What is Monestro?
Monestro is a Marketplace for investing in loans in a safe and transparent environment. At Monestro, both retail and institutional investors can invest in tiny fractions of consumer and credit line loans placed on the Marketplace issued by Loan Originators from Baltics.
By connecting to Monestro, Loan Originators get instant Access to investors that are looking to purchase loans.
How is Monestro's platform regulated?
Monestro P2P OŰ is a company licensed as a credit intermediary by the Financial Supervision and Resolution Authority of Estonia, according to Decision № 4.1-1/144 of the Management Board of the Authority.
Who can invest?
The Marketplace is open to both individuals and companies. Individual investors must be at least 18 years old, citizens or permanent residents of the European Economic Area (European Union, Norway, Iceland or Liechtenstein) or Switzerland, have a bank account in the European Economic Area, and have their identity successfully verified by Monestro.
Family trusts, partnerships, limited liability companies and other organisations must have a bank account and be registered in the European Economic Area or Switzerland. UK citizens, residents or taxpayers currently can’t invest on Monestro. The individual registering the company must have the legal right to represent the company.
To comply with AML requirements, we request additional information from companies, such as registration documents, information about ultimate beneficial owners, identification of a company representative, and any other documentation deemed necessary in each case.
What is the minimum amount that can be invested?
The minimum investment in any single loan on the Primary Market is €10. There is no minimum for investments on the Secondary Market.
What currencies can I invest in?
Currently you can only invest in EUR.
Are there any fees for investors?
Investing on Monestro is free of charge, see our Fees here. Only Loan Originators pay fees for Monestro.
How do I make money from my investments?
According to their loan agreements, each borrower makes monthly payments, consisting of principal, interest and late payment fees, or any combination of the above. The principal part of the payment reduces your investment’s carrying value in the loan, while the interest and late payment fee portion of the payment is treated as your income.
Your portion of the payment, calculated based on your investment in any particular loan, will be added to your Monestro account after the payment has been processed. You can then choose to invest the funds in more loans or transfer them to your bank account.
How liquid are investments?
When investing funds, you should be prepared to hold the investment through to its maturity. However, Monestro offers a Secondary Market that may provide liquidity in certain circumstances.
You will receive monthly principal and interest payments, which will reduce your investment in a respective loan over time until it will be purchased. If you choose to list your investment on the Secondary Market, there is no guarantee that you will find a buyer.
What are the typical returns on Monestro Marketplace?
Monestro is not the Marketplace for the highest peer-to-peer yield. We value sustainability and offer higher quality loans with a lower interest rate (less risky). We require more security from Loan Originators than other marketplaces (see Loan Originator Due Diligence). This limits their leverage for the benefit of our Marketplace investors.
A standard funding cost in the market (how much prime Loan Originators pay for the funds from investors) is between 7-12%.
How does our affiliate program work ?
We offer 3% cashback and 20 euro bonus (once your referral makes the first investment) to affiliates and a 1% cashback to referrals until July 1st 2021, as we seek to kickstart the re-launch of Monestro and reach as many old and new investors as possible. This might cause us taking a slight loss on every new referral. However, we believe this to be justified for getting the buzz started and motivating to get loan originators to join our platform for the hopefully vibrant community.
Starting from August 1st 2021, the cashback will be decreased to 1% for referrals and 2% for affiliates, and €10 from first investment . In the long term, we see such a level motivating for You, our affiliates, and long-term sustainable.
How do I create an account?
It is fast and easy. All you need to do is fill in the registration form here. You need to create an account, verify your identity, deposit funds, and you are ready to start investing manually or by using the automated tool Auto Invest (Coming soon).
Why do I need to verify?
We are committed to provide a safe marketplace and prevent financial crime. That includes verifying the identity of our investors to make sure it is you creating an account.
Why do I need to verify again?
The ID document you used for verification has expired. Please verify again with a valid ID card or passport.
What documents are accepted as proof of identity?
Monestro accepts only a passport or national identity card.
What data is stored during verification?
Monestro stores the following data: 1) a photo of your face, 2) a photo of your identity document (front and back), 3) a photo of you holding your identity document. We will handle your data in accordance with the General Data Protection Regulation (GDPR) and other national binding laws on personal data protection. More information regarding the personal data we process, for what purposes and on which legal basis is available in our Privacy Notice.
Which browsers are supported for verification?
Please use one of the following browsers for verification: PC: Chrome or Firefox, Mac: Safari or Chrome, iPhone or iPad: Safari, Android device: Chrome.
How can I make a deposit?
