Glossary of investment terms

All the terms commonly used on HeavyFinance

Auto Investment

You can invest in newly opened projects that meet a set of criteria you specify using the Auto-Investment tool.

You won’t need to log into your account to make manual investments after setting up auto-investment as the tool will do it for you as long as you have money in your wallet. This eliminates the need to compete for investments in freshly created projects.

This feature helps investors in creating a diversified portfolio more effectively, without losing track of investment opportunities, and without sacrificing control over your money.

Your Auto-Investment is completely under your control, so you may change the criteria or turn it off whenever you want.

First Lien

The first lien means that the creditor holds exclusive rights on the proceeds from the liquidation of the pledged assets. One who is entitled to first lien has the priority over all other liens or claims on the pledged assets in the event of default.

Grace Period

A grace period is a time period automatically granted on a loan during which the borrower does not have to pay the lender any instalments toward the loan, and the borrower does not incur any penalties for not paying. Payments may be made during grace period but are not required.

Institutional Investor

An institutional investor is a company or organisation that invests money on behalf of other people.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the outstanding loan. For example, if a borrower borrows €100 with 10% interest rate for one year, at the end of the year he will have to repay €110. 

Internal Rate of Return (IRR)

A financial metric, used to measure the profitability of an investment, that takes into account the time value of money. Essentially, it is the annual rate of growth that an investment generates. 

Loan Agreement

It is a formal contract between a lender and a borrower that spells out all the details of the loan, such as the principal amount, interest rate, term, fees, payment terms etc. It also describes a lender’s legal options for getting payment in the event that a borrower defaults.

Payment Schedule

Payment schedule is the agreed frequency and amounts of payments from the borrower to lender. 

Primary Market

A primary market is a market where loans are first issued and financed by investors. It’s different from a secondary market where investors can re-sell their investments from the primary market to other investors.  

Sole Accountability

Sole accountability means that the farmer is liable for the loan as an individual. In the case of the default, the recovery process would be carried out in a general manner (HeavyFinance would not have priority over creditors). Loans backed by sole accountability are issued to farmers faster since fewer documents are required to finish the process. Therefore, the collected funds can be transferred to the farmer’s account within a couple of days after the loan is financed.

Secondary Market

It’s a marketplace that allows you to buy and sell your investments after the repayment period has begun. Investors use it to exit loans early, earn a higher return by re-selling their investments or start lending instantly instead of waiting for new loans to be available for funding. As the seller of your investment, you are able to offer a price, which can be equal to the nominal value of the invested amount or differ from it (sell loan with premium or discount). 

If you are looking for liquidity and do not want to wait for the loan to mature, your primary option is to use the secondary market.


There are two basic components that make up every loan: principal and interest. The principal is the original amount of funding borrowed and the interest is charged to the borrower for use of the loan.

Return On Investment (ROI)

Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost, but does not account for the duration of the investment.