July 18, 2014,

P2P Finance Association definition of default rates

Bondora Go & Grow

Editorial team

On June 18th P2P Finance Association announced that their members will be using a standard way to calculate default rates to help consumers compare the performance of the portfolios on different platforms.

In short, the new standards consider a loan default when it has been overdue for at least 120 days. You can read more about the press release and the formula on the P2P Finance Association web page.

Because our collection process will begin very early in the cycle, we will still internally consider 60 days as a start of the recovery process. The collection process itself will not change.

However, to help our investors compare the default rates and returns at Bondora with other platforms, we are providing an overview of default rates in the weekly newsletter according to the new standards.

Please note that we have excluded from the calculation all of the loans that were issued within the last 120 days to avoid artificially skewing the results positively due to any growth in new loan origination, which have had no possibility to default (review our June 11th newsletter for a more thorough explanation of default rate).

We have also provided a calculation on an estimated return based on these default rates and an expected recovery rate for the worst, moderate and best case scenarios based on the historical recoveries of our loan portfolio.

Please note, that as we don’t have any meaningful data on recovery rates for different countries yet, we currently use the same estimates for every country based on the entire Bondora portfolio.

The formula used for the estimated returns in the table is as follows:

(1 – default) * (1 + interest) + (default*recovery) – 1 = net return

You can also download this table as an .xls file to experiment with different recovery and default rates to see what the net return would be like.

Please also keep in mind that these calculations do not account for any positive effect of compounding interests nor taxes that you might have to pay on earned interests. Make allowance for it when considering your acceptable exposure to risk and calculating the estimated returns.

In the coming months the site reports will be adjusted to calculate data according to the new definitions.

Net returns after default rates — The calculator shows net returns after default rates and recovery is included.

Bondora Go & Grow

Editorial team

At Go & Grow, our Editorial Team combines years of fintech experience with a passion for financial education. We’re here to share trustworthy insights, platform updates, and easy-to-understand investment tips for everyone.

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Frequently Asked Questions

How is Bondora regulated?
Bondora Capital’s business model is unique, with no direct precedents in the market. As such, there is currently no specific regulatory license that directly applies to our Go & Grow product. However, we work proactively with regulators across the EU to ensure full compliance with all applicable local laws and regulatory frameworks.

To support this, we regularly publish financial updates, audited annual reports, and disclosures, reinforcing our commitment to transparency and investor trust.

At the same time, Bondora Capital is subject to all relevant general regulations, including (but not limited to) the Estonian Consumer Protection Act, the Law of Obligations Act, the Commercial Code, the Accounting Act, the Competition Act, and the General Data Protection Regulation (GDPR).

Additionally, Bondora AS, a member of the Bondora Group, operates as a Licensed Credit Provider under the supervision of the Estonian Financial Supervision and Resolution Authority. In Finland, we operate through a licensed branch regulated by the Finnish Financial Supervisory Authority. We also hold an operating license in Latvia, supervised by Latvijas Banka, and have recently received regulatory approvals to operate in both Denmark and Lithuania.
Are Bondora AS's loans secured?
Bondora issues unsecured loans, meaning credit customers are not required to provide collateral. This approach allows us to offer a faster, simpler, and more accessible lending experience.

Risk is mitigated through multiple layers of protection. Our underwriting process is powered by predictive, data-driven models, trained on deep datasets collected over 17 years. Each borrower is carefully evaluated using a wide range of creditworthiness indicators before any loan is issued.

With Go & Grow, your investment is automatically diversified across hundreds of thousands of loans in multiple countries. This significantly reduces individual borrower risk and adds a layer of protection against regional or geopolitical events.

In the rare event of non-payment, we follow a structured recovery process, working with professional debt collection agencies and, when needed, escalating cases through local legal channels to pursue repayment.
What happens when a borrower doesn't repay?
At Bondora, we do a lot to prevent repayment issues before they happen. Our advanced data models carefully assess each borrower’s creditworthiness, using historical data and predictive analytics to minimize the likelihood of default from the start.

If a payment is delayed, we act quickly but thoughtfully. From the first day of the delay, we reach out to the customer via email, SMS, and automated calls to remind them of their delayed payment and offer flexible options to get back on track. The aim is to find a solution together, whether that means a new payment date or a short-term adjustment.

If the situation doesn’t resolve, we may involve our internal teams or trusted partners to continue the dialogue and explore further options. In some cases, if communication is unsuccessful, the matter may be escalated to the local legal system in line with standard procedures. Legal steps are always a last resort, and the goal is to find the best possible outcome for everyone involved.

Throughout this process, our focus remains on recovering outstanding amounts responsibly and respectfully while protecting investors’ interests.

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What are temporary partial payouts?
Under normal conditions, your Go & Grow withdrawal is paid in full with a single transaction near-instantly. However, in rare and extraordinary circumstances, partial payouts may be activated temporarily. This means your withdrawal will be split into smaller, daily payments until the full amount has been delivered. Only one €1 withdrawal fee applies once you’ve received the full amount.

This protective feature was built into Go & Grow from the start to help maintain stability and safeguard investor returns, so you can stay on track and stay earning, even when the world feels uncertain.

In Bondora’s 17-year history, partial payouts have only been activated once.

While we aim to keep Go & Grow fully liquid, this feature ensures that when conditions require it, your investments remain protected and continue to work for you.
What happens to my investments if Bondora goes bankrupt?
Your money is protected. Even in the highly unlikely event that Bondora Capital becomes insolvent, your investments remain yours. Investors legally own the loan claims, not Bondora Capital.

This means Bondora’s financial situation does not affect the legal ownership of those claims—they continue to belong to the investors. The claims are not part of Bondora’s bankruptcy estate.

Risks related to Bondora as a company are separate from the risks associated with your investment portfolio. Simply put, if Bondora disappears, your investment doesn’t.