Percent Review: 17% Coupons, 3.7% Defaults and the 10% Interest Haircut

This section establishes what Percent is legally, who owns it, what regulator sits behind it, and how big it has become. In one sentence: Percent is a broker-dealer-owned marketplace that packages loans made by other lenders into private notes, sells those notes to accredited investors, and takes a cut of the interest.

The entities

The operating company trades as Percent Technologies, a New York-headquartered fintech founded in 2018 under the name Cadence. It rebranded to Percent on April 22, 2021, the day it announced a $12.5M Series A (PR Newswire; FinTech Global, April 2021). Its broker-dealer subsidiary is Percent Securities, LLC, FINRA CRD 314782, organised in Delaware on April 12, 2021 and registered with the SEC on August 11, 2023; its audited annual filing names its sole owner as Cadence Group, Inc., the pre-rebrand corporate name, and describes the business as placement agent, on a best-efforts basis, for private placements of debt securities by affiliated and unaffiliated issuers (Form X-17A-5/A for FY2024, EDGAR CIK 1863789). BrokerCheck records the firm as a FINRA member whose offerings are limited to private placements, says the firm or its affiliates may charge investors service fees directly and issuers placement agent fees that vary by transaction, and shows no disclosure events as of September 2026 (FINRA BrokerCheck). The firm is a SIPC member (Form X-17A-5/A). Since August 2023, then, FINRA’s rulebook, its arbitration forum and its private-placement filing rules (Rule 5123) apply to what Percent sells.

The securities themselves are private placements. Percent’s FAQ says its offerings are exempt under Rule 506(c) of Regulation D, which is why every investor must be verified rather than self-certified (Percent FAQ, retrieved September 2026). That is the whole regulatory shape: no Regulation A offering circular, no registered fund, no 1-K or 10-K for the deals. The investor’s protection is the broker-dealer registration, the accredited-only gate, and the note purchase agreement for each deal.

The founders and the money behind them

Nelson Chu founded Cadence in 2018 and ran it as CEO for eight years. On June 18, 2026 Percent announced that co-founder and president Prath Reddy, CFA, had become chief executive and that Chu had moved to executive chairman (PR Newswire; Alternative Credit Investor, June 18, 2026). Reddy joined the founding team in 2018 from UBS’s debt capital markets group, and the stated brief for his tenure is liquidity infrastructure for private credit and a larger institutional business. On August 28, 2026 the company named Bina Shetty, its former head of originations, chief commercial officer and Cecil Smart, previously at Sixth Street and Kroll Bond Rating Agency, chief credit officer with responsibility for underwriting, surveillance and workouts (ABF Journal; Asset Servicing Times, August 2026).

The venture money: a $12.5M Series A in April 2021 co-led by White Star Capital and B Capital, with Revel Partners, Morgan Creek, Nimble Ventures and Tuesday Capital named as backers (PR Newswire, April 22, 2021); then a $29.7M Series B announced May 17, 2023, led by White Star Capital with B Capital, Susquehanna Private Equity Investments, BDMI, Forte Ventures and Vectr Fintech, taking total funding to $48.2M (Business Wire, May 17, 2023; AlleyWatch). We found no later round or valuation. The owners are therefore the founders and those venture funds, and Percent is a private company that publishes no audited financials; nothing in the search record shows a profit, a loss, a headcount or a runway figure.

How big it is

Every volume figure below is Percent’s own. The waypoints: over $400M across 200-plus deals at the April 2021 rebrand (FinTech Global); 681 deals fully repaid, returning $1.35B of principal and $96.3M of interest, by September 30, 2025 (Percent Q3 2025 performance report); $1.95B across 1,048 deals at a 16.95% weighted average outstanding coupon as of March 31, 2026 (Percent track-record page). AltStreet’s recount from Percent’s investor API in late May 2026 gave $1.93B across 1,067 deals, more deals but fewer dollars than Percent’s own; we cite both.

The stock is smaller than the flow. Percent’s core assets under management, meaning notes outstanding on the platform, were $279.9M at June 30, 2025, $322.9M at September 30, 2025, above $350M at December 31, 2025, an all-time high of $367M at March 31, 2026, and $346.9M at June 30, 2026, up 23.9% on the year (Percent Q3 2025, Q1 2026 and Q2 2026 performance reports; press release, January 15, 2026). Issuance in calendar 2025 was $532.4M, of which asset-based securities were over 84%, with 140-plus borrower programs onboarded, 20-plus managers and 50,000-plus investor sign-ups since inception (Percent press release, January 15, 2026).

