Financial Models

This is designed to be a high level model that helps anyone estimate what their potential profits and IRR may look like when investing in loans on a p2p platform. There is up to a 50-year timeline if necessary.

The model is designed to be simple to use and not take too long to adjust and test various assumptions on, including average net returns, default rates, deposits and withdrawals over time, and cash drag. The main reason why this was developed was to see what kind of growth is possible over time if interest receipts are continually reinvested over time and thereby achieving compounded returns. Often, a p2p lending platform will let users invest in loan parts so it is not required to have the full loan amount in order to participate in a given loan. Additionally, the necessity of a default rate is material since some of the loans will not yield a repayment. Also, you may have some cash drag as there will be days where there are no loans to re-invest into so the cash must be held with on return for that period.