Debitum Review 2024: Up to 15% on Regulated P2P Platform!

Debitum Investments (formerly Debitum Network) is a P2P platform based in Latvia and regulated by the local financial supervisory authority. What makes Debitum special is its unique positioning in the P2P lending environment, as it is regulated, follows a marketplace model and offers buy-backed business loans. A combination that cannot be found in this form on any other P2P platform.

The innovations that have taken place since the change of ownership in August 2023 have significantly raised the profile and attractiveness of Debitum Investments. The improved loan supply, interest rates of up to 15% and the higher liquidity make Debitum one of the most exciting platforms to consider in 2024. At the same time, the new shareholders also have to deal with the legacy issues from the past, including the original ICO funding or the defaulted assets in Ukraine.

In this Debitum review, investors are given a detailed analysis of the platform and whether or not it is worthwhile to invest. Please note that all the information that are covered in this Debitum review are based on my own personal research and experiences. Make sure to do your own due diligence before investing on any platform. 

Further analyses of other platforms can be found on my P2P Platform Review page.

Summary  

Before we get started, here is a quick summary with the most important information about Debitum Investments.

• Debitum Investments is a Latvian P2P platform where investors can invest in buy-backed business loans from external lending companies, while earning a return of up to 15%.
• The platform is operated by SIA DN Operator, which has been controlled by the financial supervisory authority in Latvia since 2021 and is regulated in accordance with MiFID II. As a result, investors’ accounts are protected against misuse of funds or insolvency of the platform with up to EUR 20,000 by the investor compensation system.
• Since the change of ownership in August 2023, there have been a number of positive developments and new innovations on the platform. The loan supply, interest rates and liquidity have all been improved. New features such as Auto Invest have also been added.
• The platform has some legacy issues from the past. These include the crowdsale funding from 2017 (DEB Token) and the defaulted loans in Ukraine (Chain Finance).

About Debitum Investments

Debitum Investments (formerly Debitum Network) is a Latvia-based P2P lending platform, launched in September 2018, where investors can fund business loans from SMEs and earn a return of up to 15%.

The loans are not sourced by Debitum itself (with the exception of Sandbox Funding), but are offered from external lenders on the marketplace. Technically speaking, Debitum is therefore not a P2P, but a P2B (peer-to-business) platform.

The platform reached an important milestone in September 2021 when it was granted a licence as an investment brokerage firm. Since then, the platform has been supervised by the Latvian Financial Supervisory Authority and regulated in accordance with MiFID II.

The change of ownership in August 2023 is equally positive, as a result of which Debitum has seen a number of positive developments and new innovations. These include improvements for the loan supply, interest rates and liquidity. Also new features have been included since then, such as Auto Invest.

The Latvian word “Debitum” translates as “credit debt”.

The Origin Story

The idea of Debitum, then called Debitum Network, was born in 2017. The founders at the time included Martins Liberts, Donatas Juodelis and Justas Šaltinis.

Before founding Debitum, both Martins and Justas set up Lithuanian company DEBIFO. This was a lender specialising in invoice financing for small and medium-sized enterprises (SMEs) from Lithuania. The lender, which has also been financing some of its loans via Mintos, is now known as Factris.

Due to regulatory problems, DEBIFO had difficulties expanding its lending operations in other EU countries at the time. This problem initiated the idea of setting up a marketplace for similar lenders who faced the same issue. The idea of Debitum was born.

Following a token sale, which raised the equivalent of around EUR 6 million, the P2P platform was set up. The operational launch of the platform took place in September 2018.

Ownership and Management

Who are the main shareholders and management executives behind Debitum Investments? Let’s have a look!

Debitum Ownership

Who owns Debitum Investments? The Baltic-based P2P platform is operated by the company “SIA DN Operator”. This company is in turn controlled by two different shareholders. The owners are:

• 67.02% are owned by the company “ZIdea” which is 100% controlled by the Latvian Ingus Salmins
• 32.98% are owned by the company “Amplo” which is 100% controlled by the Latvian Eriks Rengitis

Debitum Management

Debitum has been operationally managed by Latvian Eriks Rengitis since June 2024. He has a background in corporate finance dating back to 2010. He is a partner at M&A firm Auctus Capital, which should provide him with good access to companies with financing needs in Latvia.

Together with his partner Ingus Salmiņš, he acquired 90% of the shares in SIA DN Operator in August 2023. About a year later, in June 2024, Eriks was appointed as the new CEO of Debitum Investments. Eriks succeeds Henrijs Jansons, who was previously CEO of the P2P platform for two and a half years.

Business Model and Finances

Throughout the process of due diligence, investors should also have a look at the business model of a P2P platform as well as the overall financial situation. How does the company earn money? Does the platform operate profitably? And how well is the company positioned financially? In the following paragraphs of this Debitum review, you can follow-up on those questions.

