This article is from the Good Guide to the Innovative Finance ISA, which is available to download for free here.
The money in your IFISA has the potential to make a powerful social impact alongside a personal profit.
Peer-to-peer education finance helps students – who can find it impossible to get affordable credit elsewhere – to achieve their academic and career goals, while also improving their chances of earning a higher future income.
Lendwise chief executive Rishi Zaveri said: “Myself and my two co-founders, Yiannis Georgiou and Kypros Mouzouros, wanted to do something not only entrepreneurial, but something that had this aspect of making a difference to wider society. Enabling access to education is very much something that ticks that box for us.”
Zaveri says that the platform’s commitment to doing social good is already paying dividends.
Profit and impact
Investors have historically received average returns of up to nine per cent per annum. Alongside this, in the four years since the platform has been originating loans, Zaveri has received scores of emails and messages from former borrowers thanking the company for the opportunities that their Lendwise loan has given them.
“We’ve had some lovely emails and feedback from so many of our customers who are very magnanimous when they say that were it not for the loan from Lendwise they wouldn’t have been able to achieve the outcomes that they have been able to achieve,” says Zaveri.
“It’s not the loan in terms of just the money, but the loan in terms of just the way that the product works, in terms of the fact that there’s no repayments while you study, the flexibility of being able to repay your loan early or make overpayments without having any penalties or charges, but at the same time having an interest rate fixed.
“And that’s the social impact right there.”
Lendwise offers education loans to graduates who are keen to improve their earning potential and make a difference in the wider world.
Social opportunities for borrowers
Former borrowers have gone on to become doctors, nurses, academics, teachers, engineers and even financing specialists themselves. By making fairly-priced loans available to graduates, Lendwise is creating social opportunities for its borrowers.
“Your investment is going towards someone who is, in a way, investing in themselves,” says Zaveri.
“They are pursuing postgraduate education, which is either augmenting their skills or they’re reskilling. But either way, they are doing something that will have a positive outcome in the sense of a better salary and better career progression.
“We’re all about outcomes,” he adds. “It’s not for us to say who should study what and where. We’re inclusive as a platform. What we want to see is that by undertaking a form of education, there’s an outcome that’s being attained which is enabling someone to go on and do better.”
Lendwise’s credit committee is where loan applications are analysed, assessed and discussed. Once a credit decision is made, the platform generally only communicates with a borrower if there is an issue with any repayments. However, Zaveri notes that the platform has a 96 per cent on-time collection rate, which means that borrower interventions are minimal.
In the future, Zaveri is keen to change this and follow up with more former borrowers to learn more about the various ways these funds have benefited individuals and the wider community.
“It’s really heart-warming to hear from our former borrowers,” he says. “And actually, it serves as a nice reminder that there is a wonderful impact we’re having on our customers. But let’s not forget our lenders, who are the ones truly making all of this possible. They are delivering that impact by investing in these loans whilst earning a commercial return. They should be very proud of the social impact that they have had and are continuing to have by investing on Lendwise.”
Content in this article first featured in Peer2Peer Finance News.
* As with all forms of investment, your capital is at risk. Investments on the Lendwise platform are not covered by the Financial Services Compensation Scheme (FSCS). Investment returns on the Lendwise platform are not guaranteed and past performance is not a reliable indicator of future performance.