Income Marketplace Review
The Income marketplace is a newly launched website that allows you to invest in loans from six lending companies that operate in different markets. By investing in Income Marketplace, you can earn up to 12% interest per year.
The platform is very transparent when sharing relevant financial overviews, but can it compete with other P2P players? That’s what you will find out in our in-depth Income review.
UPDATE 29/04/2022 Income's underlying technological infrastructure and loan portfolio monitoring is superior to what we have seen on other platforms so P2P marketplaces. The cash buffer and junior share are also unique, making Income an exciting investment site.
Are you wondering how the Income Marketplace works? Watch our Income Marketplace review to get learn more about the platform.
Is Income withholding taxes?
The Income Marketplace is not withholding any taxes on investors' earnings. You have to declare your annual income from P2P loans in the country where you are a tax resident. Learn more about how to declare taxes in our tax guide.
Income in Numbers
Kimmo Rytkönnen launched the Income marketplace at the beginning of 2021 to make investing in P2P loans safer.
Typically, we don’t see many statistics about a platform during the first year of operation. Income does, however, share information about its monthly funding volumes, which gives you an idea of how much money the marketplace can attract.
Another positive point about Income’s statistics is that you can easily see the performance of the loans from the seven listed loan originators.
This gives you a good insight into the size of their loan book on the Income Marketplace and its performance.
By reviewing the statistics of the currently listed assets on Income, you will realize that the availability of loans is well diversified.
We will cover the aspect of diversification in the upcoming sections of our Income review.
Logically, Income hasn’t published its annual financial report, as the platform hasn’t been active long enough to provide this document. Investors should not expect Income to be profitable over the next few years as the platform heavily invests in its development.
If you’re interested in the financials of the lending companies, you will be disappointed as audited annual reports aren’t available. You can only review condensed financial information. Even upon request, Income couldn’t provide translated audited financial statements for their lending partners so far.
Currently, we do not know any lost capital of Income’s investors. There are also now no “funds in recovery”.
As of right now, there are 2644 registered investors on Income. The platform aims to attract institutional investors in the future, but currently, most investors are retail investors. The platform estimates that retail investors are investing on average, around €1.500.
It's important to mention that Income's statistics include live data, which is not the case on other platforms like Bondster.
Income Invitation Code
The Income marketplace does offer an Income referral code for newly registered investors. Type in the Income invitation code VI1MHQ to get a 1% cashback bonus calculated from your invested amount during the first 30 days from your registration.
You have to sign up with our partner link and type in the referral code to benefit from this bonus.
Ready to earn passive income on GetIncome.com?
To be able to earn interest on your investments on Income, you have to meet specific requirements.
- Have a bank account in your name registered in either the EEA (European Economic Area) countries, Norway, Iceland or Liechtenstein
- Be at least 18 years of age
- Provide your identification documents
If you don’t have a bank account in EUR, you can open a free N26 or Wise account. Keep in mind that you can only transfer EUR from an account in your name.
The verification of your identity takes less than 2 minutes. You will get a QR code that will allow you to take a quick selfie and a photo of your ID card.
To transfer money to Income you have to move your deposit to the LHV bank account of Income. Don’t forget to add your reference number so the marketplace can allocate your deposit with your investor account. The transfer should not take more than two business days.
Keep in mind that you have to reside within the EU or EEA to be able to invest on the Income Marketplace. The platform doesn't offer investment opportunities for investors from outside of Europe.
Risk and Return
When it comes to P2P lending, you should always be able to evaluate the quality of the protection scheme and the quality of the loans in which you are investing.
In other words, have a look at the buyback guarantee, and check the financial information of the loan originators and the performance of their loan book.
Let’s first look at the buyback guarantee.
Buyback Guarantee Explained
Your investment is backed by a 60-day buyback guarantee on Income. This means that the loan originator promises to repurchase your investment and repay the accrued interest if the loan repayments are delayed by 60 days.
Experienced investors understand that the buyback guarantee is only as good as the financials of the lenders and the performance of their loans.
Keep in mind that certain loan originators list their loans on Income via SPV. Non-European lenders typically incorporate an SPV that lists loans on the marketplace. This is the case with ClickCash Brazil as well as Danabijak Indonesia. Let’s briefly review the three loan originators.
ClickCash Brazil is a Fintech company that offers consumer lending services in Brazil. The borrower's APR ranges between 63% and 732%. The average APR is 174%. This lender was founded in 2019 and raised €1.8M to grow its presence in Brazil.
So far this lender has originated €2.6M in loans and the current loan portfolio accounts for €1.6M.
