> > Percent Review 2024: Features, Pros, and Cons

Percent Review 2024: Features, Pros, and Cons

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Most people know the term financial technology from the popular peer-to-peer lending platforms. However, the investment world has also been forever changed by the use of algorithms, machine learning, and artificial intelligence.

The asset management industry is a good example of this, as robo-advisors have taken the role of building portfolios seamlessly for investors with the help of time-tested methodologies that they can adopt and execute in a matter of minutes.

Percent, a platform that offers access to alternative assets, is another great example of how technology is being applied to the financial industry to make it easier for them to diversify their portfolios by incorporating a specific kind of financial instrument — private debt.

In this article, we will be reviewing this investment platform, its products, and services, what makes it so appealing, and how you can open an account and get started.

Percent

Overall Rating 3.3

The Modest Wallet Overall Rating (Our Rating Methodology)

Bottom Line: Percent is a fintech company that allows accredited investors to invest in alternative investments, from consumer loans to small business loans and everything in between.

Account minimum

4.0

Account fees

4.0

Features and tools

3.0

Diversification

3.0

Liquidity

3.0

Security

3.0

Customer support

3.5

Ease of use

3.5

Best for:

  • Alternative investments
  • Accredited investors
  • People looking to invest in private debt

Pros:

  • Low Minimum Investment Requirments
  • Robust Deal Review Process
  • Zero Fees For Investors Of Private Deals

Cons:

  • Only available to accredited investors
  • Not Accredited On The Better Business Bureau

What Is Percent?

Percent is a financial technology company that provides access to the private debt market. This is a space where consumers and companies borrow money without having to list their securities in a public exchange.

The company was founded in 2018 but its platform was officially launched in 2019. Thus far, borrowers have managed to raise over $800 million via the Percent platform. 

Percent is headquartered in New York and it was founded by Nelson Chu, a serial entrepreneur who co-founded a firm called MySupport, a platform that helped families of elderly adults and people with disabilities find the best professionals to assist them on their day-to-day needs.

Investing in private debt is usually considered a sophisticated activity and most of the people who engaged in it either had great connections in the financial industry or a thorough understanding of this complex market. Percent is now providing access to this market to all investors who meet the criteria to be considered “accredited” by the US Securities and Exchange Commission (SEC).

Currently, Percent supports various asset classes including consumer loans — i.e. car loans and short-term unsecured loans — trade receivables, loans for small-to-mid-sized businesses (SMBs), cash advances and leases for SMBs, and corporate loans.

Investors are compensated by the interest payments made by the individuals and companies that borrow money from them via the Percent platform. They can participate in the deal by putting down a portion of the total amount required by the prospective borrower. The interest rate offered by these deals is typically higher than that of bonds, preferred stocks, and other types of fixed-income instruments.

Percent homepage
Source: Percent

How Does Percent Work? 

Percent matches borrowers and investors via its online platform. Once a customer signs up, they can browse through the portfolio of available private debt contracts they can invest in.

All of the details of each available opportunity including its interest rate, minimum investment required, and credit period are disclosed so the investor can select the deal that appeals to them the most.

In this section, we share further details about the platform and a step-by-step guide on how to enroll with Percent.

Account Minimum 

To open an account with Percent, investors must have at least $500 at their disposal. This money will go toward their first investment. This amount is typically the minimum that they are allowed to invest in a single instrument — i.e. a car loan or a corporate debt facility.

All Percent accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 as the money sits in an individual savings account until it is used to invest in a specific opportunity.

Getting Started

Percent aims to help accredited investors — more on this term later — understand the fundamentals of this activity and facilitates the process of researching, analyzing, and selecting the best opportunities for them so they can pour money into private debt deals without that much hassle. 

An accredited investor is an individual that meets certain minimum requirements to be granted access to sophisticated financial instruments like private debt. As per the rules set forth by the United States Securities and Exchange Commission (SEC), the investor must meet at least one of these requirements to be granted this status:

  • Earn an income exceeding $200,000 ($300,000 for joint accounts) in the past two years and have reasonable expectations that they will continue to earn the same in the next one.
  • Have a net worth exceeding $1 million — individually or along with your partner.
  • Hold a professional financial certification like a Series 7 or Series 82 license.
  • Being married to someone who is an accredited investor and has shared finances.
  • An employee of a private investment fund.
  • Limited Liabilities Companies (LLCs), Family Offices, and other investment entities that have assets under management exceeding $5 million.
  • Any entity that has an investment budget exceeding $5 million except those that are formed specifically to invest in assets that are reserved for accredited parties.

