Up to 20% return with P2P loans: My HeavyFinance experiences

With high interest rates and physical collateral from the agricultural sector, HeavyFinance is an attractive proposition for investors. But can farmland and tractors really secure P2P loans and what do you need to consider when investing? Read on to find out about my experiences with HeavyFinance!

74/100

Points

A return of over 12% with agricultural loans

Invest in secured loans from €100

2% cashback bonus

TO THE PROVIDER*

Overview: My HeavyFinance experience

Private credit, i.e. the financing of loans by private investors who receive high interest rates in return, has been growing in popularity for years. In addition to simple consumer loans, there are also new categories such as business loans, real estate projects and, more recently, agricultural loans! HeavyFinance specializes in the latter category.

As private investors, we at HeavyFinance provide loans to farmers, who in turn use these for acquisitions, modernization and expansion or the purchase of new land. In return, we receive high interest rates of around 12 to 14 percent per year!

To guarantee the repayment of the loans, collateral from the agricultural sector is deposited. This could be, for example, machinery or land that can be sold in the event of the borrower’s insolvency. This type of “tangible” collateral is very popular among P2P investors!

This is what the company looks like

Like so many companies in the personal loans business, HeavyFinance is also based in the Baltic States, more precisely in Lithuania. However, loans are already being granted in five different countries – Lithuania, Latvia, Poland, Bulgaria and Portugal – which offers investors a fair amount of choice.

Around 40 experts in the fields of agriculture, finance and environmental science are currently working on the platform, loans, retrieval and management. Smaller teams are operating in the individual countries to take care of the loans there.

CEO Laimonas Noreika founded the company three years ago and is considered an expert in personal loans. He has already launched and successfully built several such platforms in the past. Laimonas has also been interviewed at length by Northern Finance, answering important questions.

Although HeavyFinance is staffed by people with a lot of experience, the company itself is still a start-up that is not yet profitable. However, notable investors such as BValue, Startup Wisegys and Black Pearls VC are testament to the high quality. In a seed round in December 2022, one million euros was raised, which also indicates a positive development.

Securities in Heavy Finance

The people behind HeavyFinance have learned from the experiences of other P2P platforms: buyback guarantees and diversified portfolios are all well and good, but when loans start to default in droves and loan brokers go bankrupt in times of crisis, investors don’t buy much comfort from them!

Physical collateral seems to be a good remedy that protects even in difficult times. Despite the current difficulties, providers like EstateGuru have successfully demonstrated this. If a borrower is unable to meet his debts here, this security is sold and the investors receive their repayment from the proceeds.

The farmers who receive loans from HeavyFinance use land, machinery (such as tractors, combine harvesters, etc.) or machine accessories (plows and similar equipment) as collateral. In this case, the value of this collateral is determined by an expert before the loan is granted to ensure that there is actually enough assets.

In addition, the company limits the loan-to-value ratio: while land can be loaned for up to 90 percent of its value, the figure is only 70 percent for machinery and 50 percent for accessories. Here, too, HeavyFinance’s experience in the agricultural sector is evident: there is less demand for smaller machines than, for example, for arable land, so they would be more difficult to turn into cash in an emergency.

If a borrower defaults, for example due to insolvency, this collateral is sold. HeavyFinance relies on its own experts for this process and does not simply sell the loans to collection agencies, as some competitors do. This way, investors can count on significantly more repayments.

In general, investors benefit from the higher security of the agricultural industry when it comes to agricultural loans. Such loans perform significantly better than other forms, especially in times of crisis, and have impressively low default rates

A special form is the so-called cash flow loans: these loans with a maximum volume of 50,000 euros can be obtained by farmers without collateral. However, they are personally liable for the repayment, even if the loan was issued to their company. As an investor, we are attracted by higher interest rates with this form.

CEO Laimonas Noreika claims that these loans are by no means less secure than other offers on the platform. I myself have not yet had any experience with this particular type of loan on HeavyFinance, as I only invest in secured offers. If the cash flow loans give you a headache, you can easily exclude them completely from your strategy on the platform.

