Funding Societies Effectively Guaranteed Returns?

[RMCWMR]

Hi everyone, thank you and appreciate everybody’s view on our Guaranteed Returns Investment (GRI) product. We recently noticed this thread and would like to clear the doubts and concerns around this product for the members of the forum.

This product was primarily introduced to provide our platform investors with a more secure product, thereby creating a balanced portfolio consisting of unsecured and guaranteed financing opportunities. We had also in parallel launched Property-backed secured financing. Coming back to the GRI product, some of its features are:

- Returns of 3-5% per annum
- Short tenor between 1 and 12 months
- Monthly repayments
- Our guarantee on capital and interest if the SME defaults

To further elaborate, the guarantee helps in situations where the underlying issuer defaults. In such a scenario, repayment is guaranteed. For this specific purpose, we keep aside a buffer of 20% of the issued funds. The reason we set the GRI at mid-single digit returns is primarily because there is an additional guarantee from us beyond the recourse against the SME, which mitigates the borrower’s default risk completely. As a two-sided platform we ensure that while we want to serve the SMEs who directly contribute towards the growth of the economy, we are also equally cognizant of the interests of the investors’ investments on the platform.

As a financial institution, there is a certain sensitivity associated with sharing our financial information or the financials from our sister companies publicly. We understand that it's helpful to investors as part of your due diligence. We may decide to share more information in the future as the overall portfolio grows. We seek your understanding in this. However, irrespective of this, investors have a choice to opt out or not participate in such financing opportunities, if it’s not within your risk appetite.

Lastly to clarify, the founders of Funding Societies do not provide Personal Guarantee to the platform's financing opportunities.

Hi Funding Societies,
You type alot but you did not answer the main question. How do you ensure these loans are guaranteed? Is FS Balance Sheet strong enough to take the hit. Saying you set aside 20% of issued funds as "collateral" is cold comfort. The defaults can and will potentially run higher than 20%. Again at the end of the day we just want to know FS Capital has the financial capacity to guarantee the loans. Or if you have credit insurance. Otherwise its as good as being unsecured. Saying your company guarantees the loans without the ability to guarantee means nothing. Hope you understand.

 

[SBC]

Any recent review?

 

[jack-320]

Hi everyone, thank you and appreciate everybody’s view on our Guaranteed Returns Investment (GRI) product. We recently noticed this thread and would like to clear the doubts and concerns around this product for the members of the forum.

This product was primarily introduced to provide our platform investors with a more secure product, thereby creating a balanced portfolio consisting of unsecured and guaranteed financing opportunities. We had also in parallel launched Property-backed secured financing. Coming back to the GRI product, some of its features are:

- Returns of 3-5% per annum
- Short tenor between 1 and 12 months
- Monthly repayments
- Our guarantee on capital and interest if the SME defaults

To further elaborate, the guarantee helps in situations where the underlying issuer defaults. In such a scenario, repayment is guaranteed. For this specific purpose, we keep aside a buffer of 20% of the issued funds. The reason we set the GRI at mid-single digit returns is primarily because there is an additional guarantee from us beyond the recourse against the SME, which mitigates the borrower’s default risk completely. As a two-sided platform we ensure that while we want to serve the SMEs who directly contribute towards the growth of the economy, we are also equally cognizant of the interests of the investors’ investments on the platform.

As a financial institution, there is a certain sensitivity associated with sharing our financial information or the financials from our sister companies publicly. We understand that it's helpful to investors as part of your due diligence. We may decide to share more information in the future as the overall portfolio grows. We seek your understanding in this. However, irrespective of this, investors have a choice to opt out or not participate in such financing opportunities, if it’s not within your risk appetite.

Lastly to clarify, the founders of Funding Societies do not provide Personal Guarantee to the platform's financing opportunities.

Hi Funding Societies,
You type alot but you did not answer the main question. How do you ensure these loans are guaranteed? Is FS Balance Sheet strong enough to take the hit. Saying you set aside 20% of issued funds as "collateral" is cold comfort. The defaults can and will potentially run higher than 20%. Again at the end of the day we just want to know FS Capital has the financial capacity to guarantee the loans. Or if you have credit insurance. Otherwise its as good as being unsecured. Saying your company guarantees the loans without the ability to guarantee means nothing. Hope you understand.