Opening an Account 

It takes around two days to get an account up and running with Percent. Here’s a step-by-step guide to complete the procedure. The good news is that everything can be done online from the comfort of your home and office and no complex paperwork needs to be provided or lengthy questionnaires have to be filled.

  • Step 1 – Go to Percent’s Website: the sign-up process starts by clicking the blue “Sign up” button located at the upper right corner of the website. Percent is only available to United States residents at the moment and the firm is bound to comply with “Know Your Customer” (KYC) rules, meaning that they will ask for your personal details to complete the registration process.
  • Step 2 – Create a Percent Account: the user will be asked to share their first and last name, e-mail, and password to access the platform once registered. They also have the alternative to use their Google account to complete this process.
  • Step 3 – Verify Your Identity & Accreditation: investors must provide the required documentation to prove that they meet the criteria to be considered an “accredited investor”. This procedure takes about 10 minutes and can be completed through a platform called Parallel Passport. 
  • Step 4 – Fund Your Account: it takes around 48 hours for an account to be verified by Percent. After the verification process is completed. The user will be able to make a deposit either via ACH or wire transfer. ACHs can take up to 5 days to be cleared.
  • Step 5 – Start Investing: once into the Percent platform, the user will be able to browse through all the available investment opportunities offered by this provider, which include consumer loans, corporate loans, trade receivables, and SMB leases. They can check the interest rate paid by each investment and the minimum amount required to participate in the deal. Once you find an opportunity you like, you can click on the “Invest” button to pour some money into it.
  • Step 6 – Track Your Investments: the Percent platform allows investors to keep track of how much money they are receiving from their investments. Typically, these private debt deals will generate periodical interest payments that can be withdrawn once available. In addition, when the debt reaches its maturity date, the borrower will pay back the principal and the user will be able to withdraw the money to the account by clicking the “Withdraw” button.
Percent sign up
Source: Percent

Percent Features 

You may now be interested in applying for a Percent account. Hence, you should get to know the platform a little bit better. In this section, we share further details about what Percent has to offer in terms of the type of investments that are regularly available on the platform along with some details about their historical performance.

Minimum Investment$500
FeesNo fees for investors on individual deals; 1% annual fee on Blended Notes investments
Investment TypesPrivate Debt
Account TypesTaxable Accounts and SDIRA Accounts
Advertised Returns10% to 15%
Mobile AppsNo
Accreditation Requiredyes
Seld-Directed IRAsyes
FDIC Insuredyes
PlatformWeb-based
PromotionNone
SupportPhone (646 876-5141) and Email ([email protected]), and Contact Form

Asset-Backed Notes

Asset-backed notes are a type of loan where the borrower has pledged some form of collateral to guarantee that the principal will be repaid. If the borrower fails to comply with the terms and conditions of the loan by, for example, being late on the interest payments or failing to pay back the principal, the asset can be seized by the lender to fulfill the commitment.

Through Percent, investors can participate in private debt offerings of consumer loans, trade receivables, and SMB leases. Consumer loans are handed over to individual borrowers and backed by assets such as vehicles, furniture, jewelry, and other ordinary possessions that are purchased either online or physically.

Moreover, loans on trade receivables are made based on the amount to be collected from an invoice issued by the borrower to one of its customers. The lender usually extends a loan for up to 90% of the amount of the trade receivable. If the borrower fails to pay the interest or principal of the loan, the proceeds from the invoice can be fully collected by the lender to cover the obligation. 

Finally, SMB leases allow the beneficiary to fully exploit or use a certain asset like a real estate property, machinery, equipment, or building. A fixed or variable amount is charged periodically in exchange.

At all times, the asset will remain in possession of the lessor, which facilitates the process of evicting a delinquent tenant. The amount to be paid periodically is determined based on a calculation of the useful life of the asset, a pre-defined interest rate, and other similar factors. 

If the lease recipient fails to pay the agreed-upon installments, the owner can liquidate the lease and sell the assets in the secondary market to recoup the principal that was invested in the property. 

All of these loans are available via the Percent platform. The terms and conditions vary from one deal to the other, which makes it important for investors to read the fine print so they understand both the benefits and risks of participating in each deal.

Percent individual deals
Source: Percent

Blended Notes

Percent’s Blended Notes are created via a process known as securitization. This is a fancy word used in the financial industry to describe the process of adding up multiple income-generating assets into a single investable instrument that makes the opportunity more easily accessible and understandable for lay investors.