Regulation of the company

HeavyFinance is regulated and supervised by the Lithuanian Financial Supervisory Authority Lietuvos Bankas. Experience with other providers has shown that an unregulated platform can quickly cause problems and high losses. We generally advise against investing in P2P loans operated by letterbox companies on a Caribbean island!

Such dangers seem rather unlikely in the case of HeavyFinance. The company separates the capital of the investors from the corporate assets – as required by the regulatory authorities. In addition, audited annual reports are available to investors, through which we can gain insight into the company’s situation.

74/100

Points

A return of over 12% with agricultural loans

Invest in secured loans from €100

2% cashback bonus

TO THE PROVIDER*

Platform and use – my HeavyFinance experience

HeavyFinance welcomes us with a modern, well-organized web platform. First, we see the loans that are currently available.

The loan amount, the LTV (loan-to-value) ratio, the interest offered, the amount already financed and more are displayed directly in the overview. A practical extra is the risk rating, which is displayed on the left below the image. Here, HeavyFinance rates the specific risk of default based on its experience in dealing with such loans and the respective key data.

Of course, there is also a handy dashboard that shows investors how much they have invested and already earned. My interest here is currently “only” 10 percent because I only deposited money in January and it always takes a little time for a selected loan to “start”.

Auto invest function

An auto-invest function, which allows us to automatically invest our paid-in or earned capital, is now standard practice in the P2P sector. Although such a tool does not attract new investors, it is worth taking a look at what is on offer: some platforms still have difficulties in providing a customer-friendly and truly useful solution.

Based on my experience with other providers, I would also describe HeavyFinance’s auto-invest function as “minimalistic”. The typical parameters such as term, desired interest rate and the desired countries are of course available. It is possible to set the loan-to-value ratio as a maximum value.

The loan amount, on the other hand, is poorly managed: the minimum amount is a steep 100 euros, which makes sufficient diversification practically impossible for investors with smaller assets. HeavyFinance thus apparently targets investors with experience in P2P who are willing to pump larger sums directly into the project. By way of comparison, a minimum amount of 50 euros is already considered high among European platforms!

Furthermore, with HeavyFinance’s auto-invest, we can only select an absolute value for our investment, not a from-to range. In practice, this means that it is extremely difficult to achieve a compound interest effect through the automatic investment. The reason is simple: you would first have to earn interest of 100 euros on the platform before it can be automatically reinvested and generate further interest for you. Fortunately, this problem does not apply to manual investments, because here you can simply invest 100 euros + the interest you have already

secondary market

A so-called secondary market is also available. Here you can buy and sell loans that have already been financed. Investors use this option, for example, to sell a loan that is being recovered at a lower price or to quickly convert their investment into cash (for example, because they urgently need it elsewhere).

You can often get a few bargains at these marketplaces; however, I have not yet gained any experience with the offer from HeavyFinance. A typical fee for secondary trading of one percent is charged by the platform and billed to the seller.

payment

Although my HeavyFinance experiences have been very positive so far, there is a small drawback in terms of deposits: the two service providers Lemonway and Paysera are used for this. This is not bad or unusual at first; other providers also rely on such middlemen to organize transactions.

Somewhat annoying, however, is the fact that investors can only invest in projects in Lithuania through Lemonway, while Paysera is only available in the other four nations of Poland, Latvia, Portugal and Bulgaria. This makes depositing unnecessarily complicated and still limits investors quite a bit at the moment.

Lemonway only processes your deposits via bank transfer and therefore does not involve any additional work for you. Paysera, on the other hand, is a payment service provider and comparable to PayPal. Creating and authenticating an account with HeavyFinance just for the investment is a bit much.

All my loans at HeavyFinance come from Lithuania, and so far I have had a very good experience. Despite being limited to just one country, the range of loans is also sufficient. Nevertheless, I would like to be able to invest in the entire portfolio soon, without having to use another payment service provider. HeavyFinance says it is working on this option.