Two things in those numbers deserve a pause. First, Percent’s January 2026 release claimed 27 consecutive months of net AUM growth; the book grew again to $367M in Q1 2026 and then shrank in Q2 2026, when, by Percent’s account, repayments of about $137.5M outran new fundings of about $113.8M (Percent Q2 2026 report, Repayment, By Design; the two flow figures are unverified at publication). Capital left because deals came due, which is fair and also a reminder that the AUM is a pool of short notes that has to be refilled every quarter. Second, $96.3M of interest against $1.35B of principal repaid is about seven cents per dollar, which is what short terms and the lower coupons of the early years produce. The track record is many small, short bets rather than a few long ones.

This section walks the money from your bank account to a borrower and back, and shows where Percent is paid at each step. The fee is tied to interest, and the risk is tied to who originates the loan.

Eligibility and onboarding

You must be an accredited investor, and because the offerings are sold under Rule 506(c), Percent verifies rather than letting you self-certify. The FAQ says the accreditation questionnaire takes about ten minutes, that verification runs through its partner Parallel Passport, and that it can take up to 48 hours (Percent FAQ, retrieved September 2026). Verification means documents: tax returns or W-2s for the income test ($200,000 a year alone or $300,000 with a spouse), statements for the $1M net worth test excluding the primary residence, or a letter from a CPA, attorney or registered adviser. Entities, trusts and IRAs can invest; Percent names Alto, Forge Trust, Rocket Dollar and Strata as preferred IRA custodians and is not a custodian itself (Percent blog, retrieved September 2026). Because Percent Securities is a broker-dealer, onboarding also includes know-your-customer checks and a brokerage account agreement.

Funding the account

You fund by ACH or wire into a brokerage account at Percent Securities. We could not confirm whether idle cash earns interest; treat it as earning nothing until you see a rate on the platform. Cash drag is a real cost in a $500-a-deal model where distributions arrive monthly in small amounts and each redeployment waits for a deal.

How a deal is sourced and priced

Percent does not lend. Its supply side is non-bank originators, the lenders who make small-business loans, merchant cash advances, consumer loans or venture loans and who need wholesale funding to keep lending. The best-documented originator is Wall Street Funding, a merchant-cash-advance lender that first raised $1.5M on the platform in June 2019 and by its 18th syndicated offering had closed a $20,005,000 secured corporate loan from 588 investors with tickets from $500 to $3,250,000 (Percent blog, December 2023). AltStreet’s 2026 review names Steadypay, The Smarter Merchant, Pollen VC and FAT Brands among the other repeat borrowers, and Aluna Partners and Quiq Capital among the third-party underwriters; Percent’s own site confirms Quiq Capital joined its underwriter program (Percent news page, retrieved September 2026).

Pricing is by auction-style syndication. Percent posts a deal with a coupon range, a term and a minimum, investors submit indications with a rate and an amount, and the deal clears at a coupon within the range once it is fully subscribed. Q3 2025 fundings carried a weighted average coupon of 16.14% and an average term of 14.1 months (Percent Q3 2025 performance report). Investor demand and the originator’s willingness to pay set the coupon, with Percent structuring and marketing in the middle.

What you actually own

You own a note. In the deals we could read about, the instrument is a note issued by a special-purpose vehicle organised for that borrower program, sold under Rule 506(c), and the note’s claim runs to the loan the vehicle made to the originator, often secured by a pool of the originator’s receivables (Percent disclosures; AltStreet, 2026). Percent uses the term asset-based securities for the majority of its book: over 84% of 2025 issuance volume (Percent, January 15, 2026). The remainder are corporate loans, meaning unsecured or lightly secured loans to an operating company, and venture debt. We could not open a note purchase agreement for this piece, so the issuer name, the collateral and the events of default are things you must read in the deal documents.

Distributions, valuations and statuses

Most deals pay interest monthly and return principal at maturity; some amortise. Percent’s deal-status vocabulary is its own default disclosure, so learn it. A deal is Outstanding while it performs. If a borrower misses scheduled payments and does not cure, the deal moves to Work-Out, defined by Percent as a deal with a default and an outstanding principal balance that has neither been charged off nor repaid, while the manager pursues recovery. A deal that catches up becomes Reperforming. If no further recovery is expected, the manager charges off part or all of the balance (Percent blog, Understanding Deal Statuses on Percent, retrieved September 2026). There is no mark-to-market: a note in workout sits at par in your account until it is charged off or repaid. AltStreet found in May 2026 that the public deal pages show only Funding and Outstanding, and that the workout and reperforming states are visible only through the authenticated investor API and portfolio views; log in before you judge the book.

How Percent gets paid at each step

From you: 10% of each interest payment on deals you enter, deducted from each distribution (Percent blog, August 2023; Percent FAQ). From Blended Note holders: 1% a year on assets plus the same 10% of yield (Percent Blended Notes page; WallStreetZen, 2026). From secondary traders: 50 basis points of trade size from each side of a trade (Percent secondary market user guide, 2026). From borrowers: a placement agent fee that BrokerCheck says varies by transaction and is disclosed in each deal’s private placement memorandum, not on the investor pages; assume it is priced into the coupon. From institutions: Percent also syndicates deals for third-party managers and, since 2025, runs its own asset-management arm, where the chief credit officer hire fits (ABF Journal, August 2026). The conflict to name is the obvious one: Percent is paid on volume and on interest, not on losses, and the company that structures, markets and services the note also decides when to call a workout.