Monetization

At Debitum, revenue is generated exclusively through commission income from the lenders who offer their loans for financing on the marketplace. The company pursues two different models:

• On one hand, there is a classic and fixed brokerage fee, which usually averages 2% p.a. of the financed loan volume.
• On the other hand, there is an “all-in” approach, in which a certain interest rate is fixed in advance for the financed loan volume. Debitum can then offer the interest rates variably on the platform and earn money from the interest margin. According to Debitum, this is currently between 2% and 3% p.a.

The second model, which was first introduced by the lender Noviti Finance in February 2020, is currently also the predominantly used system for remuneration.

Profitability

Debitum has published an annual report for 2023, which has been audited by Grant Thornton and checked in accordance with IFRS standards.

According to the report, Debitum achieved a turnover of EUR 350,000 in 2023, which almost doubled compared to the previous year. Nevertheless, a loss of around EUR 360,000 was the result at the end of the year. Increased expenditure on employee salaries (EUR 105,000 more than 2022) and marketing activities (EUR 112,000 more than 2022) have mainly contributed to this.

However, according to the platform, Debitum was already profitable in Q1/2024 and plans to reach the break-even point for the whole of 2024, despite further increases in growth costs.

Despite the losses in the last two years, the equity position remains positive due to the increase to EUR 750,000 in 2023. The equity ratio was 34% at the end of 2023. The development of assets under management is also positive, having grown from EUR 7.2M to EUR 11.8M in 2023 (target 2024: EUR 25M+).

Sign Up and Bonus

In order to invest on Debitum, investors must meet two requirements: A minimum age of 18 years and a bank account in one’s own name. If these requirements are met, registration on Debitum can be completed in a few steps.

• Register: Enter name, email, date of birth, password, etc.
• Provide Financial Information: Planned investment amount, state citizenship, country of residence, tax residence, etc.
• Upload Documents: Copy of identity card, proof of residence

Also legal entities have the opportunity to register on Debitum.

Debitum Bonus

Investors who register on Debitum via this link will receive a 1% cashback on all investments made in the first 30 days after registration. Only assets with a term of 90+ days are taken into account.

Investing on Debitum

How does Debitum work and what should investors know and consider when investing on the plaform? In the following sections of my Debitum review you will find all the necessary information that you need.

Loan Offering

Debitum has been a regulated P2P platform, controlled by the Latvian financial regulator FCMC since 2021. Since this change happened, investors no longer invest in claim rights, but in asset-backed-securities (“notes”).

These are financial instruments that are composed of a bundle of different loans. The focus of Debitum is on business loans, which are offered by international lenders.

Debitum is very careful when assessing new lenders, which is why there are only a few long-term partners on the marketplace. These include Evergreen Capital (Estonia), Flexidea (Latvia and Poland) and Triple Dragon (UK). Other lenders include Sandbox Funding and Juno Finance (both Latvia).

• Evergreen Capital: The Estonian lender, which has been on Debitum for many years, offers financing solutions for Estonian SMEs.
• Flexidea: Offers invoice financing solutions for Latvian and Polish SMEs. Long-standing partner of Debitum.
• Triple Dragon: The London-based lender offers flexible financing and working capital solutions for developers and publishers of mobile apps and video games. Receivables from companies such as Google, Apple and Amazon serve as collateral.
• Sandbox Funding: Is owned by Debitum shareholders and was primarily founded to test lenders with smaller volumes (50,000 EUR to 200,000 EUR) before they appear independently on the platform.
• Juno Finance: The Latvian lender, which has been on Debitum since April 2024, specialises in providing loans to SMEs in the forestry and agricultural sectors. Offers an interest rate of up to 15% and was previously tested with assets via sandbox funding.
• Foresto: Also based in the agricultural and forestry sector. A company founded in Latvia in 2021, which specialises in the purchase and merger and acquisition (M&A) of small and medium-sized forestry properties in Latvia. The collateralised notes (buyback after 20 business days) are offered with up to 12.5% and a maximum term of 12 months.
• Bono House: Subsidiary of the BONO Group (EUR 90M turnover in 2023), which was founded in Latvia in 2022. The lender specialises in the development of private house projects and the assembly construction in the real estate sector. The loans, which are collateralised with a buyback obligation, are offered with interest rates of up to 12% and terms of 90 to 250 days.

There is a fixed interest rate for the securities. This is amortised over the entire term as the underlying loans are repaid. The range on Debitum is between 8% and 13%. In some cases, it can also be up to 15%.

The minimum investment amount is EUR 50. Debitum does not have a monthly deposit limit, as is the case with Bondora Go & Grow, for example.

Debitum Notes (Bonds)

In addition to asset-backed securities (ABS), Debitum is offering notes (bonds) as a further investment product since March 2024. The difference to asset-backed securities is that the repurchase obligation no longer falls on the lender, but on the issuer’s shareholders.