Offer and cash drag

Many P2P platforms suffer from what is known as “cash drag”. This effect occurs when there are insufficient loans available for investment. The capital the investor then sits on the money and, of course, does not generate any interest. The result: our absolute return is steadily declining because only part of the money yields interest.

This very annoying problem, which affects, among others, our direct competitor Landed, means that our returns are far lower than we had expected based on the interest rates offered. A long loan origination phase (the time it takes to find enough investors, provide the money, send it to the borrower and charge interest for the first time) also noticeably reduces our returns.

In my experience, HeavyFinance is very good at this, although the application phase takes a little longer than for small consumer loans, for example. The cash drag is low, mainly because of the large selection of loans! There is even the opposite problem here: the company has to limit the number of loans offered because there are not enough investors.

74/100

Points

A return of over 12% with agricultural loans

Invest in secured loans from €100

2% cashback bonus

TO THE PROVIDER*

Green loans with returns of up to 20 percent

HeavyFinance has an additional offer up its sleeve that is, in my experience, unique: as ‘green loans’ they offer you the opportunity to invest in special loans. These are used to finance the switch to no-till farming methods, which the European Union rewards with CO₂ certificates.

No-till farming is a cultivation technique that is widespread worldwide, but has almost “died out” in Europe in particular. In this form of agriculture, soils are not plowed, treated with chemicals and left as bare soil after harvest, leading to erosion, water scarcity and nutrient deficiency. Instead, plant residues and natural crop rotations are combined with minimal tillage.

No-till farming improves soil quality, reduces the need for heavy machinery (and fuel!) and lowers CO₂ emissions from agriculture. The EU rewards this with valuable CO₂ certificates. However, it remains to be seen how valuable these actually are!

With green loans, it is still unclear what return is actually possible at the end of the three- to four-year term. Based on previous experience and calculations, HeavyFinance is assuming up to 20 percent! However, depending on the direction in which the prices of the certificates move, there may be strong deviations from this value.

The Latvian company has created a unique product that allows investors to make a positive environmental contribution. However, due to the unclear return on investment, it is more of a tool for risk-seeking investors. I myself have invested in the green loans from HeavyFinance, but have not yet had any experience with them (the offer is still too new and the term too long). However, I will of course report on my success or failure when the time comes.

Advantages and disadvantages of HeavyFinance

Based on my previous HeavyFinance experiences and the key data on the company and the platform, it is now time to list the most important advantages and disadvantages. Let’s start with the advantages:

Advantages:

• At HeavyFinance, you can invest in the attractive category of agricultural loans and receive impressive interest rates of up to 14 percent!
• The HeavyFinance team has experience in the P2P and agricultural sectors. CEO Laimonas Noreika has already made a name for himself in the industry and seems to be managing his high-caliber team well so far.
• Up to 85 percent of the loans offered are secured with physical collateral in the form of land, machinery and machine accessories. If a borrower is unable to make his repayments, these securities are sold and the proceeds used to settle the investors’ claims.
• HeavyFinance has already had some initial experiences with recovery: the company sells the collateral instead of simply selling the loans to a third-party provider. Investors usually benefit from this form of security, as they can hope for a higher repayment or even a full repayment.
• With its green loans, HeavyFinance offers a unique investment tool. Here you can invest in environmentally friendly agriculture and, in return, be rewarded with valuable CO₂ certificates. The exact return is unclear here, but it could be as high as 20 percent!
• The company is regulated by the Lithuanian financial authorities. Your paid-up capital is separate from the company’s finances
• HeavyInvest has no significant cash drag – on the contrary: there are significantly more loans available than investors, so your money is not sitting unused in your account.

