My opinion of Flender is ⚡️ rather positive, and this is unusual since the platform suffers from some flaws that I am used to pointing out
Why do I consider Flender P2P crowdfunding worth my time?
Let’s dig into the numbers. Let’s review Flender my way
Reading time: 5min.
Warning! ⚠️In truth, I’m biased: At present, for me, the advantages outweigh the drawbacks. From my point of view, Flender.ie could become one of my favorite P2P for business loans if it solves some little issues
Flender is another fast-growing peer-to-peer lending platform.
I want to spend two minutes analyzing its key features, but also, I want to say why I consider it despite …everything.
I am constantly looking for new investment options.
Lately, I am a bit fed up because in the P2P business model there are many new websites but nothing is really disruptive. Some P2P crowdfundings are getting famous for their extremely high P2P yields, others for their monster growth in investor number and size, but where is the beef for me?
My need now is to diversify my investment portfolio in order to have a safer automatic income that grows some compound interest. As easy as this.
This review of Flender, as I anticipated, is unusual. I don’t bother to review such small and new websites especially if they serve business loans.
In this opinion, I want to show my investment process with this platform while I would like to stress what, from my humble point of view, are the advantages and grey areas.
🖌The Flender peer to peer story (in short)
Flender is registered in Ireland, one of those countries where it is most rewarding to do business according to World bank data. The Irish economy is rather strong, companies are competitive and enjoy fair taxation.
Flender was founded in 2015.
So, apart from its nationality, Flender seems to be just “one more” business lending website.
The difference here is the will to create a different and safer environment where supply and demand meet. But how did they do it? The answer is: strategy.
The platform offers lenders (like me) a rather high returns. Lenders can earn an interest rate of up to 16% per loan, but this is not the point, and soon you’ll understand why.
For lenders, there is no commission to pay, not even on performance. I like this aspect, but again, nothing new.
I feel uneasy, because you readers know that I never use P2P platforms too small and too young. Why should I make an exception this time?
Let’s start from age. Flender is no longer “new”, began in 2015 (the same age as Mintos, to understand) and has gained the trust of large funds and investors who believe in the project itself. In a meritocratic nation like Ireland, this is worth noticing. As a matter of fact, it is really growing very fast with about 7000 active creditors and has already invested more than 13 million euros in Irish companies (2019). This is not a record number but it is actually doing well.
‼️Flender default rate
Here comes the number I like. This clearly shows the potential that Flender has to offer investors. Their little but yet important disruption.
The average historic failure rate of 1.1%. Yes, you read it well. Only 1.1% of loans have problems.
Flender loans delinquency rate: 1,1%
Among the dozens of platforms I’ve analyzed in my life, this (at the moment) is a cut above the rest. Such a low default rate is equalled only by Estateguru (2,4% declared on total number).
At this point, I have to consider Flender one of the most attractive P2P websites to invest in business loans in 2019.
Let’s be honest, even if this figure (1.1%) were to triple, it would still be better than many other P2Ps.
Lendix/October is a competitor in a certain sense, but their stats are a bit worse. So let’s say that here, the real protection is given from the work of real professionals. They must know how to asses risk and therefore decide whom to lend my money to. Everything can change, but I’ve studied the profiles of each of the team members, exchanged some correspondence with them and got some of the answers I needed.
⭕️ How to start with Flender P2P
I want to describe this platform in detail, starting from how to open an account.
How do I open my account on Flender?
Opening an account on Flender took me few minutes. To open an account, I went on the “get started” button on the top right of the initial page.
Then, I selected what I want to do on Flender, whether to apply for a loan or lend money. I chose the second option (the one on the left “Earn great returns by lending to Irish businesses”/ Start investing).
I have chosen my account password and have provided a valid e-mail address. Once the address was confirmed, Flender asked me to provide my personal data, telephone number and address.
Once these steps were completed, my Flender account was ready. It took me less than 1 minute. Not bad.
☑️ How do I invest with Flender?
The first command I see is “Marketplace”, then “Dashboard” and then “Settings”.
I went on “Dashboard”, then at the top right I clicked on “ADD FUNDS”.
Here I had I nice surprise.
I could also use my Visa/Mastercard to deposit immediately.
I don’t know if this option is available for every country, but being able to use my credit card made things easier for me. Even if it is true that I have monthly limits with credit cards, in the meantime I can get started and then a few days later transfer the rest of the money via bank account. If something doesn’t work out well, I’d cancel everything and bring back my money at home.
Beware. If I invest from outside the European Union I will be able to pour money into Flender by credit card (credit cards have no country restrictions) but I’ll need a bank account in the EU to cash in at the end of the investment. So I’d not use Flender if I had not a bank account in the EU.
Type of investments
On Flender I can lend to companies, sole proprietorships and partnership companies. This platform allows its investors to lend from €15000 to €150,000, to be repaid in 3 years.
