Project Scoring & Rating
At EvenFi, we are committed to ensuring transparent risk assessments to help our investors make informed decisions. The EvenFi rating system provides investors with an overview of the risk level of projects, ranging from low-risk (A+, A-, A) to high-risk projects (C, C-, D).
Depending on the project, EvenFi applies one of the following rating methodologies:
Internal Rating
Our internal rating methodology analyzes financial and qualitative parameters such as debt level, revenue, operational tenure, and employee count. We use audited and unaudited financial documents to determine the rating, including other factors like the operating sector and company-bank relationship. A higher rating (e.g., A+) is associated with a lower probability of default.
External Rating
Some projects are rated by an external rating provider, for instance, ModeFinance, supplied by the Project Originator. The external rating report is available within the project, offering investors an additional, unbiased perspective.
Our rating system is dynamic and adaptable. In case of new information or events such as delays, liquidations, or restructurings, we apply specific downgrade rules:
Delay over 30 days: rating is downgraded to C-.
Delay over 90 days, voluntary or judicial liquidation: rating is set to D.
Restructured projects: rating is automatically lowered to C-.
When a project is backed by a CONFIDI, its final rating combines the CONFIDI rating (based on the guaranteed percentage) with the company's rating for the residual value. This approach ensures the rating reflects the higher credit reliability provided by the guarantee, allowing projects that might not otherwise qualify to be presented on our platform for investor consideration. This means that investors gain access to a wider range of opportunities with the added security of CONFIDI-backed guarantees.
In addition to financial information, we have a Due Diligence process: both the company and its legal representative must agree to our terms and conditions and provide their personal data. We verify their identity with a KYC procedure that validates their ID, passport, or driver’s license and confirms their digital presence. Our team typically validates this information within 24 hours.
As we always say, it is important to emphasize that investing in SMEs (Small and Medium Enterprises) and loans to startups involves high risks. Despite our best efforts to assign accurate ratings to each project, it is crucial to recognize that all investments carry the potential for loss. Unforeseen circumstances can impact a project’s performance. Even companies with the highest ratings may encounter difficulties, leading to debt default. Factors beyond our control, such as market fluctuations, economic changes, or unexpected challenges in the business environment, can contribute to project uncertainty.
Types of Ratings: Internal and External
Depending on the project, EvenFi applies one of the following rating methodologies:
Internal Rating
Our internal rating methodology analyzes financial and qualitative parameters such as debt level, revenue, operational tenure, and employee count. We use audited and unaudited financial documents to determine the rating, including other factors like the operating sector and company-bank relationship. A higher rating (e.g., A+) is associated with a lower probability of default.
External Rating
Some projects are rated by an external rating provider, for instance, ModeFinance, supplied by the Project Originator. The external rating report is available within the project, offering investors an additional, unbiased perspective.
Update and Downgrade Criteria
Our rating system is dynamic and adaptable. In case of new information or events such as delays, liquidations, or restructurings, we apply specific downgrade rules:
Delay over 30 days: rating is downgraded to C-.
Delay over 90 days, voluntary or judicial liquidation: rating is set to D.
Restructured projects: rating is automatically lowered to C-.
CONFIDI Guarantees
When a project is backed by a CONFIDI, its final rating combines the CONFIDI rating (based on the guaranteed percentage) with the company's rating for the residual value. This approach ensures the rating reflects the higher credit reliability provided by the guarantee, allowing projects that might not otherwise qualify to be presented on our platform for investor consideration. This means that investors gain access to a wider range of opportunities with the added security of CONFIDI-backed guarantees.
Due Diligence
In addition to financial information, we have a Due Diligence process: both the company and its legal representative must agree to our terms and conditions and provide their personal data. We verify their identity with a KYC procedure that validates their ID, passport, or driver’s license and confirms their digital presence. Our team typically validates this information within 24 hours.
Risk Disclaimer
As we always say, it is important to emphasize that investing in SMEs (Small and Medium Enterprises) and loans to startups involves high risks. Despite our best efforts to assign accurate ratings to each project, it is crucial to recognize that all investments carry the potential for loss. Unforeseen circumstances can impact a project’s performance. Even companies with the highest ratings may encounter difficulties, leading to debt default. Factors beyond our control, such as market fluctuations, economic changes, or unexpected challenges in the business environment, can contribute to project uncertainty.
Updated on: 05/11/2024
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