Groundfloor,a real estate crowdfunding platform based in Atlanta, Georgia, announced on Thursday it has reduced its loan interest rates by 10 to 50 basis points. According to the funding portal, the loan rates will now start at 5.9 percent for “fix-and-flip” renovations.
According to Groundfloor, investors reportedly backed projects at a pace of up to $2,800 per minute last month. Over the past ninety days, the average time to fund a loan was 281 minutes. The portal funded over $600,000 worth of loans in February, and last month that number more than doubled to well over $1.2 million.
Co-founder and CEO of Groundfloor, Brian Dally, commented:
“The laws of supply and demand are alive and well in peer-to-peer lending. With thousands clamoring to earn the outsized yields offered by investing in our loans, it’s great to put money back in the pockets of real-estate entrepreneurs who make the opportunity possible.”
The company went on to state that its average retail investment metrics are growing at 32% quarter over quarter and 201% year over year. It currently offers loans of six-to-twelve-month term, from $25,000 to $500,000, in most states nationwide, with special emphasis in the mid-Atlantic and southeastern United States, selected Texas metropolitan areas, and greater Chicago. The rate cuts announced today will take effect upon state and federal regulatory approval, expected in 45-90 days.
Nick Bhargava, co-founder and EVP of regulatory affairs at Groundfloor, added:
“Three years ago, we dared to envision how we could bring the highest risk adjusted yields to self-directed retail investors, while simultaneously providing the lowest possible rates to borrowers. Dozens of startups claim disruption when all they are doing is using the web to hawk the same financial products, for the benefit of the same accredited investors and institutions. For us, that never was and never will be good enough. Our unique offering under Regulation A+ delivers a real challenge to the status quo. Today’s rate cut is an opening salvo.”
To date, Groundfloor borrowers have returned $1.7 million in principal to investors, returning a weighted average annual rate of return of 13.7 percent on a term of 7 months, with no loss of principal.