language||English, German, Italian, French|
PROS & CONS
- A novel risk management strategy
- A range of investment products
- An emphasis on social impact
- Limited transparency
- An overcomplicated fee structure
- Low interest rates
- “Risk-pooling” is essentially a solidarity arrangement in which investors share risk within the same rating grade. This means that if a borrower defaults on an A-rated loan, the loss will be allocated proportionally to all investors owning any A-rated investment. Such a method has several implications: 1) you can achieve high diversification without having to invest in numerous projects (although it’s still a good idea to have more loans in your portfolio as in case of default, the surcharge from the pool may take several weeks to reach you decreasing your real return); 2) you are minimally affected by each loan default, which smooths out your returns; 3) you don’t need to select loans so carefully but instead focus on including different rating grades in your portfolio.
- The platform offers two main investment models – “Direct-Invest” and “Premium-Mandate”. The former is manual investing, as we all know it. The latter is a “VIP service” in which CreditGate24 will send you investment proposals that fit your defined goals best before they are published on the platform. It’s a kind of personal auto-invest option for the more affluent clients (you need to invest at least CHF 100,000). Besides, CreditGate24 offers several structured investment products, including Swiss Growth Lending Bond, Swiss Growth Lending Retail Bond, Swiss Fixed Income Bond, CreditGate24 Fund, Quality P2P SICAV.
- Corporate Social Responsibility seems to be important for CreditGate24. They support, for example, coffee farming in Ethiopia as well as several local social initiatives. It can be a point to consider if you’re keen on diverting a small share of your potential income to make a positive impact.
- Crucially, the platform lacks any statistics on past performance, including the default rate or ROI. Their investment opportunities dashboard only lists projects open for funding and a very limited set of completed investments. Without such data, it’s extremely hard to make informed judgements on risk/return ratios of different credit classes and CreditGate24 offer’s worthiness in general.
- Investors are charged a fee on repayments made by the borrower to the investor, depending on the term, rating and product. According to the fee structure, the fees vary from 0.25% on short-term loans, through 1% for business and 1.25% for personal loans, to 0.486% – 2.726% on real estate loans. However, in the FAQ section, you can read that “CreditGate24 will charge you only 1% of the amounts actually paid to you”, which is another low point for CreditGate24’s transparency.
- Investor protection is rather limited: there is no buyback guarantee, only some loans are collateral-backed, and risk-pooling redistributes rather than mitigates risk. Yet, nominal interest rates on past projects typically range between 4 % and 7% (before fees and potential defaults).
Who is behind CreditGate24?
The CreditGate24 top management team has solid experience in business and finance. Only three key persons are disclosed on the website, though – it would be interesting to see more faces, especially when over 30 employees are involved with the company. That’s quite a big team.
CreditGate24 is well-recognised on the Swiss fintech scene. It won the banking and fintech-focused BBVA Open Talent Awards in Zurich in 2018 and was included in the 25 most promising Swiss start-ups in 2020. Since 2016, it has cooperated with Hypothekarbank Lenzburg, whose clients are offered to apply for loans directly via CreditGate24. In spring 2020, CreditGate24 merged with Advanon, further cementing its market leader position in the Swiss alternative finance market.
What does CreditGate24 offer?
You can invest in business loans (including, for example, liquidity loans, financing research and development and investments in fixed assets), personal loans (e.g., to finance education and healthcare expenses) and real estate loans.
Durations of the past projects range from 6 months up to even 7 years. Loan amounts also vary a lot – from CHF 12,000 to CHF 2 million. The secondary market is quite vibrant and offers many more options than the primary listings.
How much can you earn?
You can probably expect a return in the 3-6% range, although the platform does not disclose past annual ROI or the default rates. From the list of current and past projects, we can learn that the interest rates range from roughly 4% on AA-rated loans to about 6% on C-rated loans before fees and potential losses within the risk-pooling system are accounted for.
Who is CreditGate24 best for?
First of all, it’s for the Swiss (or for the holders of a Swiss bank account). Besides, the platform seems to be targeting rather high-end investors, especially with their personalised investment offer and additional bond- and fund-like products.
How to invest on CreditGate24
You will have to wait a bit for your data to be verified and your account activated but otherwise, signing up shouldn’t be any different from most platforms. There’s an extra option for corporate clients to register or sign in via Bexio – a cloud management software for SMEs.
CreditGate24 features some uncommon solutions, including spreading investment risk across all investors or teaming up with a bank to secure new borrowers. Risk-pooling is particularly interesting, and I suppose it can be seen as good or bad depending on your taste. Overall, it’s very hard to say with certainty whether CreditGate24 is a good or bad platform, given zero information on their track record and past loan performance. The fact is, though, that CreditGate24 remains the leading alternative finance provider in Switzerland, so the solutions they use seem to be working well for their target groups.
At P2PMarketData we are dedicated to providing unbiased reviews of peer-to-peer lending, real estate crowdfunding and crypto lending platforms. Among other, in our mission to bring more transparency to the market we closely monitor and track over 70 platforms funding volumes.
When reviewing an alternative investment platform, we consider a variety of factors such as:
- Number of investors
- Minimum investment requirement
- Historical annual returns
- Diversification opportunities
- Reinvestment opportunities
- Educational and informational offerings
- Platform fees
- Total capital invested
- Features (such as secondary market and automatic investing)
- General transparency (the difficulty of finding who the owners are, how they make money on the platform (fees), terms & conditions and more)
- Management team
We also look into the company’s online reputation (for example customer reviews, news, complaints, average monthly searches and social media).