Each loan application is carefully assessed by our credit team and assigned a grade that reflects the quality and risk profile of the application. These grades allow investors to quickly understand the relative level of risk associated with a loan, while still having access to detailed information if they wish to explore further, in particular by reviewing the KIIS.
How We Assess Loan Applications
Every business that applies for funding from Linked Finance undergoes a comprehensive credit assessment prior to its loan being offered to investors on the platform. Our credit team looks at several key factors, including:
- Financial performance: profitability, balance sheet strength, and trends over time.
- Cash flow and repayment capacity: ability to comfortably service loan repayments.
- Credit history: In-depth analysis of bank statements and track record on our platform, including any missed or late payments.
- Business stability: length of time trading and resilience to changing conditions.
- Sector and market risks: broader economic and industry-specific considerations.
Our Loan Grades Explained
How Investors Can Use Loan Grades
Loan grades are designed to help investors make informed decisions by giving an indication of risk level:
- Higher grades (A+ and A) typically appeal to investors seeking lower risk and more predictable returns
- Mid-range grades (B and C) may offer a balance between risk and yield
- Lower grades (D and Y) carry a higher risk, but may be considered by investors with a higher risk tolerance
Many investors choose to diversify across multiple loans and grades as part of a long-term investment strategy.
A Transparent Approach to Risk
While no investment is risk-free, our grading system provides a clear, consistent framework to help investors make informed decisions.
The grade of any loan or application is just the starting point. Every loan listed on the platform includes detailed loan profiles so investors can look beyond the grade if they wish.
All of this information will provide investors with all the details they need to make an informed decision about where to invest and what businesses to invest in.