You can find the deposit details on your account under “Deposit/Withdraw”. The minimum first deposit is €10 and must be transferred from the investor’s personal bank account (in case of a company, from the company’s bank account) operating within the European Economic Area. We only accept payments in EUR, so please make sure you have selected EUR currency before you make the transfer.
Your deposit will be processed as soon as it is received. Please note that it may take up to 2 business days.
What happens if I send currency different from the currency in my bank account?
Suppose you choose a different currency than the one your funds in your bank account are in. In that case, then your bank will automatically convert your money according to your bank’s currency exchange rate if your bank offers such a service. Monestro is not responsible for any additional exchange fees caused by this action, as this is up to your bank.
Suppose funds are sent to Monestro’s bank account in another currency than the euro. In that case, we can return the money to the sender, and this might be less than what you originally transferred, due to the exchange rate or bank commission for returning the incorrect payment. Alternatively, Monestro’s bank may convert the payment into euros according to the rates applied by the bank and such amount in euros will be reflected on your investor account. Monestro will automatically deduct any conversion cost from such an amount.
I entered incorrect payment details. What happens with my deposit?
Please inform us about the error as soon as possible. We may process payments more slowly if incorrect payment details or payment are automatically sent back to your bank account.
Can I make a deposit from an account that is not held under my name?
No. Deposits are only accepted from accounts held under the same name as the Monestro investor account.
How can I make a withdrawal?
You can withdraw funds from your account by choosing from the menu “Deposit/Withdraw” – „Withdraw“ and following the instructions. We will process your withdrawal as soon as you enter it. Please note that the actual payment transfer may take up to 2 business days. We only send funds to the account you have deposited from.
Can I change the bank account to which I withdraw money?
We can only transfer money to a bank account that belongs to you; this is a necessary precaution to protect our investors and comply with anti-money laundering (AML) requirements.
To change the bank account to which you withdraw money from your Monestro account, transfer at least one (1) euro cent from your new bank account to your Monestro account. We will register all bank accounts used to transfer money to Monestro under your profile “Personal info”, and you will be able to choose from any of these accounts when requesting the withdrawal.
How can I add my new bank account?
To add a new bank account as a withdraw option, it is necessary to make a deposit (at least one (1) euro cent) from it. After that you will see it in the “Withdraw” drop-down menu.
Will I be charged for a withdrawal?
Monestro does not charge for a withdrawal, please see prices here. Your bank may charge additional fees for transfers. Please consult your bank or money transfer service provider to identify any such fees.
How long does it take to withdraw money to my bank account?
It usually takes 1-3 business days to withdraw money to a bank account in the Eurozone. Withdrawals outside the Eurozone may take a bit longer, depending on your bank.
Is it possible to secure Monestro account with two-factor authentication?
Each Investor can choose whether to use two-factor authentication as an extra layer of security tool or not. Two-factor authentication helps to protect your account from unauthorised access due to a compromised password, phishing attacks and other cybercrime. To ensure that the only person logging into your account is you, the sign-in with the two-factor authentication will require your password and your Security Key which you will type in via an app on your phone. This means that even if someone has your password unless they also have your phone or your other trusted device with them, they will not be able to access your account.
How to invest?
To invest, you must have available funds on your Monestro account. You can choose to invest either manually or by using the Auto Invest tool (coming soon).
You can manually browse, filter and invest into listed loans. You can compare each loan’s details such as term, interest rate, loan purpose, and borrower information by investing manually. Rather than funding an entire loan, investors can purchase a piece of a specific loan to diversify investments.
Automated investment (coming soon)
Automated investments are performed by an Auto Invest tool. To start using Auto Invest, you must create an Auto Invest portfolio (strategy). This is done by setting what type of loans you would like to invest in continuously (term, interest rate %, country of issuance, Loan Originator, etc.). The system will then automatically invest in loans that match your criteria. When you can, set a maximum EUR amount for your Auto Invest portfolio, the tool will re-invest loan repayments to loans matching your selected criteria and ensure that all your capital is earning interest and is efficiently deployed.
What is the Primary Market?
The Primary Market is where Loan Originators list their loans, making them available for investors. On the Primary Market, it is possible to invest either manually or create an Auto Invest portfolio.
What is the Secondary Market (coming soon)?
The Secondary Market is a place where investors can place their investments for sale to other Monestro investors.
Selling on the Secondary Market increases liquidity for investors, as they can sell their loans if they want to get their money sooner. Investors can even choose a premium to earn more, or a discount to sell faster.
Buying on the Secondary Market can give investors access to good deals from other investors. They may profit from loans that have an attractive discount or interest rates not available on the Primary Market.
