Updates, survey results and recovery freeze

Thank you for filling out the survey, we really appreciate your support and feedback.

Honestly, we were hoping to see you sharing our approach and expressing support, but we were a bit surprised seeing how many of you did. The results of the feedback can be seen below:

– Over 60% of active investors submitted their replies to the survey.
– 93.3% of those who voted supported actions to extend the maturity of the loan for borrowing businesses. Such an action will ensure they will be able to restructure their operations during this crisis period and live through the difficult times increasing the possibility to fulfill their obligations.
– 91.8% of you also voted to support the relief on interest payments during this time with majority voting on the option of distributing the accrued interest through the payment schedule after the relief period.

Based on the survey results and the situation in economics and with each of the borrowers individually, some of the loans will receive the extension immediately. Some of the loans will still pay you current pending interest but are under consideration for the extension and the relief. And some of the projects receiving immediate extension and relief options are expected to use it for a shorter period of time than that currently imposed.

Regarding those few loans which have missed their principal repayment date, there will be a separate decision taken involving related investors.

What will change for the lenders?

Projects that missed interest payment last month, are currently experiencing a delay due to the COVID19 consequences. In case the extension is applied, all pending interest payments up to date will be due once the relief period has ended, while the accrued interest during the relief will be divided equally through the payment schedule.

These changes mean lenders will get more interest income eventually, while for borrowers it is a significant relief by extending their loan term and getting relief on interest payments during upcoming months allowing them to recover and get back on the path of normal business operations.

Results of the survey as they are seen:

For your information, we are reviewing each project separately, and while actions seem to be common for all, there is still a lot of work to be done during this relief period to understand how each of the businesses will recover and preferably, prepare in advance for further actions.

We’re monitoring their ability to pay interest as per schedules and how are they coping with COVID19 crisis consequences. What we will do, during the following weeks we will provide as many updates as possible on each of the projects regardless of whether they are on the relief status or not.

Any of the projects under extension and relief can withdraw from it at any time, and cover their accrued obligations at any time, as well as cover the full principal before the end of the term. As we have seen that before with previous projects we hope to see the trend further on as well where borrowers repay their obligations ahead of time. In the meantime, let’s support them (and you clearly showed the support based on the survey results) and hope for the best.

BuyBack guarantee

Many of you asked what happened with the Buyback guarantee.

Before January, there
was an agreement with our partner to cover early exit requests up to 250,000
EUR, as well as cover defaults if such accrue in the same amount. After January
21st, 2020 when multiple Baltic crowdfunding platforms stopped their operations
leaving investors leaving confusion and uncertainty among investors trusting
their funds with those platforms, Wisefund received “panic” requests
for early exit quickly exceeding the amount of 250,000 EUR. While many recalled
their requests, those which left were all respected and paid out in full amount
as promised.

Unfortunately, for fee-based early exit option there are no further arrangements and it stays disabled as there is no possibility to increase the guarantee agreement limit at this stage.

Given the fact that the limit of the agreement was exhausted and none of the requests were denied, the guaranteeing partner has fulfilled their obligations under the agreement and after extensive talks with consulting lawyers and legal advisers, it becomes likely it will be hard to get something more out of the guarantee agreement as the partner has not expressed the will to extend the limits on it due to uncertain situation in the global economy. Unfortunately, this is not something to rely on during these unprecedented times. This is why we have to concentrate on supporting businesses and as a platform and service provider do extensive work in the background to secure the return of the loans as per agreement terms.

Feedback, questions, and answers

We will also take the opportunity to answer some of the questions and concerns pointed out within the survey keeping the anonymity of those asking questions. Those who asked will spot their question and get the reply below:

“More transparency about the team, the people behind Wisefund, and the borrowers. Also more information about the project in order to be able to do thorough due diligence.”