This section gives the menu as of September 17, 2026, with what each product is, what it pays and what it costs. The menu changes weekly because the primary market is deal by deal, so treat the coupons as the range printed around mid-2026 rather than a quote.

Single deals (the primary market)

The core product is a note on one borrower program. Minimums are $500 on many deals and higher on some; terms run mostly from 6 to 24 months, with 14.1 months the average on Q3 2025 fundings (Percent Q3 2025 performance report). Coupons on outstanding deals averaged 16.95% at March 31, 2026 and 16.14% on Q3 2025 fundings. The four deal types Percent uses:

• Asset-based securities (SMB and consumer lending): a loan to a non-bank lender secured by its receivables, merchant cash advances or consumer loans. This was over 84% of 2025 issuance (Percent, January 15, 2026). The typical originator is a merchant-cash-advance or small-business lender such as Wall Street Funding.
• Corporate loans: a loan to an operating company, sometimes secured, sometimes not. This is the category with the 11.84% default rate (Percent track-record page, March 31, 2026).
• Venture debt: loans to venture-backed companies, often structured through a specialist lender.
• Trade finance and other: receivables and cross-border trade deals appear on the platform from time to time; we could not verify their share.

Blended Notes

Launched December 16, 2021 with a $25,000 minimum, a Blended Note is a single note whose proceeds Percent allocates across many primary-market deals under stated concentration and eligibility rules (PR Newswire, December 2021). The standard version has a $20,000 minimum in 2026; a bespoke version, with investor-chosen filters, starts at $500,000 (Percent, Blended Notes Explained; The College Investor, 2026). Payments are interest-only monthly for the first 12 months, then principal and interest. Fees are 1% a year plus 10% of yield. Percent has published no realised return series for Blended Notes, and the pooled structure means your note’s return is the weighted result of whatever defaults hit the pool.

The secondary market

Launched February 26, 2026 as Secondary Markets, it is an order book on eligible seasoned deals where holders post asks and buyers post bids, quoted as yields, with a market-depth view on each deal’s page (PR Newswire, February 26, 2026; Alternative Credit Investor, February 27, 2026). As of May 2026 it was enabled on about 4.3% of the deal book (AltStreet). Each party to a trade pays Percent 50 basis points of the trade size (Percent secondary market user guide, 2026). Percent’s own disclosure is that liquidity is not guaranteed and that no buyer may match your terms.

Cash, IRAs, and what has changed

There is no cash product and no stated yield on idle balances. IRA investing runs through the custodians named above, with Percent’s investor-relations team executing the investment (Alto help center; Percent blog). The fee changed on September 1, 2023: deals entered from that date pay Percent 10% of interest, where earlier deals paid nothing on the investor side (Percent blog, Broker-Deal Approval and New Fee Structure, August 2023). Several review sites still print “no fees to investors”; that was true before September 2023 and was not true in September 2026. We found no product that Percent has shut down; what has changed is the mix, with asset-based deals crowding out corporate loans, and the addition of an institutional and asset-management arm in 2025 and 2026.

This section counts every fee, direct and embedded, then runs $25,000 through the platform for 14 months so you can see what is left. Percent’s fee is one of the cleanest in retail private credit, and the thing that eats your return is not the fee.

Every fee the investor pays

• Service fee: 10% of each stated interest payment, collected from each distribution, on deals entered from September 1, 2023 (Percent blog, August 2023; Percent FAQ). A 15% coupon carries a 1.5-point fee and pays 13.5%; a 14% coupon nets 12.6%. There is no fee on principal, no fee on a loss and no fee on a deal in workout that pays nothing, which is the right way round for the investor.
• Blended Note management fee: 1% a year of assets, on top of the 10% of yield (Percent; WallStreetZen, 2026). At the March 2026 platform coupon that is a combined haircut of about 2.7 points.
• Secondary market: 0.5% of trade size per side (Percent secondary market user guide, 2026), so a round trip costs 1% of the position, plus whatever discount the buyer demands.
• Account, wire and custody fees: none stated on the investor pages we could reach. IRA custodians charge their own schedules, typically $10 to $35 a month or a percentage of assets, a real cost on a $500-minimum product that Percent does not control.
• Embedded borrower fees: Percent Securities charges the issuer a placement agent fee that varies by deal and is disclosed in each private placement memorandum (FINRA BrokerCheck). The coupon you receive is what is left after the originator has priced that cost. Treat it as an unknown of perhaps 1 to 3 points that never appears on your statement.
• Cash drag: a $500-minimum platform with monthly distributions leaves cash idle between deals, at what we must assume is 0%. Two weeks of idle cash per 14-month cycle costs about 0.5 points a year at a 16% coupon.
• Taxes: interest is ordinary income on a 1099-INT (Percent FAQ). At 37% federal plus the 3.8% net investment income tax, a 15.3% net coupon is 9.1% after tax, a bigger haircut than Percent’s fee.

