Investing in the Dutch state guarantee

Recently October introduced the Corona Fastloan in the Netherlands. The unique combination of the Dutch State Guarantee (BMKB-C) and our technology, allows October to provide an offer to a company within 24 hours. A fast and simple solution for a borrower, which will increase the number of Dutch state guaranteed loans on the platform. What do you need to know if you want to invest?

Guarantee up to 67.5%

The Dutch government introduced the state guarantee to support SMEs during the coronavirus crisis. Under this guarantee scheme (BMKB-C), the Dutch government provides a partial guarantee for loans to companies in need of liquidity as a result of this crisis, after previously benefitting from other support measures. Thereby the state covers a part of the loss in case a loan defaults. In other words, if a company is not able to repay the loan, the state will partially repay for the company. As such it is safer for you, as a lender, to lend. Approximately 67.5% of your outstanding amount will be covered at any time. Learn more in the Dutch state guarantee tutorial.

Quick and simple solution

October was accredited to the state guarantee scheme in April and introduced the Fastloan to support even more companies. We have used our experience and technology from the French and Italian Instant projects to design a standardised credit analysis, using our semi-automated scoring model. Consequently, we are able to tell a company within 24 hours whether they can get a loan at October.

This is significantly faster than our normal credit analysis. October reduces time by omitting the online borrower videocall with the borrower and combining the standardised analysis with a standardised proposition for each borrower that needs financing up to €200,000 with:

  • A duration of 24 or 48 months, and
  • A 6 or 12 month grace period

Loans above €200,000 covered by the Dutch guarantee go through our normal credit analysis.

Investing in the Dutch state guarantee

Our fast track credit analysis only allow access to viable companies that were profitable in 2019 and experience a temporary setback due to the coronavirus crisis. However, if you invest, you should be aware that no one can predict how the company will come out of the coronavirus crisis and your loan can default.

To compensate for the higher risk, these projects always have a B or a C credit rating, based on the credit analysis. If the company is rated a ‘B’, the interest rate is 7% and if the company is rated a ‘C’, the interest rate is 8%. The state guarantee covers approximately 65% of the risk, but next to that we always take a 30% personal guarantee of the shareholders to cover an even larger part of the loan.

Balanced offer

With the Fastloan we have created a balanced offer, that is attractive for both companies and lenders. Companies that are affected by the coronavirus crisis, get a proposal within 24 hours that should help them survive the crisis. Lenders are able to achieve an interesting return, with part of the risk covered by a state guarantee and a personal guarantee of the borrower. Nevertheless, as with any investment on October, there is a risk of losing part of your investment. Therefore, diversify and keep your loans balanced to limit the impact of a default on your portfolio.

The first Fastloan project has recently been financed and many will follow. Keep track of the platform to stay up to date with new projects coming online.