Debitum Analysis

Debitum is a marketplace for business loans issued by loan originators from mainly Europe. The company provides investors with fixed-term, fixed-income investments that are backed by a pool of business loans. Over €75M has been invested through Debitum so far - see Debitum statistics for more historical performance insights.

• Minimum 8% annual interest rate, accrued monthly
• SME loans pooled into asset-back securities, backed by collateral
• 0% default rate on investments since launching in 2019

Debitum offers access to asset-backed securities (ABS) that are regulated and provide fixed income to investors based on a predefined term. These securities are backed by a pool of business loans that are continuously replaced as they mature or become overdue during the life of the security. All assets on Debitum are backed by approved collateral in case of non-repayment, including stock, guarantees, property, inventory, invoices, or promissory notes. 

Small and medium-sized businesses seek funding from loan originators, also known as brokers on Debitum. Debitum’s partnered loan originators submit loans to the platform for review, where Debitum’s team of financial analysts evaluate, credit scores, and either approve or deny the loans. Most of Debitum’s ABSs also come with a Buyback Obligation, requiring the loan originator to buy back the loan and cover any outstanding interest if the loan becomes late beyond an agreed-upon number of days (usually 90 days). 

All securities currently available on the platform are bullet loans, meaning investors receive monthly income payments and are paid the principal amount in full at the end of the term. Most are short-term with expected principal repayment in less than a year. Debitum provides an auto-invest feature, whereby investors can save time by setting criteria and having funds automatically invested into loans that match.

According to Debitum, the average interest rate on their investments is 9.89%. Debitum negotiates at least an 8% interest rate, and currently available securities on the platform range from 8% to 9.5% interest. However, additional factors like investment participation in cashback programs or penalty fees incurred when a loan surpasses the grace period can increase real returns.

Default and delayed payments are always a risk for the returns when investing in loans. However, due to Debitum’s strict due diligence process and Buyback Obligation for brokers, the current default rate on Debitum securities is 0%.

Mārtiņš Liberts is the founder of Debitum. He has a professional background in business development and innovation. Henrijs Jansons leads the company as CEO and brings extensive knowledge of FinTech and IT. He has previous experience with another Latvia-based P2P lending platform, DoFinance.

The Debitum platform is operated by SIA DN Operator, which officially began operation in 2021 and was created so that Debitum is managed by a licensed financial company. According to SIA DN Operator’s annual report, the company has reported operating losses for the last two consecutive years. However, SIA DN Operator has considerable assets beyond those operating losses, including “Claims on demand from credit institutions”, which are receivables that can be satisfied without prior request.

Although you have access to information regarding the loan originators themselves and from there can get a sense of the type of companies they serve, you are unable to see which specific companies you are funding through the investment.