Research On Bad Debt Trends At Lande

I’m going to pull out and simplify some of the recent research 4thWay’s specialists conducted on Lande*, the EU-based P2P lending company that enables you to lend to farmers for 10%+ interest rates.

Trends in bad debts

How many loans turn bad quickly now compared to in the past?

I’m going to use the word “cohort”, which is banking jargon that is usually used to mean all the loans issued within a 12-month period. Those loans are batched together for analysis so you can compare them to other cohorts and predict what will happen to those and similar cohorts in future.

Proportion of loans that turn bad 12 months after launch

Three years ago – as of mid-2023 – five out of every 100 loans that had been issued in the 12 months prior to that had turned bad, resulting in recovery procedures being activated.

While the equivalent cohort as of mid-2024 did better, the mid-2025 and mid-2026 cohorts were pretty much exactly the same, at about six in every 100.

This means that Lande appears to be consistent in terms of new loans that turn bad quickly. I’d prefer to see it get steadily better, but it was already doing good enough.

Proportion of loans that turn bad 12-24 months after launch

Except for the cohort most impacted by the pandemic, the results here are also in a reasonable kind of range.

Three years ago, about eight out of every 100 loans that had been approved 12-24 months ago had turned bad.

I’m skipping the equivalent cohort from two years ago, because those loans were the ones issued that were most powerfully impacted by the pandemic. (The research I’m bringing you today is not about the impact of major disasters on bad debts.)

Last summer, the equivalent cohort was running a bit higher at 12 out of every 100 having turned bad by that point.

This year, looking back at loans issued 12-24 months ago, the proportion of those loans that turned bad is back down to pretty much where it started, at nine out of every 100.

I’m reliably told by a 4thWay specialist that this is in a perfectly normal range for this kind of money lending to small businesses, since the economy and lending conditions don’t stay the same all the time.

Proportion of loans that turn bad 24-36 months after launch

Summarising similar analysis by 4thWay on loans that are even more mature – having been issued two to three years earlier – I find that, over the years, between nine and 12 loans out of every 100 in such cohorts turn bad.

Again, this is a very narrow range.

Summary of the trend in the proportion of loans that turn bad

What this means is that Lande* has not made any changes to dramatically reduce the number of loans that turn bad. But at the same time it seemingly has kept its standards, resisting the temptation to approve more loans so that it can more quickly earn more fees itself.

So you can usually expect roughly one in ten loans to turn bad within three years.

By that point, due to Lande’s double-digit lending rates, you can already expect to have earned enough money on your loans to cover bad debts. That’s before you even factor in any recoveries of bad debts…

Quality of your security

…Speaking of which, once a loan has turned bad, you want Lande to attempt to recover that debt. The main weapon Lande has here is the security your borrowers have legally granted you.

“Security” means real property or other assets put down by the borrower for the benefit of lenders. The security is to be sold off if necessary should they become unable or unwilling to repay their debt.

Looking at the quality of Lande’s security, I want to draw your attention to the trend in land loans.

Land loans are the loans where Lande has taken a powerful first legal charge on land owned by the farmer borrowers. If the borrower doesn’t repay, Lande can forcibly sell the land and take back your money and interest before the farmer can take whatever is left.

That’s much like if your mortgage provider repossesses your house.

I can see that, three years ago, 32 out of every 100 loans were land loans. Over a recent 12-month period, it was exactly 50 out of every 100 loans. This solid shift bodes well for recoveries of bad debts.

As a result of this trend in security, I think you have every right to expect that recoveries will be higher in loans approved in the past year or two.

4thWay research has found that land security leads to recoveries of almost all bad debt within two years of the loan turning bad. 95%, or probably more – with most loans recovering in full.

The other types of security that Lande takes are a) machinery, b) subsidies and grants, as well as c) livestock and harvest. For Lande’s non-land loans, it instead has these other assets as security so that, on their sale, you take your money from it before the farmers.

None of these types of security are anything like as strong as land or buildings.

4thWay now has seen enough history that I can report on a major pattern on these types of security.

Each of them has pretty much half the bad debt still outstanding after two or more years of turning bad. It’s surprising to all of us that none of those types of security appear to perform substantially better than the rest after two years in terms of recoveries.

The odds of non-land loans turning bad in the first place are also substantially higher.

Excluding loans issued in the past two years, eight out of every 100 land loans turned bad. This compares to around 14 out of 100 for machinery loans and basically the same for livestock and harvest loans.

Subsidies and grants have seen a quarter of the loans turn bad! However, over the past 12 months, just four out of every 100 loans issued to lenders through Lande’s online lending platform have been loans of this kind.

Summary of the quality of the security

Lande* might not necessarily be improving results in terms of reducing the proportion of loans going bad or even improving recovery rates for any specific type of security.

However, it is shifting its loan book towards types of security that are less likely to turn bad, have greater prospects of recovering more money and better chances of a more rapid recovery.

The shift overall is substantial and is likely to mean even better returns for lenders in future – in typical years.

Quick numbers on overall past bad debts

Historically, on more mature loans, less than 5% of the amounts lenders have lent have turned bad and not yet been recovered.

That outstanding bad debt has easily been covered by interest earned on loans issued in the period – and no doubt with a few more recoveries on that debt still to come in.

Now, we can most likely expect better than that to come, provided Lande maintains its standards and its new blend of security types.

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