In addition, payments are no longer linked to the underlying assets, but to the issuer as a legal entity. The first ten bonds were offered by Sandbox Funding, with a term of 6 to 12 months and an interest rate of between 13% and 13.5%.

Costs and Fees

There are no fees or hidden costs for private investors on Debitum. Neither for deposits or withdrawals, nor for the functionalities when investing on the platform.

Expected Returns

At Debitum, the interest rate for loans can vary depending on the market phase and investor demand. As an active investor who invested on Debitum between June 2019 and June 2023, I was able to achieve a total return of 8.9%. According to my previous Debitum experiences, this corresponds to a realistic return expectation.

Since the change of ownership in 2023, the interest rate level has risen significantly and is mostly in the double-digit range. In some cases even up to 15%.

Auto Invest

In December 2023, Debitum has launched the long overdue Auto Invest feature, which is one of the common functionalities of a modern P2P platform.

Investors have the option of having their investments selected automatically based on previously set criteria. These criteria include the maximum portfolio size, the interest rate, the loan term or the selection of individual lenders.

The “Auto Withdrawal” setting is particularly interesting. Here, the monthly interest income is automatically transferred to the investor’s account. However, there is a restriction that only investors with an outstanding portfolio of EUR 10,000+ can use the Auto Withdrawal function.

Buyback Guarantee

All assets offered on Debitum have a buyback guarantee issued by the lenders. This means that if the repayment of a particular loan is delay for an extended period of time (usually 90 days), the lender is obliged to buy it back and cover the remaining principal, as well as the outstanding interest.

In general, this buyback mechanism has always worked well. There is an exception with the Ukrainian lender Chain Finance though, where the repayment could not be met due to the war in Ukraine. Here, the platform invokes a force majeure.

Debitum Forum

The P2P lending industry is a fast-moving environment. Hence, make sure to stay on top of all relevant information by subscribing to my channels on Telegram or WhatsApp. This way, you will always receive the latest information from the P2P industry, including platform news regarding Debitum. 

Debitum Taxes

In principle, interest income generated by loan financing is considered investment income and must be reported as such in the tax declaration. After obtaining the investment brokerage firm license in 2021, Debitum is now legally required to also withhold taxes on interest income that is collected through regulated financial instruments.

The applied tax rate is based on the country of tax residency and the tax information that are submitted.

• 20% for investors from Latvia
• 20% for investors outside the EU or EEA
• 5% for investors with residency in the EU or EEA (except Latvia)
• 0% for investors from Lithuania (tax certificate required)
• 0% for legal entities

When paying taxes in your county of residence, the withheld taxes can usually be deducted from the overall balance. This means that the effective taxation rate will be the same as it has been before when investing into claim rights. To get access to the relevant data, Debitum offers to download tax reports and income statements from the platform.

Debitum Risks

When considering a P2P platform, investors should take a very close look at the potential risk factors and evaluate them before making an investment. What should be considered in the specific case of Debitum? What are the underlying risks and how can they be assessed?

Platform Risk

Debitum Investments, operated by SIA DN Operator, obtained an investment brokerage licence issued by the Latvian Central Bank in September 2021. The platform is therefore subject to the requirements of the Markets in Financial Instruments Directive (MiFID II).

As a result, investors’ accounts are protected up to EUR 20,000 by the investor compensation system in Latvia in the event of the platform’s insolvency or misuse of investor funds. However, this does not cover potential loan defaults by lenders.

Another advantage of the regulation is the governance and compliance to which Debitum must adhere. Among other things, audited financial statements must be prepared on a regular basis, giving investors an insight into the financial performance. 

Lender Risk

On Debitum, lenders are obliged to finance between 10% and 30% of loans with equity (skin in the game). This is to ensure that the lender is interested in maintaining a good portfolio quality.

In the event of loan defaults, the lender commits to buy back the loan within the specified period (usually 90 days) as part of the buy-back obligation. Important: Compliance with the buy-back guarantee depends on the financial situation of the issuer. In Debitum’s history, all lenders have so far honoured this obligation.

Debitum in Crisis Situations

In the recent past, P2P platforms have had to overcome several crisis situations. These included the coronavirus pandemic and the war in Ukraine. How did Debitum deal with these situations?

Covid-19 Pandemic

Following the outbreak of the corona virus, many P2P platforms have struggled with a lack of liquidity. In the specific case of Debitum, the volume of financed loans collapsed by up to 60%. However, this development is partly due to the lack of supply from lenders, who were able to take out aid loans at favourable conditions from national governments or through EU funding programmes at the time.

Overall, Debitum demonstrated a maximum level of transparency with regard to its business operations during the outbreak of the pandemic. On the lender side, there were no late repayments or defaults to complain about and payouts on the platform also worked smoothly. This is a positive sign with regard to the good due diligence of the lenders.