Worked example: $25,000 for 14 months

Assume you spread $25,000 across 50 deals at $500 each, that the book earns Percent’s March 31, 2026 weighted coupon of 16.95%, and that the average deal runs the Q3 2025 average term of 14.1 months (call it 14). All figures are before tax.

1. Gross interest: $25,000 × 16.95% × 14/12 = $4,944.
2. Percent’s service fee, 10% of that: $494. Net coupon 15.26%.
3. Interest actually received if nothing defaults: $4,944 − $494 = $4,450, or 15.3% annualised.
4. Then the losses. Percent’s charge-off rate was 0.90% of principal at March 31, 2026 (AltStreet’s dollar-weighted recount says 1.17%). Take 1.0%: $250 of principal gone, plus the interest that slice would have paid, about $45. Net: $4,155, or 14.2% annualised.
5. Distress case. If your 50 deals track the platform’s 5.90% lifetime distress rate, about three of them stop paying. Assume they pay nothing from day one, are worked out over two years and recover 60% of principal (an assumption; Percent publishes no recovery series). The other 47 deals earn $23,500 × 16.95% × 14/12 = $4,647 gross, $4,182 after the fee. You lose $600 of principal and have $1,500 stuck past month 14. Overall: $3,582 on $25,000, or 12.3% annualised on the whole book, with 6% of it locked at month 14 and $600 of that never coming back.
6. That is still not what Percent’s investors got. Percent’s own trailing figure for the 12 months to June 30, 2026 was 11.9% net of losses and 10.5% net of losses and fees. On the realised 10.5%, $25,000 for 14 months earns $3,063. The gap between the distress case and the realised figure is what no default table shows: idle cash, workouts that pay nothing for years, and a book whose coupon at funding is lower than the outstanding average.
7. The liquid comparison: a Treasury bill ladder or government money-market fund at an assumed 4% pays $1,167 on $25,000 over 14 months, with no default, no accreditation, no idle-cash problem and no workout. Use the day’s bill yield when you read this; 4% is an assumption for the example, not a quote.

The Blended Note version of the same money needs $20,000 and carries 1% a year plus 10% of yield: on a 16.95% gross pool that is 2.7 points of fee and a 14.3% coupon before losses. It buys diversification without the clicking, at about 1 point a year over doing it yourself.

The fee costs you about 1.7 points; the credit and the idle cash cost you 3 to 5 points, and the second number is the one the coupon page does not show. Percent’s fee is fair; the coupon is not a return.

This section sets the platform’s own claims against what the book has delivered and explains the gap. Percent publishes more than any retail private-credit rival, which makes the gaps visible, and that is to its credit.

What Percent claims

The track-record page claims $1.95B funded across 1,048 deals since 2018, a 16.95% weighted average outstanding coupon, a 3.70% blended default rate across every deal ever funded, an 11.84% default rate on corporate loans, and a 0.90% charge-off rate (Percent track-record page, March 31, 2026). Percent’s 2025 Private Credit Outlook, released January 14, 2025, put its gross returns after losses for 2024 at 14.6% (Percent press release; Crowdfund Insider, February 2025). All of these are claimed, computed by Percent, unaudited, and the 14.6% is before the 10% fee.

What has been realised

The best realised figures are Percent’s own trailing twelve months, which it defines as aggregate net interest paid to investors divided by average AUM over the period, across every deal on the marketplace: 11.5% net of losses and 10.1% net of losses and fees for the year to March 31, 2026, then 11.9% and 10.5% for the year to June 30, 2026 (Percent Q1 2026 and Q2 2026 performance reports). It is the only series in the record that subtracts both the credit losses and the fee, and it sits 6.5 points below the outstanding coupon. It was also a benign stretch: Q1 2026 recorded zero charge-offs, and Q2 2026 was a quarter in which repayments outran new fundings, meaning deals were coming due and paying.

The realised distress record, per AltStreet’s May 2026 recount of the investor API: 49 deals in active workout representing $47.9M of funded principal, 12 deals charged off representing $18.3M, 2 reperforming after a prior default, a lifetime distress rate of 5.90% by count (workouts plus charge-offs plus recoveries), and a charge-off rate of 1.17% by dollar on completed deals against Percent’s 0.90%. The corporate-loan default rate of 11.84% is Percent’s own, and it is a category figure: on the corporate slice of the book, one loan in eight has defaulted.