Flender recommends me I create a diversified portfolio to spread the risk over a range of loans. They carefully examine the potential borrowers and, before admitting them, borrowers are asked personal guarantees as well as a security deposit.
▶️ Auto-invest here is called AutoFlend
Flender offers me its AutoFlend automatic investment tool.
Using this tool I can save time by not having to manually choose every single loan. AutoFlend allows me to invest automatically according to my instructions. I can choose the duration, the loan grade and how much money for each parameter. AutoFlend is not one of those complex instruments with hundreds of options, it’s simple and understandable. Auto-lend here is even too basic for my taste.
The truth about Flender?
Flender is absolutely restrictive in offering credit, so I won’t find hundreds of mini-projects with attractive photos to invest in on their “marketplace”. They are serious, selective. If I don’t have much time to spare to Flender to waiting for the perfect “deals” for me, I MUST activate the autoFlend. Only doing so, whenever a new project is published, the system automatically invests for me applying my filters.
My opinion on Autoflend?
Not bad, but if I don’t love automation I have an alternative. Flender accounts are set to send out an email as soon as new loans are published.In my first period using Flender I’ve received an average of 2/4 email alerts with new loans per week.
❓ How much profit can I do on Flender?
It depends on the amount I invest and from the annual rate of return offered by the loans I’m invested in. Flender currently offers an average rate of return of 10.4%, this number is not the return on yearly basis. To maximize and enjoy the benefits of compound interest, I have to reinvest the monthly repayments received from a loan into other loans. So basically, every month I get back part of my “old loans” plus interest.
The way Flender count the interesting is peculiar, so here I report their statement from the FAQ:
Who are the investors?
Investors must be at least 18 years old and have a valid bank account. Investors must have a valid personal document (passport or driver’s license). The minimum investment is 50 euros. So, even if I just wanted to do a little test with a small amount of capital I could do it.
🛡 How safe is Flender?
Let’s start to say that nothing is safe in the investment world.
What I like here is that Flender wants to make sure that the loans given to companies are returned without delays BEFORE they provide financing.
Moreover, if a company does not repay the loan is prosecuted. The investor may be required to participate in the cost of debt collection. I strongly dislike this. Why should I take care of this aspect? I’m just a lender, you run the P2P business and you have to deal with these issues.
But the focus for me goes to back to the average default rate of this tool. If the defaults are so rare, this will just not impact on my performance.Moreover, the cost of collection will never be greater of loan principal.
Some 10,4% yield per loan against 1,1% potential loss is just fine with me, but I never forget these are business loans and P2P lending investing is a risky practice.
How does Flender make sure that the loans will be repaid?
- Companies are requested to be able to repay up to 1.5 times the instalment
- Flender rejects approximately 80% of applicants
- Flender invites the borrowers to have their friends and families involved in the loans
One of the founders illustrates the project
📈 Benefits of using Flender
- Offers a good rate of return (in its industry)
- The very low default rate, 1,1% (2020)
- Investors do not have to pay any commission
- It is not based in a frontier country
- Ease of use
- Very easy to deposit
- Does not offer any safety net
- Although it grows fast, it is still small
- The only language is English
- Return rate indicated is per loan
- Restricted to EU investors
- Customer service may be improved
📂 Competitors and alternatives
Linked Finance is the Irish alternative.
Flender is said to be a peer to peer lending platform that caters more to experienced investors. However, thanks to its extreme ease of use, I found it smoother than other tools. So I believe it can also suit some smart beginners.
All in all, Flender is not a complex investment tool. The aim is clear, the investing process is straightforward.
I’m financing thousand of personal loans, car loans, mortgage loans distributed across multiple P2P platforms. What I realized is that I’m still under-exposed on business loans.
To be honest I was already in search of a reliable way to do it when I found Flender.
⚖️ Risk/reward ratio
I think Flender offers a decent rate of return in relation to the “security” given by the current low default rate.
There is a fair variety of business sectors (car, fishing, agriculture, construction, energy, transport), so it also offers a decent diversification.
They plan to expand into the UK, but for now, geographic diversification is NOT their thing.
Due to his geographical limitation, I believe Flender is not the right fit to be the only P2P in a diversified portfolio. The most complete P2P tool in Europe at the moment is Mintos, but even there, it could not be my only P2P tool.
I appreciate that they don’t deal with crypto-farms and somehow dangerous businesses.
Flender has not charged me any commission to invest and deposit.
P2P taxes are not deducted from loan returns
Therefore, as an investor I get the full amount I earn, of course, everything is in euros.
💡 Flender sign-up bonus
At the moment Flender provides a huge bonus for “referred” investor.
I got a 5% bonus on what I invested in the first 30 days. There is no cap to the bonus.
I do not think this promotion will stay for long.
What are your thoughts?
What is the best business lending tool you are using?