"Skin in the game" is a concept where the Loan Originator (the company issuing the asset) must keep a financial stake in each loan they offer on the Debitum platform.
How it works:
The Loan Originator is required to hold a certain percentage of each loan themselves. This means they share the risk alongside investors.
Example: If a Loan Originator has agreed to 10% "skin in the game" on a €100,000 asset, they must hold €10,000 of that investment themselves. Only the remaining €90,000 would be available for Debitum investors.
Why is it important?
This practice helps to align the interests of the Loan Originator with those of the investors. Since the Loan Originator also has their own capital at risk, they are incentivized to maintain high loan quality and ensure successful repayments.