Oct 1, 2021
sorry to open a new post, but I would like to briefly summarize what my current findings are and ask if I have understood it all correctly.
PIF is a way for project owners who want to reinvest their already funded and repaid money into other projects. Whether that happens with my borrowed money or not, I have no control over that, right?
In the last months it became more quiet around my funded projects, which surprised me, because before there was a lot of movement in it. I really enjoyed watching the projects and their owners and reinvesting the money they paid back.
Now, unfortunately, I no longer have the option of an 'advance repayment'?
And then I have another question - in my Lending Fund Value I now have an 'amount written off' ? And this is the just a little less than half of the total amount paid in by me. What does that mean? Where did that money go?
Change in lending fund value: $-50.51 (-46.77%)
Impact investment growth credits: $3.03
Foreign currency exchange rate gain or loss: $-2.31
Amount written off: $51.23
It was nice to support projects and people, but now I don't understand the system anymore. I feel like I make a one-time donation and then the money makes its way through the projects and gets less. I am happy about every successful project, but I don't have the feeling anymore that I can be involved as it used to be and I find that a bit sad.
Thanks anyway for this platform that has given me great joy for quite a while.
guenter, Marzl, Barry Cooper, Joshi, Yosef and Mukichi Getrude like this.
Oct 5, 2021
"PIF is a way for project owners who want to reinvest their already funded and repaid money into other projects." - Yes, this is correct. And as you stated, the people who originally backed the project do not direct the funding allocation of repayments. In that sense, funding a Pay It Forward project should be viewed as akin to a donation, but with the exponential impact growth over time of a loan. From the entrepreneur's perspective, it is still a loan because it needs to be repaid. I hope this makes sense.
Re the reduction in value of your lending fund, this is because a fund that is recycled repeatedly into new loans at any repayment rate less than 100% will eventually lose most of its value. (Try multiplying $100 by a 90% repayment rate multiple times. It takes just seven iterations for the value to drop below $50.)
The advance repayment option is not available at this time, because the fund that enabled it was funded with a credit risk fee paid by borrowers. The new Pay It Forward projects do not carry risk fees, so there are currently insufficient inflows into this fund to cover all loans eligible for advance repayments. We hope to be able to make the advance repayment option available again in the future, once we have sufficient project volume to use expediting fees or some other source of inflows to provide funding for this purpose. We do not have a timeframe for this currently.
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