ClickCash is a brand operated by Credit 24 LTDA which is audited by BDO (audited reports are not available). The Income management owns 12% of Credito24 in equity.
Here is a short graphic representing the security structure of loans listed by ClickCash’s SPV.
To our knowledge, ClickCash was not profitable in 2020.
Danabijak is an Indonesian fintech company providing payday loans to the underbanked middle class in Indonesia.
Danabijak was founded in 2016 and since then, the company has originated €16M in loans. Currently, the loan portfolio accounts for €788,000.
Like ClickCash, Danabijak also uses an SPV to list loans on the Income Marketplace.
Review the security structure below to learn more about the process.
By investing in loans from Danabijak, you are funding loans in EUR that are issued in IDR. This means that the lender is carrying the FX risk.
While Kreston International audits the financial report for 2020, this report isn’t publicly available on the Income Marketplace. From the listed financial information sheet, we have learned that Danabijak lost €601,000 in 2020 due to the impact of the COVID-19 pandemic.
FIN Yritysrahoitus is a Finnish lender lending money to SMEs (small and medium enterprises). The borrower APR ranges from 16.2% to 133.8%. The lender was founded in 2015 and since then, the company has originated €6.8M in loans.
The current portfolio accounts for €1.2M. The loans from this Finnish lender are listed through an SPV (Income EST SPV OU).
Here is the security structure:
FIN Yritysrahoitus Oy is audited by Aurinkolahden Tilintarkastus OY. Audited reports are, however, not publicly available on the Income Marketplace.
What you should also be aware of is the fact that the CEO of Income acts as a board advisor to FIN Yritysrahoitus.
IN 2020, FIN Yritysrahoitus was not profitable.
The Income Marketplace is constantly onboarding new loan originators. You can now invest in loans from Danarupiah (Indonesia) or Vivus Mexico. The platform is also in the process of onboarding Juancho Te Presta, a lender backed by Rapicredit that you may also find on Bondster.
Income's Due Diligence and Onboarding
Let's get into more details about the onboarding process of lenders on the Income Marketplace.
First, the platform collects data about the lending company. The lender has to provide legal documentation, financial statements and explain how the company originates loans.
In the second step, Income’s risk manager analyses the documentation. The key factors that the platform is considering are the loan book performance and portfolio profitability.
The Head of Onboarding on Income looks at the information from various dimensions and reviews the lender's financial statements.
In some instances, a group guarantee is required if the lender doesn’t have a good track record which could be a case where the lending company is a startup operating under a more prominent financial institution.
Next, the marketplace calculates the junior share and submits the results to the management for approval. If the decision is favorable, the lender receives an offer.
As soon as the offer is accepted, the platform conducts a sanity check and reviews the loan agreements, bank statements, and loan documents to see if the loans are backed by collateral.
If all goes well, the lender is onboarded, and API integration with the company is established, so Income can mirror the performance of the listed loans directly from the lender’s loan management system.
Every six months, the platform runs a completeness check and reviews the performance of the entire loan portfolio, which helps determine a new junior share.
Junior Share & Cashflow Buffer Explained
The Income Marketplace brands itself as the “safest” marketplace in Europe. The marketplace introduces additional protection mechanisms such as “junior share” and “cash flow buffer”.
Junior share is the improved version of “Skin in the Game”. “Skin in the Game” represents the percentage of the loan, listed on the platform, that is funded directly from the lender’s balance sheet (not investable for investors). The junior share is subordinated to investors' funds.
The Junior Share protects your money if the lending company defaults.
Let's have a look at the differences between Skin in the Game and Junior Share, to understand the unique protection on Income better.
So let’s say that a lender with a €1 million loan portfolio with 10% skin in the game defaults.
In the next step, a collection company starts the recovery process.
Let’s assume that 40% of the portfolio could not be recovered, which means that 60% of the loan book is the final value that will now be distributed proportionally to the lender and the investors.
In this scenario, the lender and the investors have an equal likelihood of recovering the debt.
In this case, investors would lose 46% of their investments. 40% is bad debt, and 6% goes to the lender.
That’s basically how skin in the game works.
Now let’s look at the Junior Share.
The lender will list a €1 million portfolio on the platform, from which 35% is reserved as Junior Share. That means that only 65% of the portfolio is investable by the investors.
What’s important to highlight is that Junior Share is subordinated to investors’ funds. Let’s have a look at what it means.
So let’s say that the lender goes bust, and the collection agency cannot recover 40% of the loans.
