Comprehensive encyclopedia of key financial terms, acronyms, risk metrics, and regulatory rules in European peer-to-peer and crowdfunding markets.
The ratio of a loan balance to the appraised market value of the collateral asset securing the loan, expressed as a percentage.
If a borrower requests a €600,000 loan for real estate valued at €1,000,000, the LTV is 60%. This leaves a 40% equity cushion safeguarding investors against market property drops.
A contractual commitment by a lending company (loan originator) to repurchase an overdue loan from investors if borrower delinquency exceeds a threshold (typically 60 days).
On marketplaces like PeerBerry or Mintos, delinquent loans delayed over 60 days are bought back with accrued interest. Note that the guarantee depends strictly on originator solvency, not government backup.
The portion of equity (normally 5% to 15%) that loan originators are obligated to co-invest and retain in their listed loans, ensuring alignment of interest with investors.
When an originator holds a 10% stake in every issued note, they absorb direct principal losses alongside investors upon borrower default, discouraging reckless credit underwriting.
The percentage ratio of total loans issued that have failed to meet scheduled debt servicing beyond an agreed delinquency horizon (customarily 60 to 90 days).
Top-tier consumer P2P platforms keep historical default rates between 1% and 3.5%. Escalating default rates above 8% signal deteriorating borrower quality or macroeconomic headwinds.
An integrated liquidity exchange enabling peer-to-peer investors to trade existing loan participations with other market participants before formal maturity.
An investor needing early cash liquidity lists a 36-month loan at a 0.8% discount, allowing another participant to acquire it instantly with an amplified yield to maturity.
A unified European regulatory framework governing European Crowdfunding Service Providers, establishing cross-border operating passports and rigorous investor protection rules.
ECSP-authorized platforms must segregate client escrow funds, publish standardized Key Investment Information Sheets (KIIS), and pass annual central bank audits.
A specialized non-bank credit institution that sources, scores, and disburses loans directly to borrowers before listing them on marketplace portals for syndication.
On multi-originator hubs like Mintos, investors allocate capital across dozens of distinct originators located in diverse geographic jurisdictions.
Uninvested idle cash balances sitting passively in an investor's platform account due to scarcity of qualifying loan supplies, degrading the portfolio's effective annual yield.
If €3,000 of a €10,000 portfolio sits unallocated for two consecutive months, the effective realized net return declines from 12.0% down to approximately 10.3%.
An algorithmic platform capability that automatically matches and commits incoming deposits and repayments into qualifying loans based on preset risk criteria.
A user configures an auto-invest rule: 'Commit €50 into loans with minimum 11% APR and loan term below 18 months'. The system reinvests repayments 24/7 without manual intervention.
A capital reserve accumulated by platforms or originators from fee margins, utilized to absorb investor losses on unbacked loans if borrower defaults surge.
A platform redirects 1.5% of loan origination fees into an escrow provision pool to compensate lenders whenever debt recovery proceedings stall.
The percentage of defaulted principal and overdue interest successfully recouped through workouts, debt enforcement, or collateral auctions post-default.
Following insolvency on an €80,000 business loan, the platform auctioned pledged factory machinery for €64,000, producing an 80% net recovery rate.
Loans backed by first-priority legal liens on specific pledged assets, granting senior creditors supreme claims during collateral liquidation over unsecured claimants.
On property developments, first-rank mortgage security guarantees that proceeds from asset sales satisfy senior noteholders in full before junior or mezzanine debt holders receive funds.
The mechanism allowing retail investors to acquire micro-participations (e.g. from €10 to €50) across large loans, enabling robust diversification with modest capital.
Rather than risking €5,000 on a single borrower note, a retail investor spreads €1,000 across 100 independent €10 loan fractions, mitigating single-debtor failure.
Comprehensive examination of financial health, balance sheets, management track records, and regulatory licenses of platforms and originators prior to capital deployment.
Prudent P2P investors audit corporate filings, capital adequacy figures, and trust structures before depositing funds onto marketplace platforms.
A contracted period (typically 3 to 14 days) following a scheduled payment due date during which late repayments avoid penalty fees or default classification.
A corporate debtor makes a transfer on Friday that clears on Tuesday; a 5-day grace period ensures the loan remains recorded as performing throughout.