How are the P2P companies who disburse loans to small and medium enterprise companies surviving through this COVID period? Are there more defaults for retail investors? - Seedly
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Anonymous

Asked on 08 May 2020

How are the P2P companies who disburse loans to small and medium enterprise companies surviving through this COVID period? Are there more defaults for retail investors?

Please share your experience with everyone, thank you!

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Answered on 08 May 2020

There are many perspectives to approach the question. One of such is this -

1) The economy was gradually sinking into recession, hasten by the black swan.

2) When times are bad, major and primary lenders tighten credit controls.

3) Companies who used to be credit-worthy during the norm, get downgraded coupled with the adverse impacts on their businesses.

4) This opened up opportunities to the market of secondary lenders such as P2P platforms.

5) Not suggesting that P2P lenders are reckless and slipshod with credit controls, but different financial companies operate differently. As the saying goes, "high risk, high returns".

Default rates can definitely be expected to increase in tough financial times and can be attributed to different reasons.

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