Minimise risk - increase return
Every loan application is reviewed in detail by CG24. With the review, the credit risk of each applicant is determined and assigned on the basis of the rating. In addition to the borrower's creditworthiness, the general conditions are also looked at. A detailed analysis of the borrower is carried out to find out whether the borrower is able to service the loan on time.
Currently, more than 80% of the requested loans are rejected because they do not meet our criteria. Furthermore, CG24 offers borrowers (non-legal entity) various insurance options (death, unemployment/incapacity) to secure the debt service of the loan.
Borrowers are directed to our marketplace through selected marketing channels.
Our reliable loan providers are checked for quality and regularly monitored.
In addition to KYC and AML checks, creditworthiness data and debt collection information are checked. Furthermore, this data is supplemented by the following internal audit processes:
A qualitative and quantitative due diligence (DD) is performed on every company. The qualitative DD is composed of e.g. management experience, strategic focus, data transparency, completeness of documents, etc. The quantitative DD is based on the last two annual financial statements.
Depending on the desired loan term, CG24 uses a short- or medium-term oriented cash flow debt model.
The review process is based on the underlying investment property that CG24 holds as collateral (subordinated to an external first mortgage). Our real estate experts determine the market value and thus the loan-to-value ratio of the property. Since the loan must be covered by the income from the property, CG24 also determines the affordability of the property.
The monthly budget surplus is determined for the affordability of the loan instalment on the basis of income and expenditure.
In addition to the credit check on the borrower himself, any collateral is stringently reviewed and monitored for value. Collateral can be joint and several guarantees, company guarantees, bank guarantees, mortgages, shares and debtor books, etc.
After the borrower and the collateral have been checked, CG24 issues a rating to the loan project. The individual rating levels consist of, in descending order, AAA, AA, A, B and C. The better the rating, the higher the probability that the borrower will repay the loan on time and in full.
Dunning and recovery
If a borrower defaults on payment, the following measures are taken:
Automated dunning system
- Payment reminder
- First reminder
- Second reminder
Under certain conditions, loans can be restructured. The investor's interest is always paramount.
If no solution has been found with the borrower, the following steps, among others, will be taken:
- Loan termination with a payment deadline for repayment of the entire loan amount.
- If this payment deadline is not met, a debt collection procedure will be initiated.
- Realisation of collateral.
If the entire outstanding amount has not been recovered, the solidarity agreement comes into play.
In the event of a loan default or partial default, the defaulted amount is borne jointly and severally by all investors in the same loan category and rating level on a pro-rata basis. We would like to use an example to show you how our solidarity agreement works:
The entire loan (X) of CHF 10,000 defaults in the solidarity pool "Private Credit Rating C".
The total volume of the solidarity pool "Private Credit Rating C" amounts to CHF 5'000'000.
Investor 1 has invested CHF 2,000 in the loan (X). In total, investor 1 has invested CHF 30,000 in the solidarity pool private credit rating. Through the solidarity agreement of all investors, the total amount of CHF 2,000 is not lost, as investor 1 is only charged proportionally to the total investment amount of the solidarity pool.
Calculation of the solidarity share:
(30'000 / 5'000'000) * 2'000 = 12
The loss suffered by investor 1 amounts to only CHF 12. Thus, investor 1 benefits from a payout of CHF 1,988 thanks to the solidarity agreement.