Articles on: Project ratings and types of payment

Project Scoring & Rating

At EvenFi, we prioritize providing our investors with clear insight and transparency, empowering them to make informed and conscious investment decisions. Throughout our project evaluation and risk rating assignment process, our commitment is to offer investors comprehensive and transparent information.

Our risk rating scale offers investors an insightful perspective into the level of risk associated with each project: from lower-risk projects (A+, A-, A), to medium-risk projects (B+, B-, B-, C+), and finally to those displaying a substantial risk (C, C-, D).

For projects that are delayed or restructured, we have specific downgrade rules. If a project is more than 30 days late, its rating is automatically downgraded to C-. For those delayed beyond 90 days or undergoing voluntary or judicial liquidation, the rating is set to D. Similarly, a project restructuring automatically results in a downgrade to C-.

The ratings are determined via our internal methodology. It assigns a higher rating to companies with low debt levels, higher number of employees, of revenues, and longer operational tenures. Evenfi uses audited and unaudited financials for its credit analysis and rating decissions. Thus, a higher rating inversely correlates with the forecasted likelihood of project default.

EvenFi's approach also encompasses qualitative aspects such as the company-bank relationship, its operational sector, as well as considerations such as external rating reports, sector, liabilities, fiscal debt, and other factors.

Our rating instrument is always evolving. Under exceptional circumstances, such as emerging data relating to the above parameters, project ratings may be updated to ensure continuously accurate risk assessment for investors.

When a project is backed by a CONFIDI, its final rating combines the CONFIDI's rating (based on the percentage they guarantee) with the company's own rating for the remaining value. This approach ensures that the rating reflects the enhanced creditworthiness provided by the guarantee, allowing projects that might not otherwise qualify to be showcased on our platform for investor consideration. This means investors have access to a broader range of opportunities, with the added security of CONFIDI-backed guarantees.

Every project undergoes a screening before being launched on our platform. We carry out an analysis of the project and the applicant company's documentation to assign the most appropriate risk rating.

Besides the financial information, we have in place a Due Diligence process to prevent frauds: both the company and the company’s legal representative need to accept our terms and conditions and provide their personal details. We verify its identity with a KYC procedure validating his ID, passport or driving license and we verify their digital presence. Our team typically validates these within 24 hours.

As we always mention, its important to highlight that investing in PMEs (Small and Medium-sized Enterprises) and startup loans, carries high risks. Despite our best efforts to assign accurate ratings to each project, it's crucial to recognize that all investments involve the potential for loss. Unforeseen circumstances can impact a project's performance. Even companies with the highest ratings may face difficulties, leading to debt default. Factors beyond our control, such as market fluctuations, economic changes, or unforeseen challenges in the business environment, can contribute to project uncertainties.

Updated on: 16/04/2024

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