Our take on SALT Lending
The bottom line:
If you’re looking for a crypto platform that will allow you to borrow cash against a small variety of cryptocurrencies in your portfolio, then SALT Lending is a viable option. This centralized finance lending platform also helps users protect their collateral from a market downturn and charges very few fees for its products. Furthermore, its flexible loan features make it easy to customize loans to users’ liking.
Important Note: On the 15th of November, 2022, SALT Lending paused withdrawals on its platform, citing the FTX bankruptcy as the cause. The pause means that users who put funds into SALT’s Earn product and those who deposited collateral for loans are unable to access their funds for the meantime. It appears that SALT kept some funds on the FTX exchange and is a victim of its bankruptcy.
The platform says it’s assessing the impact of the FTX collapse on its business and hasn’t yet offered a final word on how much it was affected. Meanwhile, SALT’s imminent acquisition by online investing platform Bnk To The Future was called off due to the situation.
In order for a crypto platform to stand out, it needs to offer something unique to users — and that’s precisely what makes SALT Lending a top competitor in the crypto lending market. Established in 2016, SALT Lending is a one-of-a-kind crypto lending platform on which users can take out cash loans using their crypto holdings as collateral. This allows borrowers to quickly and easily access cash loans without the long waits or requirements of traditional lenders.
That alone is a relatively unique perk, but it’s hardly all that SALT Lending offers. In addition to crypto-backed loans, SALT Lending rewards users in a number of interesting ways — and for a few different reasons — including having a low loan-to-value ratio. Here’s what you should know about this crypto lending platform, including the pros, cons, and features it offers to users.
What is SALT Lending?
SALT Lending is a centralized crypto platform that allows users to borrow cash against their crypto holdings. When borrowers use SALT Lending to take out a loan, their crypto is held by the platform as collateral until the loan is repaid. Users can put up any number of tokens as collateral for their loans, including Bitcoin, Ether, Bitcoin Cash, Dogecoin, Ripple, SALT, USDC, PAX, TUSD, Litecoin, Dash, and PAX Gold. The platform was one of the first to offer these types of loans to users — and it has remained at the forefront of crypto-backed loans ever since.
Minimum borrowing amounts start at $1,000, contingent on your location, and the platform offers two types of loans: personal and business. Loan rates vary, but can be extremely low for many borrowers, and the platform doesn’t charge any other fees. Borrowers will pay $0 for withdrawal fees, origination fees, custody fees, prepayment fees, or even bounced ACH fees. That keeps the cost of borrowing very low on this platform.
SALT Lending key features
Over the years, SALT Lending has added a number of unique features to the mix in addition to the crypto-backed loans it offers. This includes the SALT token, the platform’s native token, which gives users the ability to pay for memberships or take advantage of other perks on the platform. SALT Lending offers these tokens as rewards to borrowers whose loan-to-value ratios are lower than average, which can be a huge benefit to users who want to earn for keeping their LTVs low.
- SALT token: SALT is an ERC-20 token originally used for borrowers to gain membership to the lending platform, but now isn’t needed to take out a loan. Investors can use SALT tokens for up to 20% of their loan collateral, pay for any fees using the platform, and get higher rewards rates with StackWise.
- StackWise Rewards: SALT Lending automatically enrolls customers into the StackWise program, which rewards users with rebate-like BTC, ETH, or USDC deposits into their account when they make loan payments. It’s smart to use those deposits to manage the LTV of the loan or make further payments, but users aren’t required to do so and may trade or sell the rewards as they see fit.
- Stabilization: If the volatile market causes your LTV ratio to exceed 90.91% and your collateral value to drop, SALT won’t outright liquidate your collateral. Instead, it will convert your collateral to USDC to maintain value and offer the option to reenter your positions when the price increases. Stabilization fees are 5%, with a free first conversion, then following conversions are 1%.
- Security: SALT Lending partners with Fireblocks, a digital asset management company that leans heavily into multiple layers of security to ensure asset protection. Furthermore, SALT Lending has insurance against cyber incidents like data loss and theft.
How does a SALT Lending loan work?
To sign up for a SALT Lending loan, head to the sign-up page to enter your email, set a password, verify your email, then input personal information and finalize the process. There is a KYC process, but to create an account, only your name, email, and location is required.
Next, you can set your loan amount, with any state restrictions in mind, and choose your collateral. Bitcoin, Ethereum, Litecoin, SALT, USDC, and USDT are all supported for collateral. You can set your LTV at 20%, 30%, 50%, or 70%, and your APR and loan repayment terms are adjusted accordingly based on if you are making interest-only payments or principal and interest payments. For example, a $150,000 loan at 50% LTV paid over one year with principal and interest payments requires $300,000 in collateral and SALT advertises an APR of 3.82%.