The same recount splits the book by underwriter, and the split is the most useful number in this review. Percent underwrote 733 of the 1,067 deals itself, 68.7%, with a 2.59% distress rate; deals underwritten by Aluna Partners showed 33.33% distress (24 of 72) and by Quiq Capital 41.67% (5 of 12) (AltStreet, May 2026). Those are small samples and AltStreet’s arithmetic, not Percent’s, but the direction is not subtle: the platform’s own credit work has performed, and the outsourced credit work has not.

Why the numbers differ

Default, distress and charge-off are three different events. A default is a missed payment; on Percent’s own definition the deal then enters workout. A charge-off is the manager giving up. Between the two sits the workout, which can run for years: a deal in workout counts in the default rate and the distress rate but not in the charge-off rate, and pays you nothing while it sits there. That is why 0.90% is true and misleading at the same time. A platform with 49 open workouts holding $47.9M has not yet decided how much it has lost. Reviewers’ reports of workouts running two to five years (Trustpilot via AltStreet, 2026; unverified customer report) fit the mechanism.

The second reason is mix. The 3.70% blended figure is a lifetime, count-weighted average across a book that is more than four-fifths asset-based by recent issuance. Asset-based deals fail differently from corporate loans: the collateral is a pool of short receivables that keeps paying even when the lender is stressed, so those deals default less and recover more. Corporate loans fail whole. The 11.84% corporate figure is the honest part of the disclosure; the blended 3.70% is what the marketing leads with.

The third reason is vintage. The book grew fast: $532.4M of issuance in 2025 alone against $1.95B lifetime (Percent, January 2026). Most of the dollars ever funded went out in the last two years, and a 14-month note funded in 2025 has barely had time to default. Lifetime default rates on a young, growing book understate the eventual rate. Percent has not published a vintage table, meaning defaults by year of origination, and that is the most useful thing it could add.

The industry benchmark

Percent’s 3.70% blended and 5.90% distress rates sit inside the range the institutional market printed in the same period. The Proskauer Private Credit Default Index recorded 2.51% for Q2 2026 across 716 loans and $195.6B of original principal, down from 2.73% in Q1; Fitch, on a broader definition that counts payment deferrals and payment-in-kind, put the US private credit default rate at a record 6.0% for the 12 months to April 30, 2026; Lincoln International’s shadow default measure, the share of companies capitalising interest they cannot pay in cash, reached 6.4% in Q4 2025 (Proskauer, 2026; Fitch via Reuters and Bloomberg, May 2026; Fortune, February 22, 2026). The Financial Stability Board’s Report on Vulnerabilities in Private Credit (May 6, 2026) added that the market had not been tested at its present size in a severe downturn. Percent’s borrowers, small-business lenders and merchant-cash-advance funders, are smaller and riskier than the sponsor-backed companies in those indices and the first to feel a small-business downturn, so a comparable default rate is not a compliment; it is what a 17% coupon should buy.

This section explains how you get out, which is by waiting. Percent’s liquidity is the maturity date; the secondary market changes that for a small share of deals, at a price.

The base case: hold to maturity

There is no redemption, no interval tender and no early-repayment right on a single deal. You receive interest monthly and principal at maturity or on the amortisation schedule; the average term at funding was 14.1 months in Q3 2025 (Percent performance report), with the menu running mostly 6 to 24 months and some notes to 36. Percent’s argument, made explicitly in its Q2 2026 report, is that a book of short notes is self-liquidating, so it never needs a gate. That was true in Q2 2026, when repayments outran new issuance. It is true of performing deals only.

The secondary market

Secondary Markets went live February 26, 2026 (PR Newswire; Alternative Credit Investor, February 27, 2026). Sellers post an ask, buyers post a bid, both quoted as yields; Percent matches and settles, and each side pays 50 basis points of trade size (Percent secondary market user guide, 2026). Three facts limit its usefulness. It covered about 4.3% of the deal book in May 2026 (AltStreet), so for most positions there is no market at all. Percent’s own text says liquidity is not guaranteed. And a deal in workout will not trade near par on any order book, so the positions you most want to sell are the ones you cannot. Expect it to be useful for rebalancing performing notes at a discount of a point or two plus the fee, and useless for escaping a bad one. Percent has published no volume, spread or trade-count figures.

Time to exit in practice

For a performing deal, the realised time to exit is the term: 6 to 24 months. For a deal in workout, it is however long the recovery takes, and the only figures in the record are reviewer reports of two to five years (unverified customer report). Percent’s 49 open workouts in May 2026 against 1,067 deals funded means roughly one deal in twenty-two was in that limbo.

