Understanding Returns & Risks at Lendahand
Your investment contributes to supporting hardworking entrepreneurs in emerging countries. But what is the expected return on your investment? And what about the risks? That's what we explain on this page.
Returns
At Lendahand, you invest in loans for entrepreneurs in emerging countries. This almost always happens through an intermediary: a local financial institution with a social focus and strong knowledge of the region. The local institution repays your investment during the loan term. With each repayment, you also receive an interest payment. The financial return on your investments is therefore a simple calculation: repayments plus interest minus any write-offs.
The average annual interest rate in 2025 was 6.9%. The historical average write-off percentage for projects with a credit score of A or B is 0.37% (these are the only types of projects Lendahand offers since 2023). This would bring the expected return to 6.5%. On top of this, there can be exchange rate profits or losses, when investing into USD projects. Note that past results do not guarantee future outcomes.
Next to financial returns, there’s the social return.
Curious about the interest rates available today? View our projects here
Interest
Most loans you provide with your investments have a maturity of 24 months. Typically, you receive a repayment of part of the loan every 6 months. Along with this repayment, an interest payment is also made.
Interest rates vary per project and currently range from 5% to 8% annually. The differences in interest are the result of several variables. The most important variables are: international and regional interest rates, risk, loan term, fluctuations in currency exchange rates, the popularity of the borrower (competition with other financiers), and negotiations with the borrower.
See here the variation in interest between different projects.
The interest rate that the borrower pays for the loan is higher than the interest you, as an investor, receive. On average, this fee is 3% annually. This fee covers Lendahand's operating costs. For clarity: this fee is not deducted from your interest.
How much interest does an end borrower pay? The end borrower is the person or entrepreneur taking out a loan from the local financial institution. The interest the end borrower pays equals the interest you receive plus the Lendahand fee plus the margin charged by the financial institution. The financial institution charges a margin to cover costs (such as currency conversions and operating expenses), manage write-offs in their portfolio, and a reasonable profit margin. Lendahand only works with financial institutions that make a positive social impact, charging defensible costs and modest profit margins. We find it important to work with profitable financial institutions, as this increases the likelihood of your loan being repaid.
Risks
Investing involves risks, that is also the case for investing with Lendahand. It is possible that a borrower cannot repay the loan, repay it in full, or on time. In such cases, you may receive the loan later or lose your investment partially or entirely.
The risk of investing at Lendahand is best explained through past figures (from 2013 to now). Note: past figures do not guarantee future outcomes. These figures consider only investments with a credit score of A or B, the only investments Lendahand offers since 2023.
- 97.4% of investments are repaid on time. A payment is considered 'on time' if it is received within 30 days of the due date.
- 0.37% of investments have been written off. This means the loan will no longer be repaid.
With the projects on our website, we aim for a healthy balance between social and financial returns. We want your investment to make an impact and be repaid properly. That’s why all projects you invest in have at least a credit score of A or B.
Investing in emerging countries carries risk. At Lendahand, we try to mitigate these risks by facilitated loans through established financial institutions (indirect investments), rather than provided directly to individual end-borrowers (direct investements). This structure has several implications:
- The financial institutions do not pass on missed repayments by an end borrower to Lendahand investors.
- The financial institutions are supervised by local financial authorities. This means they are required to maintain financial reserves, which are also monitored.
- The financial institutions and Lendahand agree on thresholds for the institution’s financial metrics. We review these metrics every three months. If an institution no longer meets such a threshold, Lendahand will no longer provide new loans to the institution. In some cases, we even require accelerated repayment of outstanding loans.
- The financial institutions are experienced in working with international financiers. This makes the collaboration process relatively smooth.
At the same time, this structure does not remove risk entirely. As an investor, you remain exposed to the financial institution's own ability to repay. This can occur even when an institution has previously met its financial covenants and has a high credit score. Financial positions can deteriorate quickly, as circumstances change.
Default rates and other statistics
What is the difference between default, write-down and write-off?
Under the European crowdfunding regulation, a default occurs when we believe the counterparty is unlikely to pay in full and we have considered — or need to consider — a write-off, or when a loan is more than 90 days overdue. In order to calculate the one-year default rate, the denominator consists of the number of non-defaulted loans observed at the beginning of a 12-month observation window, whereas the numerator includes all loans considered in the denominator that had at least one default event during the 12-month observation window. The default rate we publish is based on this definition.
We also use our own internal write-down method, which starts as soon as a payment is 30 days late. The longer a repayment is delayed, the bigger the write-down, and the lower the estimated value of your investment. The write-down follows a fixed schedule: 20% at 30 days, 50% at 90 days, 75% at 180 days, and 100% at 360 days overdue. The loan itself still exists. You can read more here: https://www.lendahand.com/en-
A write-down is different from a write-off. A loan is only fully written off (meaning it no longer exists) once the borrower has been declared bankrupt and the bankruptcy process is complete, or the business has been liquidated for another reason, or in other cases approved by the management board. Since this process can take years, we believe it's important to gradually write down a delayed loan in the meantime, so you get the most realistic picture of your investment's value.
Please note: the default rate is not the same as the write-off rate. A loan can be recorded as "in default" (for example, after 90+ days overdue), or even be fully written down (100% at 360 days), without the loan actually having been written off yet.
Expected default rate: The expected default rate for the coming period is set equal to the most recent default rate over the past 36 months, for the risk categories shown (direct and indirect), as displayed in the table. Please note that past performance, including periods without defaults, does not guarantee future results.
Average default rate: The average annual default rate, as shown in the table, is calculated as the simple average of the one-year default rates over consecutive, non-overlapping 12-month periods, calculated over the entire historical period.