With Blended Notes, the Percent investment management team carefully selects each of the assets that will be added to the Blended Note and create a separate individual investment instrument that is offered to the platform’s users.

These investors are entitled to receive monthly interest payments for the first 12 months and they pay a fee to the investment management company (Percent Advisors LLC) for facilitating the securitization process. After these first 12 months, the investor will receive a mix of interest and principal payments until the initial investment is fully amortized.

According to the information disclosed on the Percent website, no more than 10% of the assets invested in Blended Notes are allocated to a single instrument. This ensures that the Notes are adequately diversified to mitigate risks.

Blended Notes are convenient for investors who prefer to let a professional build a portfolio of alternative assets on their behalf rather than having to go through the platform to select the most appealing and convenient opportunities based on their financial goals and risk tolerance.

Venture Investing

Venture investing is a program that allows investors to act as lenders for early-stage or fast-growing companies — i.e. startups — that need capital to keep expanding their businesses.

Even though these firms typically turn to equity funding to raise capital, some founders may be reluctant to keep diluting their ownership percentage and they may opt to take on debt to avoid this.

With venture investing, Percent users can participate in private debt deals structured as regular loans but with specific covenants that allow them to take possession of some of the borrower’s assets or even a portion of the business’s equity if the borrower fails to fulfill its financial commitments.

To evaluate these opportunities, investors must analyze the underlying business that will be borrowing the funds. This includes its business model, leadership team, product-market fit, and financial situation.

Moreover, certain covenants are typically added to the loan agreement including provisions on the minimum amount of cash that the company must hold at all times, specific clauses in case a merger or acquisition is on the table, and prohibitions on cash distributions to shareholders while the loan agreement remains active.

Venture debt deals are way smaller than corporate debt agreements. The amount lent to these companies is typically lower than $5 million and they tend to offer more appealing conditions in terms of interest rates to the lender due to their riskier nature.

Percent Performance

By the end of May 2023, Percent had funded a total of 415 deals for its borrowers. The total amount investors have poured into these loans exceeds $800 million. The average default rate is 1.89% and the average investment term is 9 months. Meanwhile, the weighted average annual percentage yield (APY) of these funded projects stood at 17.04%.

For comparison, the average APY on high-yield savings accounts in the United States at this time stands at 4.50% while delinquency rates on consumer loans according to data from the St. Louis Federal Reserve stood at 2.23% by the end of the first quarter of 2023.  

Percent has effectively returned $713.4 million in principal to its investors and nearly $30 million have been paid in interest to them thus far. Meanwhile, the weighted average APY for deals that have already matured stood at 12.8%. 

Percent why invest in private debt
Source: Percent

Percent for Borrowers

Borrowers can use the Percent platform as an alternative to traditional banking and venture capitalists to avoid handing over a large percentage of their equity when looking for funding for their early-stage companies.

Since its launch in 2018, Percent has helped both consumers and businesses raise more than $800 million across 415 deals. Its powerful funding platform provides insightful analytics on the state of various credit products, their cost, and usual terms, and it also provides a track record of recent transactions closed that can serve as a reference for prospective borrowers to offer the most appealing conditions to Percent’s investors.

Through the asset-based financing program, Percent allows borrowers to select between various alternatives to secure funding including factoring, cash advances for SMBs, and business loans to raise the capital they need to keep growing and expanding their operations.

The Percent platform provides a seamless onboarding and application experience for borrowers and requires minimum information from them such as their tax records, updated financial statements, an audit, and signing the resulting credit agreement.

Percent for Underwriters

Underwriters can scale up their businesses by tapping on the Percent platform by engaging directly with prospective borrowers to help them raise the capital they need. These underwriters can turn to their network of investors — whether they have registered on Percent or not — and can help these companies accelerate their funding process.

In addition, they can also bring deals to the platform to help the companies they are working with tap into Percent’s growing investor base to raise money. Percent benefits from bringing in underwriters as they can help enroll both business and investors on the platform while underwriters benefit from this relationship as they can expedite the process of sourcing capital for their customers.

One interesting feature of this program is that Percent provides a list of vetted corporate borrowers that are presented to underwriters directly. These prospective borrowers have already been evaluated by the Percent team and they can discuss with underwriters the terms of a future deal so they can more easily receive the funding they are looking for.

The Percent platform takes care of all the documentation required to sign underwriting deals. This eliminates multiple time-consuming tasks for both underwriters and borrowers and allows them to focus primarily on analyzing deals and finding funding sources.