If Percent fails

Your notes are obligations of the deal vehicles, not of Percent Technologies, and your cash sits in a brokerage account at Percent Securities, a SIPC member (Form X-17A-5/A, FY2024). If the broker-dealer failed, cash and securities held in custody for you would be covered by SIPC up to $500,000, of which $250,000 for cash; whether Percent Securities self-custodies or uses a clearing firm we could not confirm. SIPC does not cover a note that defaults. What would actually be lost in a platform failure is the servicer: someone has to collect from originators, chase workouts and distribute cash, and the note documents should name a backup servicer or trustee. That is the clause to read, and we could not read it for this piece.

This section gives the forms, the character of the income and the rules that bite, with Code sections. The short version is that Percent income is ordinary interest, which is simple to file and expensive to earn.

The forms

Percent’s FAQ says most investments on the platform are taxed as ordinary income and that investors receive a consolidated Form 1099-INT each year (Percent FAQ, retrieved September 2026). The note interest, net of Percent’s 10% service fee, is reported under IRC §6049, which requires a 1099-INT for interest of $10 or more. If a note is issued at a discount or accrues interest that is paid later, a 1099-OID may appear under the original-issue-discount rules of §§1271 to 1275; ask before buying such a deal in a taxable account. If a Percent product were ever structured as a partnership you would receive a Schedule K-1 instead, so check the offering document for the word “partnership.”

Character and rate

Interest is ordinary income under §61(a)(4), taxed at your marginal rate up to 37% under §1(j) for 2026, plus the 3.8% net investment income tax under §1411 for modified adjusted gross income above $200,000 single or $250,000 joint. There is no qualified-dividend rate, no long-term capital gain rate and, because these are loans and not collectibles, no 28% collectibles rate under §1(h)(5). A 15.3% net coupon at 40.8% all-in is 9.1% after federal tax; California or New York adds more. Percent’s 10% fee is deducted before the interest is reported, so you are not taxed on the fee, unlike a fund whose management fee is non-deductible under the §67(g) suspension of miscellaneous itemised deductions.

Losses

A charged-off note in a taxable account is a nonbusiness bad debt under §166(d): deductible only when wholly worthless, and only as a short-term capital loss, which offsets capital gains and then $3,000 a year of ordinary income under §1211(b). That asymmetry matters: your interest was taxed at 37% as it arrived, and the principal you lose comes back at capital-loss rates, slowly. A deal in workout is not worthless and generates no deduction until Percent charges it off, which can take years.

IRAs and UBTI

Notes are permitted IRA assets under §408, and Percent supports Alto, Forge Trust, Rocket Dollar and Strata as custodians. Interest is excluded from unrelated business taxable income under §512(b)(1), so a Percent note in an IRA generally produces no UBTI; the exception, debt-financed property under §514, does not arise when the IRA buys the note with its own cash. An IRA turns 37%-taxed ordinary interest into deferred (traditional) or exempt (Roth) income, the strongest tax argument for the product, subject to the custodian’s fees; a loss inside an IRA is not deductible.

State issues

Interest is sourced to your state of residence, so Percent’s notes should not create a non-resident filing obligation in the borrower’s state, unlike a real estate partnership.

This section starts with the risk that ends the investor and works down to the dated record, which is clean of regulatory action and litigation as far as the search can see; the risks are structural.

The risk that ends the investor

The originator. Every Percent note is a loan to a lender, and the failure mode of a non-bank lender is not a slow decline but a stop: an originator paying 16% on wholesale funding runs into a bad cohort of merchant advances, its own lenders pull lines, and the receivables that secure your note turn out to have been double-pledged, or unpaid, or smaller than the borrowing base said. The autumn 2025 collapses of Tricolor, a subprime auto lender that filed Chapter 7 on September 10, 2025 and whose former chief executive, chief financial officer and finance director the SEC charged on August 18, 2026 with double-pledging hundreds of millions of dollars of loans across asset-backed offerings, and of First Brands Group, which filed Chapter 11 on September 28, 2025, were this kind of event at institutional scale (SEC press release 2026-77; Business Wire, September 28, 2025). Percent’s protection is the underwriter, the borrowing-base covenants and the servicer’s monitoring, none of which you can audit from outside. Diversification across originators is your only tool, and it does nothing against a bad vintage that hits many small-business lenders at once.

Concentration in a few originators and underwriters

Percent’s volume is concentrated. Wall Street Funding alone had run 18 syndicated offerings on the platform by December 2023, the latest a $20M loan (Percent blog); AltStreet’s 2026 review describes the book as dependent on a handful of repeat borrowers, and 140-plus borrower programs (January 2026) are not 140 equal-sized borrowers. Because a repeat originator’s new deal often funds its next cohort of advances while its old deal is still outstanding, an investor who buys every Wall Street Funding note has one credit, not ten. The underwriter split adds a second concentration: a third of the deals were credit-checked by someone other than Percent, and that is where the distress sits.

