Online business finance marketplace Platform Black is now underwriting the first 10% of every invoice auction that takes place on its site and as such it will cover the first 10% of any losses faced by an investor.
In addition to this, the business has also announced that it will also contribute a 1% financial interest in every single invoice auctioned on their platform.
Caroline Langron, MD of Platform Black, said: “Interestingly when you look around the industry, it is apparent that most marketplace lenders are intermediaries, not principles and therefore do not retain any credit risk. We feel there comes a time when we as an industry need to man up and put some skin in the game! As all good credit teams do, we treat all trades as if they were our own money.
“This demonstrates our belief in our own underwriting and our commitment to treating investors fairly. Given that we have funding lines from as little as £5k to as high as £10 million, this could potentially be a considerable sum and has not been a decision taken lightly.”
The move means that with effect from 1 June, Platform Black will underwrite the first 10% of every auction on its Platform, thus taking the first capital loss from any bad debt. So for example a client default with a capital exposure of £500k, would see Platform Black put its hand in its pocket and contribute £50k to the investor’s capital loss on a % investment per investor.
Langron said: “I stand by my belief that if I wouldn’t put my own money into an auction, then I wouldn’t expect an investor to do so either, so from 1 July we will be the first to invest in every auction.”
Over the last 15 months, Platform Black has only suffered one bad debt of £65k in January 2015 against a turnover of £44m.