HeavyFinance Review 2024: Up to 14% with Agricultural Loans?

In recent years, agricultural loans have experienced an ever-growing popularity among P2P investors. One platform that has been focusing on this niche since 2020 is the Lithuanian company HeavyFinance.

By financing agricultural loans on HeavyFinance, investors are promised a return of up to 14%. At the same time, these loans are also intended to help promote sustainable agriculture and thus accelerate climate protection. This is made possible by modern farming methods, which have great leverage to store CO2 emissions in the soil.

By facilitating investments through HeavyFinance, the platform wants to remove 1 gigaton of CO2 emissions by 2050.

This HeavyFinance review will reveal if the platform is worth your time and money. Please not that all the information that are covered in this HeavyFinance review are based on my own research about the platform. Make sure to do your own due diligence before investing on this or any other P2P platform. More information can be found in the Disclaimer.

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 HeavyFinance.

• HeavyFinance is a Lithuania-based P2P platform on which investors can invest in agricultural loans, while earning a promoted return of up to 14%. The platform aims to build a bridge between sustainable investments and competitive returns.
• The platform’s goal is to remove 1 gigatonne of CO2 emissions by 2050.
• HeavyFinance has obtained the European Crowdfunding Licence (ECSP) in July 2023, which enables the platform to offer its services under uniform framework conditions throughout the EU.
• A special investment product on HeavyFinance are “Green Loans”. Here, the return is not achieved by interest on the loans, but from trade of CO2 certificates, which are generated through sustainable land farming methods.

About HeavyFinance

HeavyFinance is a Lithuanian crowdfunding platform that started operations in June 2020. On the platform, investors can invest in a variety of highly collateralised agricultural loans, while earning a return of up to 14%.

The platform has been regulated and monitored by the Central Bank of Lithuania since the beginning. In July 2023, the platform also received the European Crowdfunding Licence (ECSP), which allows HeavyFinance to offer its services throughout the European Union.

The environmental awareness is very strong at HeavyFinance. Since one third of greenhouse gas emissions worldwide come from agricultural products, the company wants to use its fintech platform to primarily finance solutions that promote sustainable agriculture and accelerate climate protection. This could be by farmers buying better equipment or by switching to no-till farming methods.

The platform’s goal is to remove 1 gigaton of CO2 emissions by 2050.

The Origin Story

The origin of the platform goes back to a discussion between Laimonas Noreika and Rytis Darginavičius. Rytis, who later became a business angel of the company, complained that he wanted to sell equipment to farmers, but they had problems getting access to loans.

Laimonas, who had been CEO of the Lithuanian P2P platform FinBee at the time, recognised the potential of this niche. On one hand, there were strong collaterals in the agricultural sector (agricultural land, heavy machinery, etc.), on the other hand, the loan amounts were too small for the traditional banking business.

Laimonas then formed a team with two other co-founders: Andrius Liukaitis, who had been CFO at NEO Finance until then, and Darius Verseckas, who covers the area of marketing and communication. In June 2020, they then founded the company UAB Heavy Finance. The P2P platform was born.

Ownership and Management

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

HeavyFinance Ownership

Who owns HeavyFinance? The company “UAB Heavy Finance” has a total of 18 shareholders, including the founding team, key employees, business angels and venture capital firms.

The ultimate beneficiary owner (UBO) of HeavyFinance is CEO and co-founder Laimonas Noreika, who owns 42.5% of the shares in the company. This is followed by venture capital firm “Practica Capital” with 17.3%, “Magnum Iter” with 6.1% and Rytis Darginavičius with 4.5%.

HeavyFinance Management

CEO of the HeavyFinance platform is the Lithuanian Laimonas Noreika, who should be a familiar face to experienced P2P investors. Prior to HeavyFinance, he was CEO of the Lithuanian P2P platform FinBee for more than four years. As a result, he can provide extensive knowledge in the fintech industry and strategic planning for a P2P platform.

The other management positions are covered by the two other co-founders. Andrius Liukaitis, who was previously employed at NEO Finance for five years, is primarily responsible for the finances as CFO at HeavyFinance. Darius Verseckas, the third co-founder, is responsible for marketing and external communication as CMO.

Investors can find more information about the platform’s team members on the HeavyFinance website.

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 HeavyFinance review, you can follow-up on those questions.

Monetization

HeavyFinance monetises itself primarily through a brokerage fee, which is charged to borrowers upon successful project financing. This can be between 1% and 8% of the financed loan amount.