SALT Lending loan details
SALT loans don't have many fees attached — in fact, the only fees you'll find are fees for stabilization during market downturns. Here's a breakdown of what you can expect from SALT Lending:
|Collateral Requirements||20%, 30%, 50%, or 70%|
|APR||As low as 0.52%|
|Terms||12, 36, or 60 months.|
|Loan Origination Fee||$0|
APRs on SALT Lending loans vary based on LTV, terms, and any rewards from the StackWise program. Here’s a breakdown of approximate APRs you can expect on a SALT loan based on LTVs:
|Net APR (Principal & Interest)||0.52%||2.17%||3.82%||5.49%|
|Net APR (Interest-Only)||0.95%||3.95%||6.95%||9.99%|
Information accurate as of September 2022
SALT Lending margin calls
All crypto loans are subject to margin calls in a market downturn, and SALT Lending's loan product is no different. Margin calls are triggered when your crypto assets decline in value, meaning your loan-to-value ratio goes up. Lenders like SALT give you the opportunity to add more collateral to your loan before they liquidate your loan collateral. SALT's margin call process works as follows:
- Once your loan hits a 75% LTV, you are issued your first margin call warning. SALT does not take any action at this point.
- Once your loan hits an 83.33% LTV, you are issued a formal margin call. You have 48 hours to return the loan to a 70% LTV, which can be done by paying down a portion of the loan, or adding more collateral in the form of additional crypto.
- Once your loan hits 90.91%, SALT will "stabilize" your loan collateral by converting your tokens to USDC. You will be hit with a 5% "stabilization fee" if this happens, so borrowers should attempt to avoid this outcome.
SALT Lending pros and cons
- Loans are easy to access and approval is quick
- Low APRs and no fees on borrowing
- Opportunities to earn tokens for low LTVs
- Crypto used as collateral is tied up temporarily
- Centralized exchange, so it requires more personal information
SALT Lending pros
There are a few different benefits that make SALT Lending a standout in the crypto borrowing space, including:
Loans are easy to access and approval is quick
Unlike traditional loans, borrowers don’t have to wait long for loan approval on the SALT Lending platform. If you have tokens to put up as collateral, chances are good that you can access a loan on this platform, especially since SALT doesn't require a credit check. All borrowers have to do is follow a few steps, put up their tokens as collateral on the loan, and then receive the funds they need to borrow. By cutting down on the laborious paperwork, the process of borrowing is a lot faster than it would be with a bank or credit union.
Low APRs and no fees on borrowing
When you borrow on the SALT Lending platform, there are $0 fees for just about everything. You won’t pay anything for withdrawals, custody, prepayment, or origination, and you won’t even owe any fees if your ACH transfer bounces. That keeps borrowing cheap on this platform — and the APRs for borrowing tend to be lower than average, too. As of late August, borrowers LTVs below 20% were paying well under 1% interest on their loans — while borrowers with the highest LTVs were paying a little over 5%.
Rewards for borrowers
One of the most unique perks of using SALT Lending to borrow against your crypto is that borrowers have the opportunity to earn rewards on their loans. When users make payments, SALT Lending rewards users with ETH, BTC, or USDC to use however they see fit. Borrowers can also use these rewards for making interest payments, topping off collateral, and more.
SALT Lending cons
In some cases, there may be a few downsides to using the SALT Lending platform. The possible cons of using this platform include:
Crypto used as collateral is tied up temporarily
The SALT Lending platform requires borrowers to put up collateral in return for their loans. This can make it easier to borrow cash from SALT, but your crypto assets will also be tied up while your loan is being paid off. What that means is that you won’t have access to your crypto if you need it during that time — which can cause a number of problems, including the possibility of losses due to a volatile market.
Requires borrowers to provide personal information
The SALT Lending platform is centralized, which means that borrowers or users are required to provide certain types of identifying information to meet the Know Your Customer requirements that centralized platforms are held to. This verification process can take a while and can be relatively invasive, as it may require you to provide a copy of your ID, your Social Security number, and other personal information. It also means that crypto users who opt to borrow with this platform can’t be anonymous, which can be a big downside for some borrowers.
Who SALT Lending is best for
Many people take out crypto loans for margin trading, but SALT Lending loans are available for a variety of purposes. If you’re a passive investor who needs cash but don’t want to sell your Bitcoin or Ethereum holdings, a SALT loan lets you do so with little to no barriers. Here are the type of people who SALT Lending would be best for:
- Crypto investors with low credit scores: Because SALT Lending doesn’t require credit checks — just the right collateral — people with low credit scores can get rates comparable to traditional personal loans. Instead of paying high APRs for a personal loan due to bad credit or no credit, users can enjoy better rates despite their credit.