Percent Fees

Percent does not charge any fees to investors that participate in individual deals within its platform. However, they do charge a 1% annual fee on all the assets they manage on the Blended Notes program.

There have been reports that the platform plans to charge a 10% commission on all interest payments but, thus far, no official announcement has been made.


Percent Security 

According to the site’s privacy policy, Percent collects a good deal of information from its customers including their personal data like full name, address, phone number, and state of residence.

In addition, they collect their financial and payment information and demographic details such as their age and the state where they are registered to vote. In some specific cases, they perform a background check on prospective borrowers to check their criminal, residential, and eviction history.

The company claims that the majority of this information is collected for legitimate business purposes. However, they also disclose that certain aggregated user statistics are shared with third parties while certain personal information is also shared with a group of “sponsors”, which include prospective borrowers, investors, banks, lenders, credit bureaus, and payment processing companies.

Percent indicates that they may transfer the personal information of their users to locations outside of the United States on an as-needed basis. This primarily affects customers residing outside of the US like those based within the European Union or the Cayman Islands.

All payments made via the Percent platform are processed by a vendor called Dwolla. The user’s personal information will be shared with this provider to process the required payments. 

According to a security assessment performed by SSL Trust, the Percent.com website passed 90 different safety tests that screen out the presence of malware, viruses, and phishing campaigns, and no issues with the site’s SSL/TLS certificate were found either.  This means that information may be transferred safely within the site.


Percent Customer Service 

A customer support representative can be reached via phone call, e-mail, and a support ticket that can be sent to Percent by visiting the “Contact Us” section of the company’s official website.

The firm’s official phone number for customer support inquiries is (646) 876-5141 and the e-mail used for this purpose is [email protected].

Percent is not an accredited entity with the Better Business Bureau (BBB) and its Trustpilot profile only has two comments. This makes it difficult to assess customers’ perceptions and opinions about its service and customer support infrastructure.


Percent Ease of Use 

The Percent platform can only be accessed via a web browser as a mobile application has not been launched for the service yet, or at least not one that is available on one of the two most popular mobile app marketplaces.

However, the platform is highly user-friendly. Deals can be easily browsed and accessed and the details of each opportunity available within the Percent platform are laid out plainly so prospective investors can rapidly understand what they will be getting into.

Both the ID verification process and the interfaces used to send over documents and all the required paperwork to Percent are powered by top-notch vendors like Parallel Markets and this facilitates the process of completing due diligence.

Finally, depositing and withdrawing money from a Percent account is not complicated at all after a bank account has been linked. 


Percent Pros Explained

  • Invest In Private Debt: Percent is an organized marketplace for private debt deals for accredited investors.
  • FDIC Insurance Protection On Your Investments: The funds held in a Percent account are FDIC-insured.
  • Diversified Investment Opportunities: Investors can participate in various types of deals including factoring, business loans, and leases.
  • Low Minimum Investment Requirements: The minimum investment required is fairly low for a platform that caters to accredited investors.
  • Robust Deal Review Process: The Percent platform makes the task of sending and reviewing the paperwork for prospective deals more comfortable than usual.
  • Zero Fees For Investors Of Private Deals: Percent does not charge a fee to investors for participating in individual deals.
  • Low Management Fees: With Blended Notes, investors can be relieved of the painstaking task of analyzing dozens of individual deals to take a pick in exchange for a 1% annual management fee.
  • Easy Withdrawals: Investors can easily withdraw their interest payments to their bank account as soon as they are available.
  • Low Default Rates: Default rates within the platform are low and below the US average for consumer loans.

Percent Cons Explained

  • Risky Investments For Beginners: Investing in private debt is risky and can result in losses if investors fail to build and diversify their portfolios appropriately.
  • No Mobile Apps: Percent does not have a mobile app that users can turn to for keeping track of the performance of their investments or account on the go.
  • Not Accredited On The Better Business Bureau: This provider is not an accredited BBB business and there are no online customer reviews for its service and platform.

Percent Alternatives

Percent is not the only company offering access to the private debt market online. Here’s a brief comparison of its services with those of its two most prominent competitors — Yieldstreet and Linqto.

Percent vs. Yieldstreet

Yieldstreet is a platform that also offers access to alternative investments. However, its portfolio of financial products is wider as they allow investors to participate in real estate, arts, and even supply chain investment deals. The minimum investment required to open an account is higher than Percent at $2,500 and they charge annual management fees ranging from 0% to 2%. Same as Percent, the Yieldstreet platform is only available to accredited investors. Read our full Yieldstreet review to learn more.

