Smart Investment (“Smart Investment” or “we”) operates an electronic system in relation to lending and investing (the “Platform“), which enables investors to enter investments.
If you enter an investment contract on the Platform, your capital is at risk. While we take steps to mitigate this risk for our investors by establishing collateral on every loan, you may not get all, or any, of your money back. Each loan contract is entered into between each investor and borrower of the loan and Smart Investment will act as an intermediary on behalf of the lenders in relation to the relevant loan contract.
While there is a number of risks associated with investing, we believe the biggest risk of your return is the borrower’s ability to make their loan repayments. Our project selection processes are the key in our approach to protecting your investment against market risk.
When you invest through the Platform, your money is lent to carefully selected borrowers seeking finance. However, please read and make sure you understand the associated risks with your investment, detailed below.
Your money is at risk. Your capital is at risk and you may not receive back all (or any) of your investment. The ability to recoup all the capital and interest on these loans is determined by the ability or willingness of the borrower to repay the loan and the underlying value of the asset (which could be affected by a material downturn or anyother factor). As such, we cannot guarantee that you will get your capital back or receive your interest. While the loans are secured by the assets of the borrower, this does not guarantee repayment of your loan (including any interest) as per your loan documentation. You should therefore never invest more than you are willing to lose.
Your investment is not protected. It is important to know that your investment is not covered by any state-backed investment compensation scheme.
Any loans entered into by you on the Platform should only be made as part of a diversified investment portfolio that includes a mix of illiquid and liquid assets. Investing small amounts in multiple investments will help you spread your risk.
The property market, crypto martet as well as businesses is cyclical and values may go up or down depending on a range of issues, including political, economic or social. Historic performance of the market or a particular investment is not a reliable guide to future performance. A future downturn in an investment could severely adversely affect the ability of a borrower to repay the loan you make on the Platform.
Loans made through the Platform are an investment. Your investment will be illiquid, meaning that once your invested funds are used to enter into loans it may be difficult to easily exit your investment and get your money back. There is also no guarantee that you will get your money back at the end of the term of the relevant loan in the event that the borrower is unable to repay.
No advice. Smart Investment and its affiliates do not provide any advice or recommendation in relation to any investments made available on the website. If you have any doubts about the risks of such investments or you otherwise require financial advice, you should seek advice or recommendations that are personal to your circumstances from a suitably qualified financial adviser.
Tax is your responsibility. You should be wary of any tax obligations that might apply to you as a result of any interest received on loans entered into on the Platform. Whether and how any relevant tax obligation applies depends on your individual circumstances. You are strongly advised to consult with appropriately qualified tax professionals regarding your individual tax position, which depends on your personal circumstances and may be subject to change in the future.
So how do we manage these risks?
The collateral agent will pursue any missed payments or defaults on your behalf. The collateral agent will pursue any missed payments and hold any relevant collateral on your behalf. If necessary, the collateral agent, will enforce the collateral and try to recover what is owed to you. If a loan goes into default we provide an update under the “loan update” section as “in default” to make sure you are aware of the default. Please note that even if the collateral agent enforces collateral on your behalf, you may not get your money back.
We conduct thorough due diligence. We carefully examine three important criteria:
the asset: we conduct thorough due diligence on the underlying assets – including an independent professional valuation for each asset we take as collateral;
the borrower: we conduct in-depth analysis of each borrower’s financial position, assessing their credit history and undertaking comprehensive identity, AML and fraud checks; and
the exit: we assess each borrower’s ability to pay back the loan.
We only make ‘conservative’ loans. All loans are secured by physical assets at a maximum ‘loan to value’ ratio of 80%, and an average of 70% – giving you a substantial cushion of at least 50% should the value of the property fall.
We keep your money separate from ours. We will do our best to ensure your money is always at work. But any money that has not yet been allocated to loans will be held on a segregated ‘client money’ bank account. In the unlikely event of our insolvency, this money would be inaccessible to us. Any collateral over the borrower’s assets is also held for you by the collateral agent.
The collateral agent will hold collateral on your behalf. Should Smart Investment cease to trade, any collateral held on your behalf would continue to be managed by the collateral agent and a third-party administrator appointed by Smart Investment. All loan contracts are concluded directly between a borrower and a lender (investor) and the collateral is held by the collateral agent. Smart Investment will act as collateral agent on behalf of lenders in relation to any collateral held in respect of a loan and will also enforce any collateral on behalf of lenders.
First-come, first-serve basis. We treat all of our customers fairly and do not favour new customers over old. We deal with all requests to deposit or withdraw money on our platform on a strictly first-come, first-served basis.
We make sure that operations will continue even if Smart Investment were to stop trading for any reason. In the unlikely event that we should cease trading for any reason, we make sure that our loans are administered in a way that ensures the arrangement fees payable in relation to these loan contracts are sufficient to cover the costs of administering them during any winding down process. Contingency plans are in place for a third-party administrator to take over administration of the loan parts for investors should it become necessary for any reason.