Anyone with experience of lending on Mintos?

Yes, probably all those investing there.

The OP's message may seem odd, but that is because it was moved from another forum. The question itself is not odd. The European P2P market is bifurcated: to offer an additional layer of security, nearly all platforms on the continent use a buyback guarantee, while in the UK, they tend to use a provision fund.

danraj , I see your company is importing the BBG idea to the UK market. On your homepage, it is stated that the "buyback guarantee gives a clear correlation of risk and return". On the continent, it has clearly had the opposite effect. In the case of Mintos (the market leader), it has led to an opacity of credit risk and an increased level of intermediation to hide those risks, as evidenced by the fact that they now offer an "Invest & Access" product that only invests in BBG loans without the customer having to decide on any parameters.

It is (I assume) obvious to most that a portfolio of loans with a BBG all from the same guarantor is, in the long term, more risky than a portfolio without guarantees, because the latter will experience a steady incidence of defaults, while the former causes the risks to be correlated, so that insolvency of the guarantor can bring the whole house of cards down without advance warning. (I should clarify that BBG loans on Mintos are generally unsecured by any collateral.)

On Mintos, a number of the originators are loss-making micro companies with negative equity, so any "guarantee" extended by them is of very limited value. However, reading blogs and forums suggests that many inexperienced investors fall for this false security.

The one continental platform you probably should familiarise yourself with is Neo Finance, because they offer a voluntary BBG for a fee, which makes it the closest match to your model of BBG.

southseacompany, geldregiertdiewelt


Thank you for the comments. I can see how the instant access feature would be an extension of the BBG. It makes sense that the BBG could be invoked at the will of the holder, who would forgo the premium. This would then become sellable by the guarantor for another premium. We will probably introduce this extension within the next 12 months, though I think it may need a caveat to be 3-day access. I will need to research what’s plausible and practical. 

I share your concern about the worthiness of the guarantee of some of the smaller, inexperienced originators, but believe this will be the exception. In our case, the guarantor holds collateral that we may liquidate if they are unable to honour the guarantees.


I’ll check out Neo Finance, thanks for the tip.


Any other thoughts, comments or observations would be most welcome.

What I meant above is that of two investors hypothetically investing in the exact same set of loans, the one opting for BBG would carry more long-term risk (due to increased correlation). However, it's true that there is a second-order effect that the loans available wouldn't actually be the same in the case where the originator has no skin in the game.