What risk do you take securing the unsecure loans?
Great question. There is no risk involved in our part, since we are not using our own money to lend or to cover loans. We are simply using securitization principles that are generally reserved for large bulk funding and implementing them for all unsecured loans to SMEs, especially startups. We can do this because of our expertise in serving the securitization sector for 20 years, and superior technology in a no-code development platform which allows us to generate an individual program per each contract.
An unsecured loan is a loan that is not protected or secured by any asset. In this case the lender is taking a lot more risk and would likely charge a higher interest rate. The riskier the loan, the more expensive it will be. We are going to change that.
The credit enhancers are as follows:
1. Over-collateralization acting as additional security; and if it fails to cover all losses arising from the same borrower,
2. Third-party guarantors take care of the overflow losses from the above for the selected loans; and if it still fails,
3. Cross-collateralization pool provides additional insurance; and if it still fails,
4. Five (5)% of all FTX Tokens has been reserved to cover any losses incurred by lenders.
In essence, we make borrowing and lending a no brainer for both borrowers and investors. Investors enjoy a very safe low-risk loan for a traditionally high-risk venture, and borrowers benefit from low interest rates that result with low-risk.
