Did you know that Funding Societies has an investment product called Guaranteed Returns Investments on our platform? It provides consistent, guaranteed returns, regardless of SME repayment status.
What Are Guaranteed Returns Investments (GRI)?
Our Guaranteed Returns Investments (GRI) Product is a micro financing instrument that, as its name suggests, delivers effectively guaranteed repayments. The product has interest rates of 2% to 8% annually and investment tenors typically last between 1 and 6 months. Even if the micro business or SME submits late repayments or defaults, returns will still be made irrespective of the recovery stage by our subsidiary company FS Capital Pte. Ltd. (FSC).
To fund any new GRI opportunity, you may set up an Auto Invest Bot on your Investor account, as you would for other Funding Societies products.
How Can You Guarantee the Investments?
Our company has been offering micro financing to local businesses through our subsidiary company, FS Capital Pte. Ltd. (FSC). By doing so, we now have a data-driven credit algorithm to help in the decisioning of quality, tenor, and interest of the loan in the underwriting process, which helps to minimise default rates.
Normally, in the repayment process for our other products such as Business Term Financing, investors would collectively fund an SME loan through the Funding Societies platform. Then, over a period of time, the SME would repay loan instalments plus interest to investors, facilitated by Funding Societies. Investors understand from the outset that if the SME is late in repaying its loan or eventually defaults, they will bear the risk of losing the investment.
However, the repayment process for Guaranteed Returns Investment is structured differently. During scheduled repayment periods, FSC will repay investors regardless of the SME’s repayment status. This is in contrast to the Business Term Financing, where investors rely solely on SMEs to make their repayments in order to gain both their principal and returns in the form of interests charged to the SMEs.
To mitigate default risk, FSC maintains a cash reserve buffer to manage performance of Guaranteed Returns Investments. To date, investors have received complete repayments and interests on their investments with the Guaranteed Returns Investments product.
Cool. Do I Need to Do Anything Differently to Fund Guaranteed Returns Investments?
Don’t worry, the process of financing a Guaranteed Returns Investment is similar to our other products. Here are a few tips to make funding smoother:
- Guaranteed Returns Investment has its own Auto Invest so if you are interested in funding, you will need to set up a new Auto Invest bot.
- The above is important because as each campaign is expected to generally raise a lower quantum than other products, we anticipate that funding will be entirely done through Auto Invest. Guaranteed Returns Investment will only be open for manual funding in the event there is not enough auto investments from investors to fill a loan.
- If a Guaranteed Return Investment Product has been fully funded via Auto Invest, we will email investors who have been auto-allocated during the pre-funding period in order to provide time for investors to review their auto-allocated investment and decide if they want to opt out.
- Because the credit assessment process for Guaranteed Returns Investments is different from other offerings on our platform, factsheets for the Guaranteed Returns Investments will be more concise.
With Funding Societies, you can help empower local businesses while diversifying into a unique asset class of SME financing. Starting your investing journey with us is easy. It takes an initial deposit of SGD 100 to activate your account and a minimum of SGD 20 to start funding investment opportunities. Register to be an investor here today.
Interested in the variety of investment products we offer? Click on our Investment Page to learn more.
Disclaimer: The information provided to you in this blog post is intended only for general information purposes only and does not constitute legal or other professional advice on any subject matter. The materials and the information provided are not intended to be and do not constitute an advertisement or solicitation. In no event will Funding Societies be liable to any party for any direct, indirect, incidental, special, consequential or punitive damages for use of such information by you or any unauthorised third party.
Actual returns may be lower than the expected rates of return, and historical rates of returns may not reflect future returns. The Product type interest rates indicated above are derived from historical rates of returns and are exclusive of service fees.
Information accurate as of September 2022.
- A Guide to Investing with Funding Societies - September 23, 2022
- Guaranteed Returns Investment: How Does It Work? - September 22, 2022
- My journey from a remote paid internship to becoming a remote full-time Data Engineer - September 14, 2022