Valuation: nothing is marked

A note in workout sits at par until it is charged off. Your dashboard’s account value is principal outstanding, not a valuation, and the 0.90% charge-off rate understates the eventual loss on 49 open workouts by an amount nobody has published. This is an unlisted fund’s NAV problem in a rawer form, and the public deal pages compound it: AltStreet found in May 2026 that workout and reperforming states appear in the investor API and not on the marketing pages.

Platform risk

Percent is a venture-backed private company with $48.2M of disclosed funding through May 2023, no published financials, a CEO change in June 2026 and a shift toward institutional asset management. The 27-month AUM growth streak ended in Q2 2026. None of that is a red flag; all of it is a reminder that the servicer of your notes is a start-up.

The dated record

• Regulatory actions: none found. Searches of SEC, FINRA and state actions for Percent Technologies and Percent Securities returned no enforcement, and the FINRA BrokerCheck report for Percent Securities, LLC (CRD 314782) shows the firm registered August 11, 2023 with no disclosure events as of September 2026 (FINRA BrokerCheck; Form X-17A-5/A).
• Lawsuits: none found. Two 2026 review sites that searched dockets report no confirmed lawsuits against the company (AngelInvestorsNetwork; AltStreet, 2026). We found no class action, arbitration award or bankruptcy involving Percent as a party.
• Fee change, September 1, 2023: deals entered from that date carry the 10%-of-interest service fee; earlier deals did not (Percent blog; Percent FAQ). Investors who joined before then saw a real cut in net yield on new money.
• Complaint patterns: Trustpilot rated Percent 3.1 out of 5 on 14 reviews when AltStreet checked in May 2026, and 4 out of 5 on 25 reviews on the percent.com listing in September 2026 (Trustpilot). The negative pattern is consistent: a deal enters workout, the timeline turns vague, communication slows, and some reviewers report losing an entire position with little recovery. The positive pattern praises documentation, transparency and short terms. All of this is unverified customer report on a sample of 14 to 25. We found no BBB profile with a complaint count for Percent, and no app-store rating we could verify.
• Press scrutiny: the trade press coverage we found (FinTech Futures, May 2023; Alternative Credit Investor, 2026; ABF Journal, August 2026) reports announcements rather than investigations. No reporter has independently audited Percent’s default statistics; the closest is AltStreet’s API recount.

Two lists; the dividing line is whether you will treat Percent as a portfolio of 40 or more small credits or as a place to chase a 17% coupon.

Who it is for

• An accredited investor with $25,000 or more to allocate to private credit who will spread it across at least 40 deals and a dozen originators, hold each to maturity, and reinvest monthly.
• Someone who wants short duration. With most notes at 6 to 24 months, a Percent book turns over faster than any private credit fund, with no gate.
• An investor with a self-directed IRA at Alto, Forge Trust, Rocket Dollar or Strata, for whom ordinary-income interest is the right thing to shelter.
• A reader who values disclosure. Percent publishes default, charge-off and category figures, quarterly reports and deal-status definitions; no retail rival publishes as much.
• Someone who takes the 10.5% Percent realised for the year to June 30, 2026 as the expected return and thinks it a fair price for the risk.

Who should skip it

• Anyone who is not accredited: the gate is verified, not self-certified.
• Anyone who would put less than $10,000 in. Below that, you cannot reach 20 positions at $500, and one workout is 5% of your book.
• Anyone who needs the money on a date. There is no redemption, the secondary market covers few deals, and a workout can run past two years.
• Anyone in the 37% bracket investing taxable money who has not first filled an IRA: the after-tax net on a 15.3% coupon is about 9.1%.
• Anyone who wants a manager to pick for them and will not pay 1% a year for a Blended Note.
• Anyone whose reaction to the 11.84% corporate-loan default rate is to reach for the highest coupon on the screen.

This section sets Percent beside the five assigned competitors and a plain liquid alternative, one row each, then says which reader goes where. Figures are as of the dates in each cell; the liquid row uses an assumed yield.

Which reader goes where. If you want short-duration private credit with a visible default table and no gate, Percent is the best-disclosed choice in the category and its 10.5% realised net is a real number; the price is accreditation, the work of building 40 positions and a workout tail. If you want the same exposure without accreditation, Groundfloor is the only $10 option, at the cost of single-asset real estate loans, a longer default tail and an issuer whose auditor doubts its going concern. If you want a fund with quarterly liquidity and an institutional manager, CCLFX returned 9.57% a year net and charges 1.79%, but the Q1 2026 proration shows the tender window is a ceiling, not a floor. Willow Wealth is the cautionary case: higher fees, an income fund that had to be sold and a loss record Percent has not matched. Supervest is a narrower, riskier version of Percent’s merchant-cash-advance deals, with an unsecured note as the instrument. Heron Finance is closed to new money and is in the table so that nobody searches for it. If you cannot say why you need 10% rather than 4%, the Treasury ladder pays 4% with no accreditation and no workout.

