Unsecured loans are loans that are approved without the need for collateral. Borrowers do not need to secure an asset to receive their finance and the decision is based on factors such as their income, credit history and ability to pay back.
Borrowers are legally obliged to pay the loan back as they agree to all the terms when receiving the funds.
Raise has been built on the Ethereum protocol and we are starting 2020 with a bang. We want to build financial services for as many people as possible and as we are a #Defi platform that means we want to dominate the market for unsecured lending.
Of course, from a lenders' point of view, there is more risk involved when investing in a loan without collateral.
It's a risk worth taking.
Our marketplace is unsecured because we have learned about our users. We know that they are willing to take that risk to see a greater and faster return on investment. We would be lying if we were to tell you that these interest rates are available without a certain element of risk involved, but the potential future earnings for a lender could be far greater than a conventional form of investment.
We do our best to manage that risk on your behalf.
We only lend to non-banking financial institutions whose primary business function is credit lending. Each of these businesses operates with a defined risk model and investments are made to address their short-term cash flow. Rather than securing that funding elsewhere, they can use Raise to borrow the capital to originate their loans.
We also do a strict due diligence process for all borrowers that come on board. This starts with the initial interactions with our business development manager. We review their finances, their projections and their corporate structure. We use this data to access their eligibility to use our platform.
We aim to minimise risk as much as possible to provide our lenders with a secure environment to feel comfortable investing and only notice the benefits of high returns. We are also working on creating a better borrower curation system involving the Raise community.
You're also in control.
We have also created Raise in a vision of openness and transparency. This means our users are able to see as much information as possible provided by the borrower. It's your decision, you only need to invest in a loan when you feel really comfortable with all the information that we have provided.
We encourage all our borrowers to provide Raise users with all the information that would interest them. This is a benefit to a borrower as it will increase their chances of having their loan funded, but it also benefits the lender as they are able to understand everything before parting with their money for that short period of time.
As we are an open and transparent company, we also released our smart contract audit results to the public. This allows our users to feel comfortable knowing that security has been a priority in the technology behind the platform they are using. This should also give a sense of trust for where you are putting your cryptocurrency.
Higher returns and faster funding
We believe that unsecured lending allows borrowers to fund their loans faster. Loans on our marketplace are timed and need to be funded by that point. This option allows the borrowers to have access to their financing much quicker. The lender will see much higher returns and so both parties are able to advantage from the functionality of our platform.
So now you know, it's up to you. After successfully funding our first loan at the beginning of 2020, we have managed to onboard new borrowers that will be available to invest in over the next few days and weeks.