What is the Premium/Discount on the Secondary Market (coming soon)?
When you sell your investment on the Secondary Market, you can do it at a premium, par, or a discount.
At par (0% discount/premium) means that an investment with an outstanding value of €100 will be available to other investors to purchase for €100.
At a premium
The investment will be available to other investors at a higher price than the outstanding value. If the outstanding value is €100 and the premium is 5%, the investment will be available for €105. The seller can make a profit when the asset is sold at a premium. The buyer should consider if the premium is acceptable when looking at the forecasted return on the investment.
At a discount
The investment will be available to investors at a less than the outstanding value. If the outstanding value is €100 and the discount is 5%, the investment will be available for €95. The seller can potentially access their money faster, or exit a late loan. The buyer should consider if the risk is acceptable when looking at the loan details and forecasted return on the investment.
Please keep in mind that if you purchase loans at a premium, and the Loan Originator repurchases the loan before it has reached maturity, you risk experiencing a loss up to the amount of the premium you paid.
How is the interest calculated?
The interest is calculated daily on the outstanding balance of your made investments. The formula for calculating the interest is as follows: Invested amount * Amount of days * Interest rate/365
How is interest divided between the seller and buyer of a loan on the Secondary Market (coming soon)?
When you invest in a loan on Monestro, you receive interest on the loan for your investment duration.
If you decide to sell your loan on the Secondary Market, you stop receiving interest on the loan once it is sold.
If you buy a Secondary Market loan, you start to earn interest on the loan from the date you purchased it. The interest accrued between the date the previous investor placed the loan on the Secondary Market and the date you bought it will be paid to the previous investor upon the borrower’s next payment. E.g. If the last repayment was on December 10, 2020, the Investor sold the loan on January 1, 2021, and the purchase will be made on January 5, 2021 then the original investor will gain interest accrued until January 5th.
Can I cancel my investment?
Once you have reviewed and confirmed your investment, you cannot cancel the investment. However, you can use the Secondary Market to sell the asset to other investors.
How do I earn from my investments?
Each borrower makes monthly payments according to their loan agreements, consisting of principal, interest and late payment fees, or any combination of the above.
Your share of the payment, calculated based on your investment in any particular loan, will be added to your Monestro account after the payment has been processed. You can then choose to invest the funds in more loans or withdraw them to your bank account. Please also review the Terms and conditions of the Auto Invest function.
How can I forecast expected income from my investments?
You can currently see the payment schedule for each individual loan under the loan section Borrower Payment Schedule.
You will receive invested money as defined in each loan payment schedule, which depends on the loan term and loan amortisation method. If you would like to get your money back faster than it is scheduled, you can sell your investment on the Secondary Market. The Secondary Market allows you to add a premium or discount to your investment sale.
How can I exit my investment (before the loan reaches maturity)?
You can sell the loan on the Secondary Market, provided there is a buyer wishing to acquire it.
How are my earnings taxed?
The income earned through Monestro from investments is usually taxed as capital gains, based on your country of residence. The investor is responsible for declaring their income and if you are not sure how this is done, we recommend consulting with local authorities or advisers. Investors can download their account statement for tax purposes from their Monestro investor account (“My profile” – “Account statements”) at any time.
How are my investments secured?
We are focused on investor security. Before we onboard a Loan Originator and allow them to place loans on the Monestro Marketplace, we investigate their loan book and loan origination quality (see Loan Originator Due Diligence). Based on our findings we set a “Skin in the game” (i.e. a portion of the loan retained by the Loan Originator) at a level where we believe the Loan Originator is motivated to ensure proper handling of the loan. We may, in case of some Loan Originators (but not all), we may require the Loan Originator to provide security for the performance of its obligations. In such case, the security will be noted in the Assignment Agreement. Also, we may (at our discretion) set up a Reserve to purchase defaulted loans from investors under certain circumstances (see more from Reserve Policy). However, none of the above guarantee that an investor will get its investments back or earn a return.
As with any investment, there are some risks. The most significant risk is associated with possible credit losses from investments. The following measures have been taken by Monestro and Loan Originators to mitigate the risk:
1. All loans are issued according to the Loan Originator’s established policies, which take into account the borrower’s ability to repay the loan;
2. For the majority of loans, the Loan Originator has provided a Buyback Obligation, which means that if the loan is delayed by more than 60 days, the Loan Originator is obliged to repurchase the investment for the nominal value of the principal and the accrued interest till the date of repurchase.
Investors can mitigate risks by diversifying – making fractional investments in several loans across different borrowers, loan types, interest rates, Loan Originators etc. See more from Investor Protection.
