Heavy Finance Review Summary
Heavy Finance is undoubtedly an exciting platform for more sophisticated investors who like to add agricultural loans backed by heavy machinery to their P2P portfolio. However, as of month year, Heavy Finance is dealing with many defaulted loans, which limit the liquidity of investors' funds. Continue reading our Heavy Finance review to learn more about the platform.
Key Takeaways From Our Heavy Finance Review
- Backed by heavy machinery & mortgage
- Suitable for experienced investors
- Secondary Market and Auto Invest
- Regulated by the Bank of Lithuania
Heavy Finance is one of the options if you are looking for a way to invest in agricultural loans on a regulated crowdfunding platform.
Ready to become to make money from agricultural loans?
Or explore other real estate platforms.
What Is Heavy Finance?
Heavy Finance is a peer-to-business lending platform that the Bank of Lithuania regulates. What’s unique about Heavy Finance is the fact that all the listed loans are secured by heavy machinery or land.
As an investor in Heavy Finance, you can expect to earn an average annual interest of 12% by investing in agricultural loans. Read our in-depth review to learn more about Heavy Finance.
Pros
- Unique agricultural loans
- Regulated in Lithuania
- Individual IBAN accounts
- Backed by Heavy Machinery
Cons
- Withholding 15% tax on investments from Lithuania
- Limited diversification
- Poor portfolio quality
Do you prefer to watch a video? Here is our video review of Heavy Finance.
Note that this video was recorded in 2021; a lot has changed in Heavy Finance since then. We suggest you review the current portfolio performance on our P2P lending comparison page.
Our Opinion Of Heavy Finance
Heavy Finance is undoubtedly one of the more transparent platforms in the industry. During our research and visit to Heavy Finance's offices in Lithuania, we have not spotted any red flags that would point to fraudulent behavior. The platform is regulated and complies with the law. The management team is presented on the website, and the platform is always keen to provide additional data to our readers.
While Heavy Finance is a legitimate business, its portfolio performance is below most investors' expectations. Based on our calculations, over a quarter of their portfolio is delinquent, meaning the borrowers don't pay on time, and investors cannot exit their investments as expected.
Even though the portfolio is secured by tangible collateral, its quality directly impacts investors' risk and liquidity. Suppose you decide to invest in Heavy Finance. In that case, we suggest reviewing its portfolio quality on the company's statistics page and focusing on investments with an A+ risk rating, as those tend to have the lowest default rate.
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Heavy Finance Promo Code
Sign up with our link and invest on Heavy Finance for a 2% cashback bonus calculated from your investment amount during the first 30 days after registration.
Cashback Bonuses for Active Investors
Heavy Finance regularly introduces cashback bonuses for individual projects to increase funding speed.
When there aren't enough investors who invested in a single project, the platform might email you a unique promo code that gives you +1% if you use it. If you invest in a project early, you might miss that bonus code.
This is not a fair practice towards investors who had initially funded the project, as the bonus code can only be used for "new investments".
Requirements
To sign up and use Heavy Finance, you need to fulfill the following requirements:
- Be over 18 years old
- Fill in the KYC questionnaire
- Be a resident in the EU
The HeavyFinance platform allows you to invest as a private individual or company. You must submit your personal information, such as your tax residency, address, birth date, and gender, during your registration process.
Upon registering on Heavy Finance, you will open a virtual bank account with Lemonway, which will be used as your "investment account". That way, you are not depositing money to Heavy Finance but to your funding account, which increases the safety of your uninvested funds.
Note that any new investors signing up on Heavy Finance must open a Lemonway VIBAN account to send funds to your investment account. This safety feature decreases the risk of losing your uninvested funds.
Ready to become a Heavy Finance investor?
Risk & Return
Investing in loans is risky on any crowdlending platform. Heavy Finance mitigates some risks by taking heavy machinery or land as collateral.
Every investor on Heavy Finance should read the risk disclosure and be aware that he or she might lose money.
The value of the collateral can change over time, and there’s no guarantee that, in the case of the borrower’s default, the collateral can be liquidated and your investments will be repaid.
You should know that HeavyFinance is always the beneficiary of the collateral. If the borrower cannot repay the debt, the collateral will be sold to cover the debt.
If the debt cannot be covered with the sale of the collateral, the borrower will need to repay the outstanding amount.
Note that some Lithuanian projects are backed by the Agricultural Credit Guarantee Fund of Lithuania, which would cover up to 80% of the loan principal if the loan defaults. This "state guarantee" is valid only for Lithuanian projects.
Heavy Finance offers a very user-friendly statistics page where you can review the performance of the lender's loan book at any time. We strongly recommend our readers who plan to invest on the platform to review the portfolio quality before investing.
It's worth mentioning that despite the platform's growth into new markets, the default rate is relatively high, which cannot be said about the performance of the Crowdpear loan book, with a 0% default rate.
New Loan Type
Heavy Finance also offers unsecured agricultural loans. These loans allow you to invest in farmers' working capital. Note that any specific assets do not secure those loans; they solely rely on the borrower's accountability to repay the debt. Unsecured loans on Heavy Finance come with a 2% higher interest rate than loans secured by collateral.
Project Overview
Every loan comes with a solid project description, which includes further information about the collateral and the mortgage.
The projects on HeavyFinance are typically used to expand land or purchase new equipment to help farmers expand their business operations.