Other sources of income include administrative fees, penalty fees or early termination fees (5% of the outstanding loan amount). For investors, using and investing on HeavyFinance is mostly free of charge.

A detailed overview of the charged fees can be found here.

Profitability

HeavyFinance has been a profitable P2P lending platform since 2023. While UAB Heavy Finance generated a loss of EUR 1.1 million in the 2022 financial year, 2023 turned into a profitable year with EUR 375,000.

The annual report was prepared by Grant Thornton and can be downloaded from this page.

HeavyFinance’s profitability is a surprising result, as a venture capital-funded company does usually not aim for short-term profitability, but rather long-term market growth. In its history, HeavyFinance has raised a total of EUR 4.2 million in equity, including a EUR 3 million seed financing in March 2023.

Sign Up and Bonus

In order to invest on HeavyFinance, investors must meet two requirements: A minimum age of 18 years and a residence in the European Union.

Overall, the registration process is relatively simple and intuitive. After opening the account via email, the KYC (Know-Your-Customer) and AML (Anti-Money-Laundering) questionnaires must be completed. This is followed by the verification of the identity and the declaration of the tax domicile.

When registering with Heavy Finance, a virtual bank account is automatically opened with Lemonway, which is used as an investment account for the transactions. This provides better protection for the funds against misuse.

Also legal entities have the option to register on HeavyFinance.

HeavyFinance Bonus

If you want to improve your return on HeavyFinance, you can get an additional 2% cashback bonus when you register via this link. This bonus applies to all investments made in the first 30 days after registration.

The bonus payment is usually made the following month after the loan has been successfully financed. For an investment of EUR 1,000, this means that a EUR 20 cashback bonus will be added to the account.

Investing on HeavyFinance

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

Loan Offering

HeavyFinance offers a variety of investments on its platform that are related to an agricultural activity. This can be, for example, the purchase of equipment, the acquisition of land or the collection of working capital to continue the business.

All loans offered on HeavyFinance are secured by corresponding assets, for example in the form of heavy machinery or land. The maximum loan-to-value ratio is 70%.

In addition, some Lithuanian loans are also secured by the Lithuanian Agricultural Loan Guarantee Fund, which would repay up to 80% of the outstanding loan amount in case of default. Loans of up to EUR 10,000, which are only secured by an individual guarantee, have a 2% higher interest rate compared to loans with first-ranking security.

The borrower countries include Poland, Portugal, Lithuania, Latvia and Bulgaria. This allows investors to diversify their portfolio not only on a geographical level, but also on an agricultural industry level (grain farmers in Lithuania, vineyards in Portugal, etc.).

The average loan amount is about EUR 36,000. The average loan term, on the other hand, is 32 months. To invest in a loan on HeavyFinance, there is a minimum investment amount of EUR 100 per loan required.

Green Loans

In early 2023, HeavyFinance launched Green Loans, a new product that gives investors access to the carbon credit market. The aim is to promote sustainable practices and regenerative farming methods in order to have a positive impact on the environment.

The carbon credits are tradable units that represent the removal of one ton of carbon dioxide from the atmosphere (1 ton of CO2 removed = 1 carbon credit).

When a farmer takes a green loan (0% financing), he commits to investing the money in renewable energy, reforestation or regenerative land management practices such as no-till, thereby storing carbon in the soil and generating carbon credits. These projects are verified by globally recognised certification institutions to ensure that the carbon credits generated are real, measurable and permanent.

By investing in “green loans”, investors can benefit from the positive effects of reducing emissions while earning a return on the sale of the certificates. The return is largely dependent on the price of the carbon credits and can therefore vary greatly. According to HeavyFinance, the return is 12%+ in a conservative scenario and 50%+ in an optimistic scenario.

Costs and Fees

On HeavyFinance, investors can register and create an account free of charge.

There are also no costs or hidden fees for investing in P2P loans on HeavyFinance, as well as for deposits and withdrawals.

The only cost factors arise in the event of an early sale via the secondary market. For this, a transaction fee of 1% of the nominal value of the transferred debt right is charged.

In addition, investors pay a type of collection fee amounting to 0.1% of the outstanding amount per day, which is intended to cover the costs of recovery.

In addition, investors pay a collection fee of 0.1% of the outstanding amount per day, which is intended to cover the costs of recovery. Investors should be aware that charging this fee is a legal requirement. In reality though, investors are also credited 0.2% per day in interest on delays.