This section gives the sequence of steps and the six things to read before you wire anything. The account takes a day or two; the reading takes an evening.

The steps

1. Sign up at percent.com with an email and password, then complete the accredited investor questionnaire, about ten minutes (Percent FAQ). Choose individual, joint, entity, trust or IRA. For an IRA, open the custodial account at Alto, Forge Trust, Rocket Dollar or Strata first and have the custodian’s account number ready.
2. Upload verification documents. Under Rule 506(c) Percent must verify, so expect to provide two years of income evidence, a net-worth statement with account statements, or a third-party letter from a CPA, attorney or adviser. Verification takes up to 48 hours (Percent FAQ).
3. Complete the brokerage account agreement with Percent Securities, LLC, including the arbitration clause and the custody terms. Read the section on uninvested cash; we could not confirm whether it earns anything.
4. Link a bank account and fund by ACH or wire. Start with the amount you will deploy in the first month, not your whole allocation, because cash appears to earn nothing while it waits.
5. Browse the primary market. Each deal page shows the originator, the asset type, the coupon range, the term, the minimum, the underwriter and the documents. Submit an indication with your amount and rate; deals close when subscribed.
6. After close, interest arrives monthly to your Percent cash balance and principal returns there at maturity. Track statuses in the portfolio view, not the public deal page.

The six things to read before wiring money

1. The track-record page and the latest quarterly performance report. Write down the blended default rate, the corporate-loan default rate, the charge-off rate and the trailing net after losses and fees. If the trailing net has fallen more than two points from the 10.5% of the year to June 30, 2026, ask why before you fund.
2. The deal’s private placement memorandum and note purchase agreement. Find the issuer’s legal name, the collateral, the borrowing base, the events of default, the placement agent fee, the servicer and any backup servicer. No backup servicer means platform risk on top of credit risk.
3. The originator’s history on Percent, and the underwriter’s. Count its deals, its repaid deals and any workouts. A first-time originator is a first-time credit, and a third-party underwriter’s record on the platform is a second thing to count.
4. The fee disclosure. Confirm the 10% of interest, whether the deal is pre- or post-September 1, 2023 in fee terms, the 0.5% secondary-market fee if you plan to trade, and the Blended Note’s 1% if that is what you are buying. There should be no fee on principal.
5. The deal-status definitions. Read Percent’s Understanding Deal Statuses post so that Work-Out and Reperforming mean the same to you as to the platform, and know that a workout is carried at par.
6. The FINRA BrokerCheck report for Percent Securities, LLC, CRD 314782. It showed no disclosure events in September 2026; check that nothing has been filed since. It is the only regulatory document that speaks directly about the firm holding your cash.

Percent is the most honest product in retail private credit and it is still a product where the marketing number is 60% higher than the realised one. Both halves are true and the rating follows from holding them together. The honesty: a broker-dealer registration since August 2023 with a clean BrokerCheck, a fee charged only on interest actually paid, published default and charge-off rates by category, quarterly reports with a net-of-everything figure, defined deal statuses, and a book of short notes that has never needed a gate. The gap: a 16.95% coupon against a 10.5% net for the year to June 30, 2026, an 11.84% corporate-loan default rate beneath a 3.70% blended one, 49 workouts holding $47.9M carried at par, third-party-underwritten deals with distress rates above 30%, no vintage table, no recovery series, no published Blended Note returns, and a public deal page that shows less than the logged-in one. We rate it 3.5 out of 5: a well-built machine for a risky asset, at a fair price, with disclosure good enough to show you exactly where the risk sits.

The rating would move to 4 if Percent published a vintage default table and a realised recovery rate on charged-off and worked-out deals, and if the trailing net after losses and fees held above 10% through a year in which the small-business credit cycle actually turned. It would move to 3 if the workout count passed 75 without a matching rise in charge-offs, meaning the platform was letting losses sit rather than recognising them; if a large repeat originator such as Wall Street Funding entered workout; or if the AUM decline of Q2 2026 ran to three consecutive quarters, which would ask whether the institutional strategy is taking the best deals off the retail shelf. It would move to 2 if any regulatory action touched Percent Securities or if a deal’s collateral proved to have been misrepresented.

What to watch, with dates. The Q3 2026 performance report, due in October or November 2026, for the trailing net after losses and fees against the 10.5% of June 30, 2026 and for AUM against $346.9M. The track-record page for the blended and corporate default rates against 3.70% and 11.84%. The workout count against 49 (May 2026). Secondary market coverage against 4.3% of deals, and any volume or spread figure Percent publishes. The BrokerCheck disclosure section for CRD 314782, clean as of September 2026. And the Fitch default series, with the record 6.0% for the year to April 30, 2026 as the reference point.

Nothing here is investment advice; it is our reading of the public record as of September 17, 2026. We take no referral fees from Percent or any platform we review and hold no position in any of them.