How do I reduce the impact on my portfolio when a borrower defaults?
Lending to small businesses comes with many risks. Small businesses do face challenges from time to time and will either be late on payments or default on their loan. We regularly provide and update an expected default rate forecast which is made publicly available on the statistics page.
The best way to reduce the impact that defaults have on your portfolio is to diversify. We encourage all lenders to lend no more than 1% of their investment to any single business. Your maximum exposure measures the % of your portfolio that is exposed to one single note. An example of a portfolio with a maximum exposure of 1% may be achieved by investing $2,500 in 100 different businesses at $25 per business.