Expected Returns

The average weighted interest rate is stated on HeavyFinance as 13.13%. If there are no defaults and the performance of the loan portfolio is stable, the expected return should be in the low double-digit range. Compared to other alternatives with a similar level of collateralisation, this can be considered a competitive return.

“Depending on the risk level of the projects that you opt to choose to invest in, you can benefit from 8% to 14% of yearly return.”

My personal investment experience on HeavyFinance goes back to June 2023. During this period, I was able to achieve a total return of 7.84%. The slightly lower return is mainly due to the proportion of green loans in my portfolio, which have not yet been able to generate any profits through the sale of carbon certificates.

HeavyFinance Auto Invest

On HeavyFinance, investors have three options to invest in agricultural loans: Manual selection on the primary market, manual selection on the secondary market or the automated investment strategy (Auto Invest).

With the help of HeavyFinance Auto Invest, the following criteria can be configured:

• Investment Amount: The minimum investment amount per loan (EUR 100)
• Interest Size: The spread of the loan interest rate
• Loan Duration: The term of the loan
• Risk Rating: The risk rating of the platform (from A to D)
• LTV: The loan-to-value of the loan
• Country: The borrower country
• Extra Measure: Selection of additional collateral

HeavyFinance Forum

If you have questions about HeavyFinance, other platforms or different p2p-related topics, you can join the re:think P2P Community on Facebook and engage in discussions with more than 1,000 other private retail investors.

Alternatively, you can get the latest HeavyFinance news and updates via my channels on Telegram or WhatsApp.

HeavyFinance Taxes

Generally, interest income generated through loan financing is considered capital income and thus must be declared as such in the tax return.

As a Lithuania-based P2P platform, HeavyFinance is legally obliged to withhold tax – at a rate of 15% – on interest income earned. This is automatically withheld by the platform. Investors can reduce the withholding tax to 10% by filling out a “DAS-1 form” and sending it to the platform.

As there is a double taxation agreement between Lithuania and most European countries, the withholding tax can be offset. This means that it is not paid twice.

Investors cannot yet download a classic report for their tax return. Instead, they have to filter their transactions and then download a file.

HeavyFinance Risks

When evaluating a P2P platform, investors should look very carefully at the possible risk factors and weigh them up before making an investment. What do you have to look out for at HeavyFinance? Where are the risks and how can those be assessed?

Platform Risk

The operational launch of the platform, which is operated by the Lithuanian “UAB HEAVY FINANCE” took place in June 2020. In their home market, the platform is controlled and monitored by the Lithuanian central bank. This means, among other things, that the company is obliged to keep segregated accounts for investor funds and platform funds. HeavyFinance is therefore working with Lemonway as a payment provider to protect investor money from misappropriation.

In July 2023, the platform also obtained a licence as a European crowdfunding service provider (ECSP), allowing HeavyFinance to offer its services throughout the European Union.

Due to the regulation of the platform, HeavyFinance must fulfil a high degree of compliance and transparency standards, which increases the security of the P2P lending platform. This includes for instance to publish audited annual reports.

Risk Assessment

The performance of the loan portfolio is largely determined by the borrower evaluation process. In the case of HeavyFinance, a systematic evaluation process is used to acquire new borrowers, which can be roughly summarised in four steps:

• Initial Contact: The assessment begins with an initial interview with the farmer. During this meeting, the first important information is collected in order to get an impression of the farm.
• Financial Documentation: Subsequently, the necessary financial documents are requested from the borrower. This includes the profit and loss statement, the balance sheet, the crop declaration and a collateral valuation document. These documents help HeavyFinance assess the financial stability of the farm and evaluate the associated risk. The information provided helps to determine the borrower’s financial rating.
• Credit Check: Next, HeavyFinance conducts a comprehensive check against public sources and credit reports. This step is designed to help identify possible negative information that may affect the borrower’s creditworthiness.
• Project Preparation: If no significant issues are identified during the screening process, HeavyFinance prepares the project for integrating it on the platform. This includes compiling all relevant information about the borrower and the proposed project.

According to HeavyFinance, only about 10% of all loan applications end up as projects on the platform.

HeavyFinance Defaults

A stringent and systematic approach is essential for risk assessment. But how well does HeavyFinance perform in reality? Can a positive conclusion about the risk assessment be drawn when looking at the publicly shared numbers?

To gain insights into the current performance, investors can take a look at the platform’s statistics page or read the regular performance reports on the blog, which are published monthly.