The pledge typically includes farmland and heavy machinery.
Every property used as collateral comes with a valuation report that you can find in the project overview. In addition to this report, you can view the borrower's financial statements or crop declaration.
What’s worth mentioning is that the interest rate depends on your investment amount. The more you invest, the higher the return.
Every project includes photos of the collateral and a risk rating by HeavyFinance.
The loan period on HeavyFinance is typically between 24 and 36 months, and the borrower also provides financial numbers for the last two years.
It is essential to point out that Heavy Finance doesn't finance loans against collateral. The LTV of max. 70% is calculated based on the profitability of a dedicated farm. The collateral backing your investment helps the investor increase the loan recovery.
Heavy Finance Risk Levels
Different risk levels should always be considered regardless of whether you invest in unsecured or secured loans. Particularly with agricultural loans, it has not been easy to estimate the real risk of those loans for retail investors.
For this reason, Heavy Finance has introduced a risk level scheme that helps you determine a particular loan's risk based on seven categories ranging from A+ (lowest risk) to D (high risk).
Here you can review the default rate of loans based on risk categories.
Is Heavy Finance Safe?
Heavy Finance is a regulated platform backed by Startup Wise Guys, an investment fund that helped finance EstateGuru, EvoEstate and InRento.
Who runs the company?
Heavy Finance is run by the founder and owner, Laimonas Noreika, who co-founded a successful P2P lending platform FinBee.
Laimonas exited FinBee in 2020 to launch a unique P2B platform that offers investments backed by heavy machinery.
Laimonas brings a lot of experience from the fintech scene to the table. He has also partnered up with Rytis Darganivicius, who brings know-how about agricultural machinery. Rytis is also responsible for verifying the valuation reports of the heavy machinery, which licensed specialized local rating companies are conducting.
Want to learn more about Heavy Finance? Watch our interview with the founder and CEO Laimonas Noreika.
🎙️ Keen to learn more about Heavy Finance? Watch our exclusive interview at the company's headquarters in Vilnius, Lithuania, where we discuss the latest events and risk-related topics.
Are there any suspicious terms and conditions?
When reading the terms and conditions and loan agreements, you will notice that Heavy Finance is very precise and transparent.
You should read the user terms to familiarize yourself with the terms and the fees you must pay for administering delayed payments and any secondary market transaction.
Fees and Interest for delayed payments
Heavy Finance will charge borrowers 0.2% of the overdue amount for every day the borrower is delayed with the payment.
Heavy Finance charges the investor a 0.1% administration fee when receiving the payment.
Consequently, investors get 0.1% of the overdue amount for every delayed day.
In addition, you, as a seller, will be charged a 1% secondary market fee.
Clause 3.2 - Storage of Funds
As mentioned, you can use a Lemonway account to participate in crowdfunding on Heavy Finance. Heavy Finance doesn’t store your funds in separate business accounts.
Clause 14 - Amendments
Unless there’s a change in fees, you will get notified about the amendments to terms and conditions on the day specified by Heavy Finance, which can be when new terms and conditions get into effect.
You will be notified 14 days in advance if Heavy Finance changes its pricing policy.
Potential Red Flags
- Heavy Finance may amend terms and conditions without prior notice
Learn more about possible red flags in our guide about how to avoid investing in P2P lending scams.
🧾Does Heavy Finance Deduct Taxes?
All interest paid to non-Lithuanian residents will be taxed with a 15% personal income tax, deducted by Heavy Finance. The platform won't deduct any income from cashback bonuses that must be declared in the country where you have your tax residency.
The tax deduction applies only on the interest from Lithuanian projects. If you invest in loans from other countries, Heavy Finance won't deduct any taxes and you have to report your earnings in the country where you are a tax resident.
The platform also offers the option to decrease the tax rate upon submission of a DAS-1 form and proof of tax residency.
If you live in one country with a double-tax treaty exemption with Lithuania, you do not have to pay the income tax twice. The tax that you have already paid will be taken away from the income tax that you owe in your country.
For further information, please consult your local tax expert.
Usability
Heavy Finance is a very easy-to-use platform.
Heavy Finance allows you to invest manually into individual projects or set up the Auto Invest and automate this process.
Auto Invest
The Auto Invest on Heavy Finance is a relatively new feature. This tool defines the investment amount, interest rate, loan duration, risk class, loan type, LTV, and country.
The Auto Invest on Heavy Finance will help you automate your investments in case you don’t want to analyze individual projects by yourself (which we recommend doing for anyone new to Heavy Finance).
Liquidity
Heavy Finance does offer a secondary market, which is not always the case in the peer-to-business sector.
We haven’t tested this feature on Heavy Finance, so we can’t comment on the period it takes to sell your investments.
Heavy Finance does allow you to offer a discount or premium for your loan, which may influence the period until your investment is sold and you can withdraw your money.
However, Heavy Finance charges a 1% secondary market fee for your sales on the secondary market.
Customer Support
Heavy Finance doesn’t have live chat support yet, but you can contact them via their contact form or simply email info@heavyfinance.eu.
The website also offers a dedicated FAQ page, where you are likely to find your answers instantly.
Reading the terms and conditions might also resolve some of your questions.
Heavy Finance's support is typically very responsive; we have already exchanged several emails and even talked with the crowdfunding platform's founder.