The company team is not large, and many important services like tech support, due diligence, legal procedures, collection strategy, financial analysis, marketing, etc, all are outsourced while keeping support, borrowing business on-boarding and account and client management as well as accounting in-house. We have never been on the path of burning cash with staff expenses, and as our own funds have always been separated from user funds, and we’re not backed with millions of investments, our growth and scaling up is not done by increasing staff but more likely it’s quality. While there were plans for extending the company’s core stuff, currently those are postponed as we have to concentrate our previously earned revenue on managing the current team, current expenses, current loan management and cover further unexpected expenses. Though, during these strange and difficult times, we hope to get on the path of landing new promising and potentially valuable businesses as lenders and offer more secure funding opportunities for those who are still up for investing. Further on you will see more local (Estonian) offers together with European businesses with very high potential and strong teams behind them – in short, we will concentrate on people behind borrowing companies and not just the businesses. Once this plan starts building up, our team will scale up as well.

“For each company in default, you should have informed us of the situation in early April.”

Currently, no company is in default, yet. But this is a good point we have to work on. While we have a lot of background information on each of the projects and happenings, we still have to put those updates for all investors involved. This means we’re committing our selves to provide more detailed updates (regardless, good or bad) on each of the current projects. Please follow your inboxes as we will inform you of project updates there as well as on each project page individually
“I think you should also allow partial payments to reduce the interest of the borrower and give some money to the investors. The borrower might not have all the money for the payment, but still want to pay a portion of it, and thus reducing the interest in the next months, if that is the case let them use that option also.”

These are the options that will be enabled during the following weeks, and projects willing to use that will do it. We’ve thought about it before, and there have been talks with borrowers as well regarding this, and once some of you pointed this out it becomes clear we have to implement this option

“In my opinion you should give honest statement about Buyback Guarantee. Everyone knows that you tried to be competitive against other platforms like Monethera. If there’s no real buyback, just tell investors that there isnt one. I think bitter truth is better than hiding it. In my opinion people will appreciate your honesty (but you need to use good words) rather than making negative feedback. People know that theres no BB, you just need to find a way to tell them. This will build trust.You have to take a step forward and show people that you are not like Monethera. This is the key to gain people trust. I doubt that people will leave you because of such statement. There are visible differences between Wisefund and platforms like Monethera, but keep bringing it up. You can start with simple things like tell every investor that one of the project has been paid. Right now you send it only to investors who invested in a project. You can send summary of paid projects, it will build trust
Your transfers are very fast, not like Crowdestor. Use it as your strength
Tell everyone who is the owner of Wisefund”

A statement about the Buyback guarantee is seen above. Yes, part of it was an intention to get into a very competitive market and secure our place there as there was likely a very low chance to compete with the offer interest rates (though our offered ones were high, but most of the competitors offer much higher rates). Regarding informing about paid projects – all of the completed projects can be seen in our portfolio, and also by the end of the year (when our existence is long enough to show something from the portfolio) we have planned to present historical statistics of funded, repaid, delayed, etc projects as most of the prominent crowdfunding platforms do. Though, as suggested also by our marketing strategy partners, this is indeed information we have to present more widely even to those not directly affected. For your information, up to date, 495,000 EUR principal from 5 projects has been successfully repaid to investors together with accrued interest. Given the scope of our portfolio and the risk profile, this is a significant amount.
Regarding deposit and withdraw speed – transfers – as mentioned previously and as required by our financial partners, users funds (uninvested) are held on a separate account segregated from our own funds meaning we have immediate access to funds on users accounts, and we’re processing withdraw requests 2x a day ensuring same day withdraw. Given the transfer speed of SEPA payments users usually receive their withdrawn balance within hours. And we’re committed to only improve on this.
Who is behind Wisefund? Ingus Linkevics is the current owner of Wisefund and is responsible for all current decisions and actions you see happening. It’s clearly visible in public registers and also video interviews.

We hope you support our decision. We also hope to reduce these reliefs as borrowers fulfill their recovery plans and continue with payments as per schedule. For those <9% our apologies if this does not meet your expectations. You are still part of our customer base and we and borrowers hold obligations towards you the same way as for everybody else. This is not discrimination of your opinion but listening to the crowd (we’re crowdlending business after all). Rest assured we’re doing it to ensure the best outcome for all parties involved, and most importantly, you!

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