How does Octopus make money?
We don’t charge an up-front fee or annual management charge to Octopus Choice investors. The sum you invest is exactly the sum invested into loans.
We make our money in two ways:
- Octopus earns on the spread between the rate the borrowers pay, and the rate investors receive – Octopus charges borrowers a higher rate than Choice investors receive on each loan. Octopus makes money on the spread between the two.
- The first 5% of every loan is funded by First Loss. This is made up of Octopus and an institutional investor. First Loss can earn a maximum effective interest rate of 30% on an individual loan. It receives a higher rate of interest to compensate for the higher risk level. It would lose its capital first and can only earn interest once investors have earned all of theirs.