When lending to a business through Crowd2Fund, you take on the risk associated with making the loan. Through taking on this risk, you are rewarded with potentially higher rates of returns. Furthermore, you have total control of your portfolio - deciding which businesses you want to lend to - and get these potentially higher returns directly from those businesses.
Please note, all businesses on Crowd2Fund undergo standard risk and due diligence checks to ascertain if they can afford the loan, and maintain a low default rate on Crowd2Fund.
The interest rate a business pays for a Crowd2Fund Loan is defined by the risk and due diligence team. It is generally, though not always, tied to the risk associated with the loan. We also include two risk indicators; our own product risk level, shown on the summary campaign card on the Opportunities page, and Equifax’s assigned risk, shown on the campaign page. Our product risk is not specific to the business but the financial product you are investing through.
In general, Interest-Only Loans are higher risk, and both Revenue Loans and Amortizing Loans are lower risk. The interest return for any loan product is also clearly indicated on the campaign page. You can read about our interest rate of return here.
When lending to a business on Crowd2Fund, you will start earning interest on your loan one month after the campaign has been successfully completed and executed. ‘Time remaining’ to successfully fund a campaign is indicated on the campaign page: some might fund quicker due to higher demand or existing support networks.
Please, keep in mind that some campaigns might take one additional week to complete and execute prior to releasing your funds.
Both Loans and Revenue Loans provided through Crowd2Fund are amortising loans. Every repayment you will receive is made up of interest earned and part repayment of the initial capital.
The interest earned will decrease each month, as the amount of initial capital repaid increases. The monthly interest you receive decreases, as it is the monthly interest of the outstanding initial capital balance left that month.
It is beneficial for our investors to reinvest their loan repayments into other campaigns, to maximise the potential return on their investments.
This can be done easily using the Crowd2Fund 'Smart-Invest' feature.
Please be aware: reinvested amounts do not count towards your ISA allowance for the tax year if they have not left your Crowd2Fund account. Furthermore, funds held in your account do not earn interest.
Please feel free to drop us an email or give us a call if you would like further clarification. We are here to help.
Crowd2Fund creates individual loan agreements for each loan that is completed on the platform. In theory, the loan agreement is between yourself as the investor and the business your are lending to. However, Crowd2Fund manages this process on your behalf.
The legal agreements will include either the Director Guarantee(s) or Security for that particular loan. Should a business stop repaying their loan and be taken into legal proceedings, Crowd2Fund will represent your interests in and out of court.
Unless otherwise stated, all Crowd2Fund loans have monthly repayments. The amount of repayments is clearly shown on the campaign page - as total months of the loan.
You are repaid directly by the business into your Crowd2Fund account.
The date you receive your repayment may vary slightly - repayments are only processed on business working days.
With Revenue Loans, you may receive more or fewer repayments than the months stated. The Revenue Loan is paid as a percentage of monthly turnover, making the number of repayments flexible until the capital is repaid.
Months with higher turnover will mean larger amounts are repaid, and vice versa for months with lower turnover. Please note, the interest return remains the same on each calculated amount of that month’s repayment.
The estimated term for Revenue Loans is calculated as an average, based on the turnover of the business’s historical accounts.
If a monthly repayment is going to be late, you will be informed through Crowd2Fund. Wherever possible, Crowd2Fund will avoid a potential late repayment by working with and supporting the business.
Crowd2Fund collects a 1% transaction fee on each repayment made to investors.
Borrowers may repay the loan early with no extra fees incurred.
Read more about bad debt here.
The above information is for informational purposes only. The individual circumstances of investors can vary, and the terms of each scheme are subject to change. For full details of any tax schemes, please refer to HMRC directly or contact your personal financial advisor or tax advisor.
Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change. Please see our Risk section before making an investment decision.