- Crypto loan beginners: Investors holding Bitcoin or Ethereum will enjoy SALT Lending’s forgiving interest rates, fees, and LTV ratios. Furthermore, its stabilization feature can protect users’ assets against market dips and downturns, so beginners can convert their collateral to mitigate value losses.
- Investors with large unrealized gains: If you've held coins like BTC or ETH for a long time and your investment value increased significantly, you can unlock that value through a SALT loan. Instead of selling your tokens and facing crypto taxes on those gains, you can use BTC or ETH as collateral and take out a cash loan against them instead, allowing you to access liquidity.
- Crypto investors looking to purchase a home: If you are unable to access a traditional home mortgage, you can use a loan from SALT lending in the fashion of a crypto mortgage. Borrowing cash against your crypto to acquire a home or rental property allows you to diversify your portfolio without needing to sell your crypto.
Alternatives to consider
If you aren’t completely sold on SALT Lending, there are a few alternatives to consider. DeFi lending protocols can allow borrowers to remain anonymous, while other CeFi platforms offer more than just lending products.
Compound: Good for DeFi enthusiasts
If decentralized finance is more appealing, then picking DeFi lending protocol Compound for your crypto borrowing needs is a good option. Compound allows users to quickly borrow and repay crypto loans by simply connecting a compatible wallet. Furthermore, users can borrow more than just stablecoins with their collateral, as AAVE, BAT, ETH, and other major coins (except BTC) are available. Learn more with our full Compound review.
Cake DeFi: Good for borrowing and trading
Borrowing is a new product on Cake DeFi, and only available on the mobile app so far, but with a near-full suite of products like earning, lending, and trading available, it becomes a one-stop CeFi shop for crypto enthusiasts who want all their favorite trading options in one place. However, Cake DeFi only lends its internal stablecoin, DUSD, limiting your options or adding extra steps to acquiring the currency you want. Learn more with our full Cake DeFi review.
Nexo: Good for international borrowing
Nexo allows users to borrow a variety of international currencies, including USD, Euro, and Canadian Dollar. Furthermore, there's a variety of supported assets for collateral, like BTC (50% LTV), ETH (50% LTV), USDT (90% LTV), and MATIC (33% LTV). There's tons of flexibility baked into Nexo loans since borrowers aren't stuck to a repayment schedule and they can repay in any currency. Like SALT, Nexo also doesn't require a credit check and quickly processes loans in under 24 hours. Unfortunately, Nexo's loan rates tend to be higher than SALT's. Learn more with our full Nexo review.
Is SALT Lending right for you?
SALT Lending can be right for you if you want flexible loan terms, LTV requirements, rebates back on your loan, and possible APR reductions during your loan. Furthermore, if potential market downturns make you nervous about your LTV crossing the threshold, SALT’s stabilization feature may save you from heavy losses and allow you to reenter your positions when the market is more to your liking. It’s definitely a solid option to consider if you have no or bad credit, since it doesn't require a credit check, and need cash for your BTC, ETH, LTC, and other holdings.
Final thoughts on SALT Lending
SALT Lending sets itself apart from the competition by offering a full suite of loan features, partnerships with asset security firm Fireblocks, and flexible repayment options. Additionally, its interface and easy sign-up process makes it quick and simple to acquire a loan and get the cash needed to cover emergencies or fund a business.
Frequently asked questions
How do you get a SALT loan?Expand to learn more
You can get a SALT loan by heading to its website, navigating to its sign-up or login page, providing your email, and setting a password. After, you verify your information and determine how much you want to borrow, how much collateral you want to put up, and if you want to make interest-only payments or interest and principal payments over the loan’s term length. SALT will deposit your loan into your bank account or pay out in stablecoins to fund your loan.
Is it safe to borrow from SALT Lending?Expand to learn more
SALT Lending partners with asset management firm Fireblocks, used by multiple exchanges and blockchain-focused companies to secure its transactions and deposits. Furthermore, SALT Lending states that it has insurance against cyber crime, hacks, data loss, and more, to protect customers from collateral loss due to these incidents. These features make it relatively safe, but there’s always a risk with cryptocurrency, so you should never trade or invest what you can afford to lose.
What can I do with a SALT loan?Expand to learn more
You can do just about anything with a SALT loan, including trading or re-investing in cryptocurrency, paying off credit card debt, covering an emergency, and more.
Does SALT Lending report to the IRS?Expand to learn more
No, but the company advises users to self-report income earned on its platform to the IRS.