Disadvantages

• The company HeavyFinance itself is not currently profitable. Considering its young age and growth trajectory, this is by no means unusual. Nevertheless, investors should monitor developments accordingly over the next few years. Since venture capital financing is currently doing very well, there is no reason for panic.
• Lithuania levies a withholding tax, currently at a rate of 15 percent, on income from P2P loans. With the help of a form provided by HeavyFinance, it is possible to reduce this amount to 10 percent. In addition, in many cases you can offset the amount paid against the capital gains tax you have paid, so you will not suffer any loss. Even in the best case, however, this means additional work.
• This is still a young platform, so it is difficult to predict future success. HeavyFinance clearly has experience in the P2P sector, a professional team and has already achieved solid results for its investors. However, rising default rates and similar problems could quickly change this impression for the worse in the coming months and years. Due to the rather long investment periods for the individual loans, a quick exit in the event of difficulties would be difficult to implement.
• A high minimum investment of €100 makes it difficult for investors with a small budget to get started. To achieve sufficient diversification, you have to dig deep into your pockets here. On the other hand, if you only use a small amount and invest in just a handful of loans, you face a significantly higher risk: if one of your loans defaults and cannot be recovered at all or can only be partially recovered, you will lose a comparatively high proportion of your investment!
• Minor platform issues reduce user convenience. If you want to invest in countries other than Lithuania, you have to use the payment service provider Paysera. The PayPal clone requires its own account, authentication, etc., which causes unnecessary effort. Also, a German version of the website is not yet available. These and similar points do not harm your interests or the functioning of the platform; however, with many competitors, it is easier for you as an investor…

Lande vs. HeavyFinance: My experience and opinion

In the European agricultural credit market, HeavyFinance is constantly having to measure itself against its main competitor, Lande. The two providers from Lithuania and Latvia are not only local neighbors: they offer similar basic services, each with their own twist.

For land, alternative forms of security, such as (insured) harvests, are used. This has been in use for much longer. Although the interest rates per loan on paper can easily keep up with HeavyFinance, the reality is different: the platform suffers from an enormous cash drag due to the investor rush of recent months. Since there are not enough loans to invest, your money remains unused here and your return is reduced.

HeavyFinance has also gained its first experiences on the market and has so far cut a good figure in granting and retrieving loans. Its competitor, the rival Lande, is making a name for itself with the exciting but somewhat risky “green loans”. Collateral is handled much more conservatively here. and must be available as land or machinery, i.e. in physical form. Since there is currently a surplus of credit, cash drag is rare.

Both platforms are similar in their basic concept. The broader positioning in five nations and the good collateral speak in favor of HeavyFinance. However, we find more experience at Lande, which has been successful for years – even though the current cash drag hurts here. I personally see the two competitors as complementary and will keep both in my portfolio.

74/100

Points

A return of over 12% with agricultural loans

Invest in secured loans from €100

2% cashback bonus

TO THE PROVIDER*

My HeavyFinance opinion: sufficient experience, good collateral, high interest rates

HeavyFinance is a young player in the P2P lending space that impresses with a qualified team, high interest rates, good collateral and initial successes. The Lithuanian company offers you particularly attractive investment opportunities in agricultural loans, which promise strong returns.

In this case, the rather small niche of the personal loans market is shared with the competitor Lande. Although Lande has significantly more experience than HeavyFinance and is also profitable, the two providers complement each other well and should by no means be seen as competitors! They have their own advantages and disadvantages, which lead to an appealing mix for investors.

HeavyFinance shines through physical collateral of high quality: loans are secured by land, machinery or machinery accessories. In the event of default, the company takes over the sale and thus ensures repayment of the receivables. So far, this has worked very well.

The rather short history of the company, which so far spans just three years, has been extremely positive and whets the appetite for more. With the “green loans”, a completely new investment vehicle is also on offer, where we are rewarded with CO₂ certificates. How much these are worth at the time of payout remains open at first; however, returns of up to 20 percent seem possible!

A few small compromises due to a high minimum amount of 100 euros hardly harm the overall picture. Accordingly, it is not surprising that my HeavyFinance experiences so far have been clearly positive. Agricultural loans are an extremely exciting field that combines high interest rates with the feeling of doing something good. That’s why I will continue to actively invest in HeavyFinance!

74/100

Points

A return of over 12% with agricultural loans

Invest in secured loans from €100

2% cashback bonus

TO THE PROVIDER*

FAQ – Frequently asked questions about HeavyFinance, experiences, opportunities, etc.