That’s not too bad as investors have invested in only 65% of the loan book. The junior share will be paid first to investors to cover the obligations before paying anything to the lender.
So, in this case, investors get all the recovered funds, which results in only a 5% loss for investors.
That’s a pretty solid protection mechanism that significantly reduces your risk of losing money if a lending company defaults.
Junior Share Calculation
Based on the quality of the loan book, the Income Marketplace calculates the appropriate rate of “junior share” for every lender.
This means that every lender needs to invest the amount of the “junior share” from its balance sheet into every loan.
It's like SKIN IN THE GAME ON STEROIDS.
The calculation of the junior share is very straightforward.
First, the platform analyzes the performance of the lender’s portfolio.
The loan performance analysis is the crucial element in any due diligence process as it gives you an idea about the cash value of a portfolio within a specific time.
So let’s assume that we expect to receive 120% of the portfolio within three months. This amount also includes the interest and fees that borrowers are paying.
In the lending business, this variable is called the expected repayment coefficient.
So to figure this out, the platform has to have access to the loan book performance.
In the next step, Income Marketplace has to figure out how much is the required repayment coefficient to cover obligations to investors.
That includes loan principal, interest rate, and fees for the platform. Let’s assume that it’s 104%.
So now, the platform knows how much is required to recover and how much is expected to be recovered based on the loan book performance.
In the third step, the platform deducts risk margins.
If the lender defaults, there are some risks that you won’t be able to recover everything.
A risk factor could be that the borrower decides not to pay, the exchange rate changes, or a global pandemic starts, and borrowers lose their jobs.
The Income Marketplace will calculate every risk margin separately, and it’s never the same for all lenders.
So now, the platform can calculate the investable amount by subtracting the risks from the expected repayment coefficient.
In this case, investors will be allowed to invest 79% into a loan, and they would be fully covered if all the potential risks materialize.
The cash flow buffer is the difference between the investable amount and the expected repayment.
A side note worth mentioning here is that Income recalculates the junior share every six months or when the product and its pricing change.
So in short, the lender has a much larger "Skin in the Game (Junior Share)" if the Income Marketplace determines that the portfolio quality isn't as good or that the risks are too high. It's a similar principle as when evaluating the LTV for real estate properties, just in this case, one evaluates the cash value of the loan book.
In the case of a defaulted lender, Income takes over the collection of loans of the entire portfolio and repays investors prior to the lender.
Whether you invest on Income or on other marketplaces really depends on your risk appetite and investment preferences.
If you are looking for higher protection, interest payments for delayed loans, better monitoring of lenders and no pending payments, Income is certainly the best option for you.
Is Income Safe?
In this section of our Income review, we will dive deeper into the management of the platform and its terms and conditions.
Income's office in Tallin (HQ) is Tornimäe 5 business center 3rd floor, room D1 (next to Deloitte). It's fairly easy to find.
Here, you can watch the highlights of our visit to the Income Marketplace.
Who Leads the Team?
The team behind getincome.com is led by the CEO and Co-Founder Kimmo Rytkönen. Kimmo has previous experience in the Indonesian banking industry. He is also advising companies in the insurance and lending industry in Finland. Previously, Kimmo funded Aasa, a lender that used to list loans from Sweden on Mintos.
According to our research, the company is employing another seven employees. You can learn more about the team on Getincome.com.
Who Owns the Platform?
According to the Estonian business registry, Income Company OU is owned by three shareholders Mikk Läänemets, Kimmo Joonas Rytkönen and Alexander Hauptmann.
Mikk is one of the members listed on the team page of getincome.com. He is a lawyer by profession. He has previously worked at Aasa Global, a lending company from Poland. Mikk, as well as Kimmo, has previously worked at Supernova JV which is a company related to Aasa.
Alexander Hauptmann is the 26-year-old son of Karl Hauptmann, the Supervisory Board Member. His role is to oversee the family’s interests.
Watch our latest interview with the CEO here:
Are There Any Suspicious Terms and Conditions?
When reviewing P2P lending platforms, you should always go over the terms and conditions to fully know your rights and obligations.
Storage of Funds
Income makes it clear that the platform cannot use your funds other than investing in loans on your behalf.
Unfortunately, the platform doesn’t mention how Income safeguards your funds in its terms and conditions.
In the platform’s FAQ section, your funds are stored in a separate bank account. This information should also be mentioned in the terms and conditions.
This info will likely become obsolete as we have learned that the Income Marketplace is moving towards implementing VIBAN accounts with Lemonway. In that case, you would not send your money to Income at all but to your bank account at Lemonway, which will be used to transfer funds to the loan originators.
