Guaranteed Returns Investment: How does it work?

Did you know that Funding Societies has an investment product called Guaranteed Returns Investments on our platform? It provides consistent, guaranteed returns, regardless of SME repayment status.

What Are Guaranteed Returns Investments (GRI)?

Our Guaranteed Returns Investments (GRI) Product is a microfinancing instrument that, as its name suggests, delivers effectively guaranteed repayments.

The product has interest rates of 2% to 8% annually, and investment tenors typically last between 1 and 6 months. Even if the micro business or SME submits late repayments or defaults, returns will still be made irrespective of the recovery stage by our subsidiary company FS Capital Pte. Ltd. (FSC).

To fund any new GRI opportunity, you may set up an Auto Invest Bot on your Investor account, as you would for other Funding Societies products.

Funding Societies

How Can You Guarantee the Investments?

Our company has been offering microfinancing to local businesses through our subsidiary company, FS Capital Pte. Ltd. (FSC).

By doing so, we now have a data-driven credit algorithm to help decide the quality, tenor, and interest of the loan in the underwriting process, which helps minimise default rates.

Normally, in the repayment process for our other products, such as Business Term Financing, investors collectively fund an SME loan through the Funding Societies platform. Then, over time, the SME would repay loan instalments plus interest to investors, facilitated by Funding Societies. Investors understand from the outset that if the SME is late in repaying its loan or eventually defaults, it will bear the risk of losing the investment.

However, the repayment process for Guaranteed Returns Investment is structured differently. FSC will repay investors during scheduled repayment periods regardless of the SME’s repayment status.

This is in contrast to Business Term Financing, where investors rely solely on SMEs to make their repayments to gain both their principal and returns in the form of interests charged to the SMEs.

To mitigate default risk, FSC maintains a cash reserve buffer to manage the performance of Guaranteed Returns Investments. To date, investors have received complete repayments and interests on their investments with the Guaranteed Returns Investments product.

GRI is guaranteed by FSC — it is a Bolt loan that’s crowd funded and guaranteed.

GPI, or Guaranteed Property-Backed Investment, is the guaranteed version of a normal property loan, so collateral (property) is still involved. The difference between GPI and the non-guaranteed version of a property loan is that regardless of the liquidation of the property, investors would still receive their money back. The property used here could be residential, industrial or commercial.

Cool. Do I Need to Do Anything Differently to Fund Guaranteed Returns Investments?

Don’t worry, the process of financing a Guaranteed Returns Investment is similar to our other products. Here are a few tips to make funding smoother:

Guaranteed Returns Investment has its own Auto Invest, so if you are interested in funding, you will need to set up a new Auto Invest bot.

The above is important because as each campaign is expected to raise a lower quantum than other products generally, we anticipate that funding will be entirely done through Auto Invest.

Funding Societies

Guaranteed Returns Investment will only be open for manual funding if there are not enough auto investments from investors to fill a loan.

If a Guaranteed Return Investment Product has been fully funded via Auto Invest, we will email investors who have been auto-allocated during the pre-funding period to provide time for investors to review their auto-allocated investment and decide if they want to opt out.

Because the credit assessment process for Guaranteed Returns Investments differs from other offerings on our platform, factsheets for the Guaranteed Returns Investments will be more concise.

With Funding Societies, you can help empower local businesses while diversifying into a unique asset class of SME financing. Starting your investing journey with us is easy.

It takes an initial deposit of SGD 100 to activate your account and a minimum of SGD 20 to start funding investment opportunities. Register to be an investor here today.

Interested in the variety of investment products we offer? Click on our Investment Page to learn more.

Disclaimer: The information provided to you in this blog post is intended only for general information purposes only and does not constitute legal or other professional advice on any subject matter. The materials and the information provided are not intended to be and do not constitute an advertisement or solicitation. In no event will Funding Societies be liable to any party for any direct, indirect, incidental, special, consequential or punitive damages for use of such information by you or any unauthorised third party.

Actual returns may be lower than the expected rates of return, and historical rates of returns may not reflect future returns. The Product type interest rates indicated above are derived from historical rates of returns and are exclusive of service fees.

Information is accurate as of September 2022.

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