A repeat borrower is a company that has raised more than one loan on the same crowdlending platform. On Maclear, several borrowers have financed multiple projects — a signal they serviced earlier loans and passed due diligence again. A track record shows past performance, but it does not guarantee future results, and concentrating in one borrower raises portfolio risk.
Repeat borrowers are a powerful signal to a crowdlending platform because the businesses rarely need to return to the same lender without a particular reason behind it. Many enterprises in the fields of agriculture, finance, and construction consider loans as a part of their long-term growth strategy to help their businesses scale. Therefore, the same investor may give the loan so the company can buy farming machinery one year, rent better storage capacities the following year, and invest in a new crop growth technology in two years. The returning of the borrower to the same lender is a signal of trust and credibility.
Repeat borrowers also have a certain advantage when assessed through the investor’s perspective. The advantage lies in them being capable of proving a relationship with a certain crowdlending platform by supplying all the necessary documents and maintaining the official records of their business activity that may be disclosed to the platform for an actual credit risk assessment. On top of that, the history of the successfully completed prior projects gives a clear signal that a company was complying with the terms of the loan and managed to fulfill all the obligations regarding it if the loan was repaid successfully. Yet, the credibility and documentation established by the repeat borrower does not completely eliminate investment risk.
A borrower has a reason to come back to the same platform if they need another loan because they have the proof it has previously worked. If the business owner has been able to infer that the platform can provide a credible channel for the financing of their business development, this is the reason they may use it again.
A repeat track record of a borrower can give information about the credibility of the borrower, their financial situation, and the documents for the project. However, there are still clear limitations of what a repeat track record cannot prove, including the future possibility of the financial failure of a business, future macroeconomic conditions, or changes in the financial performance due to the company’s restructuring.
The track record about the previous financial operations of the borrower helps to assess how they have met the contractual obligations regarding the loan, what documents they have provided, and how they have accessed financing when they needed it before. If the borrower can already show multiple completed projects where they have met the obligations to repay the loan in a timely manner, as well as provide all the actual documentation regarding their business, this can serve as a signal reinforcing the credibility of the borrower by highlighting effective management practices, transparency, and a significant degree of corporate responsibility.
Still, the repeat borrower cannot demonstrate how their company will perform in the future. Even if the borrower provides estimations of the revenue for the next 5 years and thoroughly describes the model of business scaling, external events like economic recession, labor shortages, or disruption of a production chain due to the insolvency of the business’s partners cannot be evaluated or predicted even if the borrower is a repeat one. The same applies to the mechanisms that secure the loan, including the collateral that backs a Maclear loan. Its price may change given the specific market circumstances and, therefore, may still cause unexpected financial loss.
A repeat borrower is not automatically safer. Single-borrower concentration still causes risk.
No, a borrower being a repeat one does not guarantee that they automatically become safer. Every investment project requires case-specific due diligence, credit risk scoring, and loan structure. It depends on the type of asset used as the collateral against the loan, the Loan-to-Value (LTV) ratio, and the specific interest rate on the loan. Therefore, the investor should assess all the factors individually on a case-by-case basis.
Lending to a repeat borrower on Maclear is the subject of the reassessment of the actual case presented by the borrower rather than an automatic approval of the loan. The borrower would still have to submit all the documents that will provide the information about their actual financial situation and the desired terms of the loan. Maclear then conducts prior due diligence to analyze this situation and score the project with an internal risk score from AAA to D.
Maclear reviews the project based on multiple factors, including the availability of the collateral to use against the loan, the type of the collateral, the company’s revenue in the past, the history of the financial operations, sectoral limitations and risks, and other factors. Metrics like LTV and Debt-to-Equity (D/E), as well as repayment capacities and the legal conditions of the loan, are assessed before Maclear issues a final risk score. The calculation of the project’s interest rate also depends on the assessment and is subject to review.
Maclear has a record of repeat borrowers, including ULTIMA FINANCE, a Bulgarian non-bank lender that serves both the borrowers and the consumers; CRYPTON, a cryptocurrency mining company with the headquarters in the Czech Republic, and LeadX Digital, the project that provides IT infrastructure for the businesses. Some of the borrowers include WEST AGRO GROUP, the company producing organically grown almonds and dried fruit; M&M STAR Group, a construction company; and L S FOOD, the business of wholesale nutrition. The overview of the projects — part of a broader look inside Maclear’s funded projects — is given in the table below after the prior consent of the companies who have agreed to share this data.
| Borrower | Sector | Number of Financed Projects | Typical Risk Score | Typical Annual Rate |
|---|---|---|---|---|
| ULTIMA FINANCE | Consumer and SME finance | 12 | A | 15.2% |
| CRYPTON | Digital asset infrastructure and services | 10 | A | 16.0% |
| LeadX Digital | IT infrastructure and cybersecurity | 9 | BBB | 14.8% |
| M&M STAR Group | Construction | 8 | BBB | 14.9% |
| L S FOOD | Wholesale and food processing | 7 | BBB | 14.8% |
| WEST AGRO GROUP | Agriculture | 6 | BBB | 14.6% |
Number of financed projects as of publication date. A track record reflects past performance only and does not guarantee future results.