Income reserves the right to amend terms and conditions at any time. The platform promises to inform you about any upcoming changes but doesn’t mention a specific time frame.
We understand that terms can change; however, it would be more transparent to clarify how much time the users have to review the new terms.
Access to Loan Agreements
Investors should have access to the loan agreements but only after the investment has been made. Unfortunately, Income doesn’t publicly share the loan agreements prior to investing. This is something that you should pay good attention to.
The reason for this is likely the different structures in various business models. Every lender follows a slightly different scheme and a template would not provide sufficient data.
You can review the assignment agreements when setting up your auto invest. Every lender has an assignment agreement that fits the business model.
Potential Red Flags
Currently, we are not aware of any red flags. The result of our on-site due diligence was positive.
What’s our opinion of Income?
Income is very transparent when it comes to sharing the structure of how you invest in loans from various lenders. It looks to us like they have spent a lot of time figuring out how to improve the buyback guarantee and make sure that the lender is interested in recovering the debt.
Unfortunately, the platform doesn’t yet provide audited and translated financial reports for its partners, which is already the standard in the industry. From our talk with the CEO, we have received the information that they will be providing those documents soon.
During our visit to Income's office in Tallinn, we had in-depth conversations with the CEO, the compliance officer, and the risk manager.
We have also received information about their workflow and the technology that runs the platform and monitors the performance of the loan book.
So far, we have not visited a P2P marketplace that was able to mirror the loan book performance in an automated way as it's the case with the Income Marketplace.
Income's technological infrastructure is significantly more advanced, which helps to increase the accuracy of monitoring and decrease possible human errors.
The marketplace has also shown us their portfolio analysis and explained how they evaluate the portfolio quality and its cash value.
Income has made a good impression on us and they have ambitious plans for the future.
Their risk tolerance for country risk is rather conservative, which also increases the safety of your investments on the platform.
When we talked with the risk manager and asked about his favorite loans on the Income Marketplace, he highlighted the installment loans from Danabijak, which are currently being offered for 12% interest per year.
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The usability of Income is sufficient. The platform allows you to invest manually or set up your automated investment strategy.
The auto invest comes with a lot of filter options. You can define the loan amounts, interest rates, loan term, loan type, country, lender, status, and loan extensions.
From our perspective, the auto invest offers more than is currently supported by the availability of Income’s loans.
Keep in mind that the Income Marketplace is not the best platform for diversifying your portfolio. There are currently only six lenders listing their loans on the platform.
One could think that Income built the auto invest to accommodate potentially more new lenders and investment products in the future.
Income doesn’t have a secondary market yet nor a “one-click” exit button. This means that the liquidity of your portfolio is relying on the loan term of the loan in which you are investing.
Income offers investment opportunities in a variety of loans. Many of them are payday loans from Indonesia with a relatively short loan term of one month.
If you decide to invest in those, you will be able to withdraw most of your investments typically within one month.
Income’s support is somewhat responsive. The CEO is also very active on social media, which isn’t always the case with other CEOs in the industry.
During our initial research, the platform returned to us with answers to our questions within one business day. We have also visited the office of the Income Marketplace in Tallinn, Estonia.
You can contact Income’s support team by sending them an email to firstname.lastname@example.org.
Income Review Summary
Income is an exciting marketplace that provides more security with innovative protection schemes. The platform doesn't have enough of a track record under its belt, but the underlying technology and monitoring of the loan performance are superior to some of the other players in the industry.
Main takeaways from our Income review:
- Interesting new protection schemes
- Easy to use platform
- Limited diversification
- Short track record
The Income Marketplace is a good fit for you if you look for a stable and competitive yield with increased protection systems.
Ready to get some income?
Does Income offer a buyback guarantee?
Yes, the P2P marketplace offers a 60-day buyback guarantee on your investments. This means that if the loan you have invested in is delayed by more than 60 days, the loan originator will repurchase the claim and pay back the loan principal and the accrued interest.
Is Income profitable?
Income doesn’t publicly share its financial reports or its lending partners' reports yet. Investors should not expect Income to be profitable in the upcoming years as the platform is heavily investing into growth.
What happens if Income goes bust?
In the unlikely event that Income becomes insolvent, the company will appoint an insolvency administrator to facilitate the repayments to investors. According to our knowledge, Income hasn’t set an insolvency manager nor has a reserve in place for this instance.
What’s the availability of Income’s loans?
The availability of loans in Income is sufficient and there is no cash drag at the moment.