If the company cannot even answer such a question

It is good to say that this company does not worry about your money more than you do

So stay away

No such thing as guaranteed in this kind of thing

 

[TiedInsurer]

Any recent review?

Come. I also have investment oppurtunities for you. Give you guaranteed capital and 10% guanateed interest. The guarantee not by me of course. it's guaranteed by TiedInsurer Pte Ltd. No, you can't have TiedInsurer Pte Ltd financials. That's sensitive information.

That's basically what this is. There's no need for a review.

 

[Shion]

Hmm...Too good to be true, better be careful

Powerful, attractive numbers to entice people in without understanding the mechanisms and fine prints...

 

[kingboonz]

Hmm...Too good to be true

 

[Funding Societies]

Hi there, we understand where you are coming from. To clarify, when we say we keep 20% aside as a buffer, this is net of defaults. This means that when we pay out to investors in the event of a default, the buffer still needs to be maintained at 20% or above after the payout has happened. To answer your question, we assure you that we have strong cashflows as a group and the guarantor has millions in future receivables as well. This is over and above the buffer mentioned earlier. The buffer as well as the conditions are subject to change. Please also note that the Guaranteed Investment portfolio is much smaller compared to our overall business and we do not see any concerns in fulfilling our obligations in the short to medium term.

We are happy to speak to you over a call and discuss in further detail if you would like. We would have loved to invite you to our office for this but given the current COVID-19 situation, we have cancelled all face-to-face meetings and events. Thanks and have a great week ahead.

 

[ydnar1]

Ur assurance and guarantee is as good as paper talk bro!

Why not show your books, and people can assess if your assurance and guarantee has value?

As nice as your borrower’s audited and unaudited books, there will be defaults and frauds.

What’s worse is FS refusing to even show your books, and here you are talking about assurance and guarantee.

No offense but you are simply not answering the concerns raised in this thread.

You want people to trust your guarantee but you refuse to show your books.

Trust?

 

[kokjj87]

Don't invest in FS. 12 out of my 170 loans are going defaults.
The default rate on the website site cannot be trust.

 

[ydnar1]

I think it was ~1.8% 2 months ago and now ~1.3%...

I don’t see any repayment for defaulted loans in my account...

Don't invest in FS. 12 out of my 170 loans are going defaults.
The default rate on the website site cannot be trust.

 

[TiedInsurer]

I think it was ~1.8% 2 months ago and now ~1.3%...

I don’t see any repayment for defaulted loans in my account...

The Defaulted loans percentage can go down, because they made more loans. It doesn't necessarily mean the defaulters paid them back.

E.g. On 1 March, they have $18 worth of defaults, on a total loan portfolio of $1,000. That's a 1.8% default rate. Then on 2 March, they made a new loan worth $2,000. So as of 2 March, they still have $18 worth of defaults, but now their loan portfolio is $3,000, and that means their default rate on 2 March is now 0.6%.

Of course, whether the new loans will eventually default is another matter altogether, and default risk of this new debt is not reflected in their default rate as of 2 March.

 

[ydnar1]

Fair point.. I wish so but ahem...

I was and is a strong supporter of FS.. But some of their replies are simply ..

The Defaulted loans percentage can go down, because they made more loans. It doesn't necessarily mean the defaulters paid them back.

E.g. On 1 March, they have $18 worth of defaults, on a total loan portfolio of $1,000. That's a 1.8% default rate. Then on 2 March, they made a new loan worth $2,000. So as of 2 March, they still have $18 worth of defaults, but now their loan portfolio is $3,000, and that means their default rate on 2 March is now 0.6%.

Of course, whether the new loans will eventually default is another matter altogether, and default risk of this new debt is not reflected in their default rate as of 2 March.

 

[Funding Societies]

Hi there, appreciate the numbers on the website don’t line up with your personal experience, but that is to be expected since the number (currently 1.3%) reflects all investments on our platform while your portfolio is reflective only of the investments you’ve made. TiedInsurer is correct, for example if no defaults occur within a time period and we fund more SMEs, the default percentage will go down. The percentage can also drop if we do receive funds from defaulted notes, it might be possible that this has happened for a note that you were not invested in, so that’s why you’re not seeing the repayment even though the percentage drops.