Please note that any state authority or state fund does not secure your investments.
What risks are associated with investing through Monestro Marketplace?
As with any investment, investment through Monestro carries some degree of risk. Each investor is responsible for evaluating associated risks before making an investment.
1. Borrower Credit risk/Default risk
There is a possibility that the borrower will not make future scheduled payments; thus, the investor may lose part or all of the investment made. The amount of possible loss, if any, would depend on the loan risk. In the case of an unsecured loan (i.e. all loans made available on the platform), the repayment will depend on the successful recovery of outstanding amount from the borrower, resulting in a higher loss, if any, compared to the secured loan. Associated risks are mitigated by Loan Originators having to retain „Skin in the game“ and for investors to opt for loans with a Buyback Obligation.
2. Loan Originator’s Default risk
In the unlikely event that a Loan Originator goes out of business or fails to deliver its agreed obligations. This could result in outstanding claims and putting performance of the Buyback Obligation provision at risk. Monestro may (but is not obliged) to represent the investors in recovering their claims against the Loan Originator by, for example, enforcing the security (if any) provided to secure the Loan Originator’s obligations, assigning the investors’ claims to a third party (possibly for a fee which is lower than the nominal amount of the claim), entering into settlements or purchasing the claims from the investors using the reserve (if any). However, Monestro is not obliged to take any action.
3. Cash flow timing risk
All payments from an investment in a loan are directly linked to the borrower’s actual payments. There may be situations in which the borrower makes a payment after the scheduled payment date; as a result, the investor may receive cash flows later than expected. Depending on the loan agreement’s clauses and circumstances, the investor may be compensated for late payments with late payment fees (penalty).
4. Prepayment risk
The borrower usually can repay the loan early, which is generally done by repaying the principal and accrued interest up to the date of early repayment. If the investor had invested at a premium, the investor would lose the premium’s unamortised part.
5. Reinvestment and Liquidity risks
There is a possibility of loss when re-investing earned profit in a loan with a lower interest rate or when earned profit remains non-invested on your account. Therefore, it is advised to closely follow payment schedules or, as well as to adjust and think through your Auto invest plan.
Additionally, when selling your investment on Secondary Market – it is advised to keep in mind that there is a possible risk of not acquiring a buyer fast enough. Therefore, it is reasonable to make your loan more attractive for buyers using the sell at a discount or premium dynamics.
6. Monestro default risk
In the unlikely event of Monestro’s insolvency, investors will be given full information from Monestro’s database on the transactions they have concluded within the Marketplace framework. The insolvency administrator of Monestro may transfer the servicing of all loans and investments to an appropriate manager, if reasonably possible.
7. Market, legislation, economic downturn risk
As with any financial market – the market for P2P loan investment can experience changes and fluctuations. The Estonian Ministry of Finance is preparing a new draft law which aims to cover different P2P and crowdfunding models and is expected to be adopted in late 2021. These changes can affect our business model and processes in the future. To mitigate and forecast this risk, we are examining Loan Originator’s economic environment and monitoring ongoing changes in its regulations as part of our Due Diligence.
With numerous factors such as economic downturns, crisis and certain geopolitical events, it is hard to predict adverse effects and future outcomes. As with other investment fields, these factors could affect the overall market – and thus the value of your investment and its liquidity. Therefore it is suggested to diversify your investments among different asset types and across geographies.
What happens if Monestro goes out of business?
In the unlikely event of Monestro folding, investors will be given full information from the Monestro database on the transactions they have concluded within the Marketplace framework. The liquidator or administrator of Monestro may transfer the servicing of all loans and investments to an appropriate manager, if reasonably possible.
Auto invest (coming soon)
What is Auto Invest?
Auto Invest is a tool that allows investors to create an investment portfolio based on custom sets of criteria (loan term, type, interest rate, investment amount, Loan Originator etc). After setting up Auto Invest criterias, the system will automatically filter and invest in loans meeting the requirements. Auto Invest allows investors to save time and ensures efficient allocation of funds.
You can edit, stop or resume Auto Invest investing at any time.
Can I invest manually and automatically at the same time?
The platform allows you to invest manually and automatically at the same time.
What is the minimum amount for investing with Auto Invest?
The minimum amount for investing in one loan with Auto Invest is €10.
How to find out if there are matching loans to my Auto Invest criteria?
After you create an Auto Invest portfolio, you see the “Number of loans matched your criteria for investments”.
You can also set Auto Invest criteria “Include loans already invested in”, which allows you to invest into loans you have already manually invested in.