Despite repeat borrowers being a signal of credibility for the investor, they may also carry the investment risks, one of which is single-borrower concentration risk. When a company has already secured multiple financing rounds or shows stable financial performance throughout the period of 3 or 4 years, it can be tempting to invest a larger share of the portfolio in the company, up to the point that the majority of funds are lent to the company. However, in this case, if the company encounters sudden financial difficulties due to the change of the macroeconomic conditions or insolvency, the investor has the risk of losing the larger portion of their capital due to its over-concentration.
A strategy to counter that risk includes portfolio diversification that tries to mitigate the risks related to the borrower by assuming that even the most reliable borrowers can face unexpected financial struggles and try to prevent the over-concentration of capital from happening. Changes in the market demand, the volatility of the commodity prices, the shift in the legal requirements imposing additional tax concerns, or the change of legal responsibility of the company all carry this risk. Therefore, it is also important to conduct prior analysis before investing in the project alongside supporting risk mitigation with clever portfolio diversification. It helps to review the risks of P2P lending within a structured framework before committing capital.
Repeat borrowers are not automatically safer. Concentration carries the risk; returns are not guaranteed.
Single-borrower concentration risk means the overrepresentation of the company in the investor’s portfolio. The excessive allocation of funds to one of the companies the investor considers to be more, or most, reliable can increase the single-borrower concentration risk. If the investor allocates too much to one company, unexpected circumstances like macroeconomic shocks, including recession, inflation pressure, or a company’s insolvency due to a legal proceeding or the drastic increase of the production costs, may lead to partial or complete capital loss. Besides, the collateral against the loan and the loan amount also contribute to the different investment conditions. In this case, single-borrower concentration risk may be mitigated (although not eliminated) by the diversification of the portfolio and prior investment analysis of the project.
The track record of the repeat borrower may be effectively used during the stage of the portfolio construction or the investment as part of the process. Assessing the current financial situation of the company, repayment history, historical performance, and potential returns may provide useful information about the investment and a case-specific context necessary for a weighted investment decision. However, it is also necessary to include the analysis of the collateral available as security, the LTV ratio, the risk exposure in a particular sector, and other factors that may influence the financial performance of the project.
A portfolio that is balanced to mitigate different types of risks would include the projects in different regions, industries, financial performance, and loan terms. Maintaining a flexible approach to constructing a financial portfolio may help the investor reduce the risks. However, the returns are still not guaranteed.
In order to understand how to diversify investments, it is useful to consider the following theoretical example. Supposedly two investors have €5,000 each. One diversifies the investment across 5 different borrowers with €1,000 given to each borrower, while the other pays all the €5,000 to the same borrower. The first investor would have 5 different projects operating in different countries and sectors, thus reducing the single-borrower concentration risk in case of a sudden default or macroeconomic conditions.
Illustrative example only; diversification reduces single-borrower concentration risk but does not eliminate it or guarantee returns.
The investor can diversify across borrowers by examining factors such as sectoral exposure, previous repayment history and financial performance, regional constraints, and current financial situation. Metrics like debt-to-equity and LTV may help in the assessment of the project and risk scoring.
A repeat borrower is the borrower who has already asked for the loan and the platform has provided it. A repeat borrower can be a signal of financial stability, good managerial practices, and the borrower’s capability to repay the loan.
No, lending to a repeat borrower is not automatically safer. Even if the borrower being a repeat one can be a signal of credibility, there are external factors that include changing macroeconomic conditions, fiscal regulations, legal business requirements, and labor force trends that may impact business performance.
Yes, Maclear reevaluates the repeat borrower every time they ask for a new loan. The loan is not approved automatically. Instead, Maclear conducts actual due diligence to check the current financial situation, the availability of the collateral, previous repayment history, and other variables to score a borrower on the internal credit risk scale.
Concentration risk is a situation when the investor allocates too much of their funds to a single project. This can increase the chance of capital loss. Even if the project seems to be the most reliable, unexpected financial outcomes like inflation, higher production costs, recession, or insolvency may cause the investor to lose more money.
Rational diversification of a portfolio requires the investor to consider projects from the different industries and regions and with different financial performance. A balanced portfolio will also include projects with varying LTV ratios, repayment histories, and loan terms.
No, successful past loans repaid by a repeat borrower do not guarantee future returns. Even if the borrower was financially stable and made timely repayments, as well as demonstrated stable revenue, external factors may influence the borrower’s performance and disrupt the loan repayment. Investment risk may be mitigated by the collateral, due diligence, and the Provision Fund but can never be fully eliminated.
Maclear AG is a Swiss-based P2P lending and crowdlending platform headquartered in Switzerland. The company operates as a financial intermediary in the non-banking sector and is a member of PolyReg SRO, in compliance with Swiss financial regulations including AML, KYC, and GDPR. Maclear offers retail and qualified investors access to vetted business loan opportunities, with built-in risk assessment, a Provision Fund, and a Secondary Market for liquidity.
The content of this article is provided for informational and educational purposes only. It does not constitute investment, financial, tax, or legal advice. P2P lending and crowdlending investments carry a risk of partial or total capital loss. Past performance is not indicative of future results. Liquidity on a secondary market is not guaranteed. Readers should conduct independent research and consult qualified advisors before making any financial decisions. Availability of products and services may be restricted in certain jurisdictions.
