Blog14 April 2020

Investing during the corona pandemic

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At every kitchen table and in every workplace, the corona pandemic is the topic of the day. The impact on society is enormous and the economy is also hit hard. So what about our product: real estate financing to SME’s/Business entrepreneurs? Interestingly, we see confidence increasing rather than decreasing. In this post, we explain why.

Risk assessment of complete loan portfolio

Briqwise wouldn’t be Briqwise if we didn’t do an extra check in this situation. We have analyzed the entire loan portfolio and discussed the impact of corona on their business with all borrowers. We have mapped this out for each loan. We then discussed the results with all investors involved. The reassuring conclusion is that there is no concern or need for additional measures with any loan.

Calm among investors

All investors react differently, but all have done so in a calm manner. Some indicate that they want to pause until the corona developments have stabilised somewhat. Others want to take advantage of this solid form of real estate financing right now, with a stable return, without hassle. The latter is very important. Briqwise investors are usually risk averse. Although they realise that the volatility in todays financial markets can create sudden opportunities, they prefer calm and certainty.

Our investors are sensible and wise enough to make their own choices. For Briqwise, we have complete confidence in this form of investment – and that confidence increases rather than decreases when we see how our market responds to other markets.

Demand remains stable, no borrowers in trouble

To date, the corona crisis has not led to a substantial increase in the demand from SME’s/Business entrepreneurs for real estate financing. That is not surprising, after all, our model requires borrowers to have some “fat on their bones”. Due to their longer existence, they have built up reserves in real estate. We do not see any borrowers with liquidity problems in our current portfolio.

We have a limited presence in sectors that have been hit extra hard by the corona crisis, such as the hospitality industry, recreation and retail. No more than 11% of the total volume of loans has been provided to businesses in these sectors.

The benefits of our online platform

We do see some changes in the Briqwise work process. It is difficult to personally meet new investors face to face. The same applies to the intake on the borrowers side. In both cases, health protection is the highest priority.

Fortunately, both our product and our work process are ideal for online communication. Investors can easily assess a proposal from home or another location and make the decision whether or not to provide real estate financing. All necessary information is accessible through the website. Moreover, we are always available for an explanation or discussion by telephone. Our online platform, with the opportunity for personal communication, is an excellent way for borrowers to submit an application.

Our solid course is bearing fruit

From the outset, we have been cautious and careful in the selection of financing opportunities that we offer to investors. We are now seeing the benefits of this. Our portfolio may be modest in size compared to other players in the market, but it’s the quality that counts. Significantly, we have not yet had to write off any financing and that all borrowers have paid their monthly instalments on time.

We see this limited impact of Corona on the loan portfolio provided through Briqwise as confirmation of our sound policy with regard to accepting and offering loans. We continue to limit risks by only offering loans for creditworthy companies, backed by first mortgage security and with a Loan-to-Value ratio of less than 75%.

Briqwise does not exclude industries such as catering or retail, as long as the quality of the real estate and the SME/Business entrepreneur meet our strict acceptance criteria. We will of course pay extra attention during this period to the resistance of the borrower to possible negative effects as a result of corona. Where desirable, we ask for additional security for our investors.

Confidence in the future

Dozens of investors now benefit from a stable interest rate of average 6.95% on their first mortgage security backed loans via Briqwise. We see no reason to assume that this will change in the short term, but we will of course monitor developments closely.