Can I edit Auto Invest portfolio?
You always have the opportunity to edit, view, or pause an Auto Invest portfolio. You can change all filters. Please keep in mind that after every edit, your portfolio will be paused. It is necessary to activate it from the “Activate” button.
Can Auto Invest portfolio invest on the Secondary Market?
The platform allows you to invest on the Secondary market. Auto Invest does not invest into delinquent loans placed on the Secondary Market.
Will Auto Invest invest in loans that I already have manually added into my portfolio?
The platform allows you to create an Auto Invest rule where “Include loans already invested in” is permitted.
My Auto Invest portfolio has stopped investing, why?
If your portfolio does not invest, the reason may be among the following:
-There are no available loans that match your criteria at the moment.
-You have no available funds.
-Your portfolio has invested in all matching loans or set portfolio size is reached.
Who is a Loan Originator?
Loan originators (LO) are financial companies offering credit services. You can find further information about each Loan Originator on Monestro on our “Loan Originators” page.
What is Skin in the game?
The phrase “Skin in the game” is commonly used in the corporate finance industry and refers to when an owner or a principal of an investment vehicle maintains an equity stake in circumstances outside investors seek to invest. This is to ensure the interests of the Loan Originator of the asset are aligned with the interests of the investor, as both sides have a stake in the investment.
All Loan Originators that place loans on the Monestro Marketplace must keep a certain percentage of each loan, which is their stake in the loan. If a Loan Originator with 10% Skin in the game issues a €1 000 loan to a borrower, and then places this loan on the Monestro Marketplace, only €900 of this loan will be available for investors to invest in and the Loan Originator will keep a stake of €100.
Skin in the game of 10% implies that up to 90% of the particular loan’s principal can be assigned to investors.
What loans are issued to the borrowers?
Loans can be issued to borrowers for different purposes, including home improvement, vehicle purchase, other significant purchases, and many other reasons. The loan’s purpose is noted under each listed loan and depends on the borrower and Loan Originator.
Can I know who the borrower is?
Investors can see a certain amount of information about Monestro Marketplace borrowers, including how much they have borrowed and for what purpose. For security reasons and to comply with data protection laws, we do not reveal borrowers’ full names, addresses or other personal data.
What happens if borrower defaults on their payments?
If a borrower does not make a payment according to schedule, the Loan Originator may be obligated (if so prescribed in the Assignment Agreement) to buy back the loan from you once it has become 60 days overdue. Buyback Obligation covers principal and all accrued interest of the loan.
What is a Buyback Obligation and how does it work?
A Buyback Obligation is an obligation of the Loan Originator towards the investor for a particular loan. If the loan is more than 60 days late, the Loan Originator is obligated to buy back the investment at nominal value plus accrued interest. Usually, this means investors will be able to recover their investment in case of a borrower default. While there is no action needed from investors, the Buyback Obligation process may take a while, depending on the Loan Originator. If the Loan Originator defaults on its contractual Buyback Obligation obligation, the commitment might not be executed in a way that investors receive the money.
What happens if a Loan Originator cannot complete its Buyback Obligation or other commitments ?
If a Loan Originator does not comply with its obligations, Monestro may take certain action on behalf of the investors at its discretion. These actions may include, among other, enforcing the security (if any) provided to secure the Loan Originator’s obligations, assigning the investors’ claims to a third party (possibly for a fee which is lower than the nominal amount of the claim), entering into settlements and purchasing the claims from the investors using the reserve (if any). However, Monestro is not obliged to take any action. We will inform you of the action we are planning to take or if we do not deem it necessary or worthwhile to take any action.
What is a Voluntary Reserve, and how does it work?
Monestro has voluntarily created a monetary reserve to reimburse, to the extent of available funds and subject to other conditions of this Policy, the Investors by acquiring their Claims in the event that any Loan Originator does not comply with its Buyback obligation and other conditions of this Policy are met. The Reserve does not guarantee recovery of the Investor’s investment in full or in part.
We make monthly contributions to the Reserve from our own funds. The amount of contributions is determined by us depending on the risk assessment. Typically, the monthly contribution to the Reserve is 0,35% – 0,55% of the outstanding principal amounts of all Claims. In the event that any Loan Originator does not comply with its Buyback obligation, the Voluntary Reserve is used to acquire the Claims from the Investors and make other pay-outs to investors.
What happens if a Loan Originator goes out of business?
In the unlikely event that a Loan Originator goes out of business, we have arrangements to ensure that investors continue to receive payments on the loans they have invested in through the Monestro Marketplace.
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