At Income, we’re always seeking ways to help investors balance risk and reward. Analyzing platform trends, we noticed a strong demand for shorter-term loans—typically under 12 months. To better accommodate Loan Originators (LO) offering longer-term loans, Income has introduced an innovative feature called Early Buyback. This feature is designed to spread out buyback events and create a smoother investment experience.
Key Updates to the Assignment Agreement: Early Buyback with Investor Consent
With the Early Buyback feature, LOs can now specify an earlier date for buyback, allowing investors the opportunity to exit before the final maturity date, subject to the LO’s cashflow availability. Upon making an investment, investors provide advance consent for a potential early buyback, aligning with their preferences.
In case of cashflow delays, LOs can inform investors in advance, ensuring no unexpected changes while maintaining the regular buyback obligation. This flexibility enhances investor confidence and allows LOs to plan buybacks efficiently.
Discount Mechanism: If the Early Buyback is activated, a discount may apply to the payout amount, depending on factors such as the timing of the buyback relative to the acquisition date. This may affect the final interest rate received by investors. Maximum potential discounts and terms will be disclosed on the loan listing.
Practical Benefits for Investors
- Transparency: You’ll find clear early buyback terms, including potential discounts, when a loan is listed, so you’re fully informed upfront.
- Flexibility: This feature provides more options to tailor your investment horizon and risk profile.
- Risk Management: Early Buyback can act as a contingency, allowing LOs to balance cashflows while ensuring investors still benefit from regular buybacks.
Our first adopter, Hoovi, an SME lender, is using the Early Buyback feature on 3-year loans, set to be bought back after 12 months. Hoovi has listed €200,000 in loans with an 8% yield, aiming to attract investors with a shorter investment horizon.
We encourage you to review your Auto Invest filters to reflect your interest in Early Buyback loans. By adopting this new feature, Income is helping to create more investment opportunities that align with diverse investor strategies. We look forward to seeing how this feature optimizes cashflow for all participants and supports a balanced marketplace.