According to the latest statistics from August 2024, close to 20% of outstanding loans are in the debt collection process, which is a somewhat high number that could certainly be improved. Is there any explanation for this?

Among the most common causes of repayment problems are cash flow difficulties. For instance when expected subsidies are not paid on time or because farmers are still hesitant to sell their crops because they are speculating on a better selling price.

Investors should note that repayments in the agricultural sector can be very volatile as farmers often only receive income payments two or three times a year due to seasonality. Historically, repayment delays often increase between March and August, when farmers are working in the field, while repayments often occur during harvest time in autumn.

HeavyFinance Recoveries

Loan defaults are an essential part when investing in P2P loans. Conversely, however, this does not mean that the investment is automatically lost. While unsecured loans are often backed by buyback guarantees from the issuer, pledged collateral comes into play with platforms such as HeavyFinance. This primarily includes agricultural land, heavy machinery and equipment.

Something visible in the statistics is that recoveries increase with time. For example, the platform has been able to fully recover all defaulted loans from the second half of 2021. As this also includes accrued interest, the recovery rate is as high as 110%.

The recoveries of defaulted loans from 2022 suggest that the process will take a little longer though. So far, only 38% (first half of the year) and 66% (second half of the year) have been recovered after 24 months.

Historically, 295 loans worth EUR 6.3 million have been defaulted so far. Of these, 60 loans with a volume of EUR 2.7 million have been recovered to date. The average recovery period is around 250 days. These numbers refer to data from September 2024.

Important: Even though many loans are in debt collection, no loans have yet been written off with a loss. One reason is the strong collateralisation of the loans. On the P2P platform, 50% is collateralised by heavy machinery and equipment, 40% by agricultural land and 10% by other assets.

Advantages and Disadvantages

In this section, I have listed the most important advantages and disadvantages of HeavyFinance.

Advantages

• Regulation: HeavyFinance is controlled and monitored by the Central Bank of Lithuania.
• ECSP: In July 2023, the platform obtained the European Crowdfunding Licence (ECSP).
• Account Segregation: Legally monitored account segregation of investor and company funds.
• Experience: The management of HeavyFinance has extensive experiences in the lending business.
• Capital Providers: The platform is financed and supported by large and well-known capital providers.
• Risk/Reward Profile: Competitive expected returns, despite strong collateralisation.
• Diversification: Geographical as well as industrial diversification possible.
• Agricultural Sector: Positioning in an attractive and fast-growing niche.

Disadvantages

• Track Record: HeavyFinance has launched operations in summer 2020
• Profitability: No profitability as focus is on growth and scalability.
• Performance: Improvable performance of the loan portfolio.
• Withholding Taxes: 15% or 10% of taxes are withheld from private investors.

HeavyFinance Alternatives

Which HeavyFinance alternatives can be considered in the current P2P environment?

If we take the focus on the agricultural sector as a benchmark, then the Latvian crowdfunding platform LANDE comes to mind first. Both on LANDE and HeavyFinance, farmers are primarily supported as borrowers, enabling them to continue their business. Compared to HeavyFinance, LANDE is the slightly smaller platform in terms of loan volume and investor size, but it has therefore a slightly better performance.

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

Community Feedback

HeavyFinance enjoys average popularity within the P2P lending community. While the platform achieved tenth place in 2023 with 3.26 points (19 ratings), HeavyFinance landed sixteenth place in 2024 with 2.72 points (93 ratings).

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 HeavyFinance Review 2024

What is the final verdict of this HeavyFinance review?

HeavyFinance is currently the largest P2P platform in the Baltics with a focus on agricultural loans.

Due to the wide range of loan products, borrower countries and collateral options, there are many levels on which investors can diversify their investment in the ever-growing agricultural sector. In addition to the aspect of agricultural sustainability, investors can also expect a realistic return in the low double-digit range. Thus, HeavyFinance is one of the few exceptions where environmental sustainability and returns go hand in hand.

The performance of the loan portfolio is still in a manageable range, considering the economic circumstances in recent years. The strong securities have historically meant that investors have not yet suffered any capital losses.

If you want to invest your money in the agricultural sector with a young and dynamic P2P platform, you should take a closer look at HeavyFinance. Conservative investors should preferably invest in Lithuanian agricultural loans, which have historically delivered the best performance. Those who have a higher risk appetite can also look into the platform’s green loans product.

FAQ HeavyFinance Review