War in Ukraine

The war in Ukraine had a direct impact on Debitum due to the default of the Ukrainian lender Chain Finance. At the time of the default, EUR 1.9 million of outstanding assets on Debitum were affected. The repayment of these loans has been frozen until further notice, citing force majeure.

In July 2023, the platform announced a restructuring of the outstanding receivables, in which the Debitum subsidiary “DN Funding Alpha” took over the obligations of Chain Finance towards Debitum investors. As part of this restructuring, Debitum has held out the prospect of full repayment of the loans affected by the war. Accordingly, the lender could repay the outstanding receivables six years after the end of the force majeure.

In reality, this means that investors’ money, which could theoretically be paid out immediately after the end of the war, would be tied up for another four years. The fact that the old Debitum owners took this decision independently and without consulting with the affected investors, suggests a lack of investor interest by the platform.

The new Debitum shareholders favor a different approach with an early repayment of the outstanding liabilities. However, this would likely lead to the first realised losses on the platform. More detailed information will follow in the coming months.

ICO Scam Accusations

Debitum had to deal with scam accusations in the past. The background is a crowdsale funding (token generation event) from 2017, from which Debitum emerged. The accusation: Many investors felt deceived by Debitum in the promise to give the DEB token a meaningful use. Instead, it was only intended to provide funding for a business model primarily based on a FIAT currency. 

The new Debitum shareholders, who took over the platform in August 2023 and who were not involved at the time, are disputing outstanding claims against the investors concerned.

Advantages and Disadvantages

In this section, I have listed the biggest advantages and disadvantages of Debitum.

Advantages

• Regulation: The platform obtained the Investment Brokerage Firm licence in September 2021. 
• Track Record: Market experience since September 2018.
• Diversification: Meaningful diversification options aside from traditional consumer loans.
• Expected Return: Debitum offers loans with an interest rate of up to 15%.
• Auto Invest: Investors can invest in loans automatically on Debitum.
• User-friendly: Debitum is a simple and intuitively easy-to-understand P2P platform.

Disadvantages

• Ukraine: Debitum has independently extended the repayment period for Ukrainian loans.

Debitum Alternatives

Which Debitum alternative might be worth considering for investors? When focusing on business loans, one could think of the crowdfunding platform Crowdestor. Given a number of red flags, this platform might better be avoided. With regards to the marketplace model, alternatives such as Mintos (also regulated in Latvia) or Income Marketplace would come to mind. What exactly is there profile though?

Mintos

With EUR 600+ million in investor assets under management and more than 500,000 registered users, Mintos is the largest P2P lending platform in Europe. In addition to a wide range of loans, the Latvian P2P marketplace also offers other asset classes. These include ETFs, bonds or real estate. Additional information can be found in my Mintos review.

Income Marketplace

Income Marketplace is an unregulated P2P marketplace based in Estonia. The platform, which had its operational start in January 2021, markets itself with a range of innovative security features that are designed to provide investors with significantly better protection against problematic lenders. So far, investors have not suffered any losses on Income Marketplace yet. In addition, many of the lenders represented on Income offer an attractive combination of high interest rates and high liquidity. Further information on the Esketit alternative can be found in my Income Marketplace review.

You can find other Debitum alternatives on the P2P Platform Comparison page.

Community Feedback

The community feedback for Debitum Investments has improved significantly in recent years. According to my P2P Community Voting 2024, the SME marketplace achieved a personal best score of 3.25 points (8th place out of 30; 107 ratings). Debitum also managed the second-best improvement of all P2P platforms compared to the previous year.

In comparison: In the previous years, Debitum achieved 2.72 points (2023), 2.46 points (2022) and 2.98 points (2021).

The most popular P2P platforms in 2024 have been Robocash, Profitus, Viainvest, PeerBerry and Esketit. The ratings are based on my P2P Community Voting 2024.

Summary Debitum Review 2024

What is the final verdict of my Debitum review and my personal opinion? 

Debitum is one of the most exciting options in the P2P lending environment in 2024. The platform’s appeal derives from a mix of regulation, competitive interest rates and high liquidity.

This is in particular due to the change of ownership in August 2023, which has made Debitum significantly more agile and innovative.

In discussions with CEO and shareholder Eriks Rengitis, I was able to get a better idea about the expertise of the new owners. Due to his corporate finance background, Eriks may seem a little “dry”, but his experience and network from the M&A sector, coupled with his sharp mind, are useful advantages for the further development of the platform.

I therefore believe that Debitum is currently in good hands and has great potential to continue its current growth trajectory. As a consequence, I have decided to personally invest in Debitum again.

Debitum could be an attractive alternative for investors who prefer to invest their money in regulated P2P platforms and who want to diversify their loan portfolio aside from traditional consumer loans.

FAQ Debitum Review