Percent vs. Linqto 

Linqto is also a marketplace for alternative investments. However, they focus mostly on startup financing via equity deals mainly. They currently offer deals from more than 30 companies including early-stage crypto projects like Ripple and Uphold and fintech companies such as Acorns and M1 Finance. The platform is only accessible to accredited investors and they do not charge any fees for providing investors with access to these deals. The minimum investment required to participate in a deal is $5,000.

PercentYieldstreetLinqto
Our Rating

3.3

3.1

3.1

Account Minimum$500$2,500$10,000
FeesNo fees for investors on individual deals; 1% annual fee on Blended Notes investments0.00% to 2.50% annual management fee (*other fees may apply)No fees
PromotionNoneNoneNone
HighlightInvest in private debtInvest in alternative investmentsInvest in pre-IPO stocks
Best ForAccredited investorsAccredited investorsAccredited investors

Who is Percent Best for?

Percent is a platform created primarily for sophisticated investors with sizable investment portfolios. This group is known as “accredited investors” and they either own over $1 million in assets or have a lot of disposable income that they can spread across different financial assets.

These investors can tap on Percent’s large selection of private debt deals to generate above-average returns. They can use the platform to diversify their investment portfolio by incorporating this asset class to boost the overall return produced.


Notable Percent Updates and News 

  • Investor Portal: On June 8, 2023, Percent launches a redesigned investor portal that aims to improve the overall experience for its customers when participating in private debt deals.
  • Best Places To Work: On June 6, 2023, Percent is recognized as one of the Best Places to Work in Financing Technology by Arizent.
  • Series B Funding: On May 18, 2023, Percent raises $30 million in its Series B funding round led by White Star Capital and with the participation of the Susquehanna International Group, B Capital, and other venture capital firms.

FAQs On Percent Review

In this section, we provide answers to the most frequently asked questions (FAQs) we get about Percent.

Is Percent Legit?

Yes. Percent is a legitimate marketplace of private debt deals that facilitates access to this market for accredited investors. Over $800 million have been raised by borrowers through its platform. The company is headquartered in New York and is backed by several top-notch venture capital firms including Susquehanna International Group.

Do You Have to be Accredited to Invest with Percent?

Yes. To participate in the private debt market, the United States Securities and Exchange Commission (SEC) requires that individuals meet certain criteria to be considered accredited investors.

Is Percent a Good Investment?

Percent has delivered average annual percentage yields (APYs) above 12% on all matured deals since the platform was launched in 2018. Comparatively, the stock market’s performance historically has delivered gains of approximately 10% to 11% over long periods based on the returns generated by the well-known S&P 500 index. 

How Much Does Percent Cost?

Percent does not charge any fees to investors who participate in individual private debt deals. However, to access the Blended Notes instrument managed by the company, investors must pay a 1% annual management fee.

How Does Percent Make Money?

Percent generates money via the collection of its 1% annual management fee on its Blended Notes product. In addition, even though they do not disclose the details of their pricing, they probably charge fees and commissions to borrowers for publishing their private debt offerings and raising capital for their businesses.

The company is also reportedly planning to charge a 10% commission on all interest payments made to investors but this has not yet been formally announced. 

What Makes Percent Different Than the Competition?

Percent provides access exclusively to private debt deals. This niche approach makes it a great alternative for investors who would like to incorporate this financial asset into their portfolio. Its platform’s ease of use, low minimum investment required to participate in individual deals (typically $500), attractive APYs, and products like Blended Notes make it appealing to accredited investors who would like to diversify their portfolios by incorporating this asset class.

What is the Average Return on Percent?

Since the platform was launched, Percent’s deals have reportedly produced 12.8% weighted average annual percentage yields (APYs) on all matured deals — meaning those whose principal has already been paid back to investors.

What Is the Average Duration of an Investment?

On average, the private debt deals offered by Percent have a 9-month investment term.

In A Nutshell

  • Account Minimum: $500
  • Fees: No fees for investors on individual deals; 1% annual fee on Blended Notes investments
  • Promotion: None
Percent

on Percent’s website


Final Thoughts

If you are an accredited investor looking to diversify your portfolio by adding an alternative asset class such as private debt, Percent is a great platform to consider due to its ease of use, decent number of available investment opportunities, attractive yields, and low minimum investment required to participate.

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