Understanding debt

Investing can be risky but also potentially rewarding

It’s rare, but sometimes businesses don’t always make their repayments. At Crowd2Fund, we have an effective process in place to recover your money, where possible.

Crowd2Fund conduct thorough due diligence on all opportunities listed to check for their credit worthiness, before listing on the platform. Where possible, security or a personal director guarantee is taken against the loan to help recover the debt if something goes wrong.

The following definitions will help you understand your investments.

In arrears

This is the percentage of your loans that are recoverable but where the business has made a late repayment. This is when businesses are behind with their contractual payments due to internal or non-controllable issues like changing bank details or delayed debtor payments.

Your default rate

This is the percentage of your loans where we have not received a repayment for more than 90 days or 180 days if secured on property. These cases might take longer to recover the debt and are dependent on the complexity of the case.

Recovered

On occasion, a business that has been listed on the platform has failed. When this happens Crowd2Fund represents your interests in court. Investors should remember their capital is at risk and they should not invest more than they can afford to lose. Generally funds can only be recovered with loan based investments.

Written-off percentage

This is the percentage of loans that are not recoverable and your total losses to date. To reduce your investment risk, it is always advisable to invest in different businesses and different products. You can read the full risk warning here.

Average debt written-off

Average debt written-off is the amount of debt that has been written-off and is not recoverable across all outstanding platform loans.

Bad debt summary

In arrears Your default rate Written-off Recovered
Communication Soft Legal Not recovered the funds Recovered the funds
Timescale 14 days 90 days 180+ days N/A
Platform statistics 49.87%
Target statistics 10.00% 6.00% 3.00% 60%
Last updated on .
More information

Recovery process

Late but recoverable – Statutory Demand

We always try to take a pragmatic approach to initially recovering funds from businesses. Communication is key at this stage in order to try to help to find a solution to the problem. Phone calls, letters and emails will be sent to the business to remind them to settle the loan repayment.

Defaulted - Debt recovery agents or legal proceedings

After 3 months of missed repayments, the loan goes into default. This is when the legal proceedings start. Most, but not all Crowd2Fund loans have either security or a director guarantee. The legal proceedings will involve leveraging these agreements to recover the funds from the business or the directors.

Written-off - Mostly non-recoverable

If in the unlikely situation a loan is not recoverable, then it is written-off and the investor makes a loss on that investment. The target debt to be written-off is set at 1% and is currently at 1.09%.

Stage Breakdown

Recovery Steps

The recoveries process is broken down into a number of different stages illustrated in the timeline below. During this process, we use several legal remedies to ensure efficient clearing of all arrears.

In Arrears

Receive an alert from Go-Cardless of failure to pay or a mandate has been cancelled. 14 days from missed payment and mandate cancelled will be declared as "in arrears".

Contact client to understand circumstance and make arrangement to pay (arrangements will not be longer than 10 working days). Failure to communicate by the 5th working day will be marked as “in arrears”.

Default Letter

If payment not received, progress with default letter (90 days from missed payment).

Statutory Demand

If no arrangement to pay or missed arrangement, progress with hard legal statutory demand (if the company is not in administration).

Progress with statutory demand (21-day expiry from successful delivery) and continue to contact prior to a court date.

Bankruptcy Petition

File for bankruptcy petition once Statutory Demand expires for personal and corporate.

Court Order - Personal and corporate winding up

As part of the recovery process we use legal proceedings against the business.
The court will help recover funds or make an arrangement to pay by taking a charge on the business or director assets.
If the court are unable to recover funds, the loan will be marked as written-off.

Loan status

On each campaign page, the status of the loan will be clearly labelled with one of the following:

Good: The loan is repaying on time and correctly.

In Arrears: The business is behind on repayments.

Restructured: The loan book has been restructured to help the business..

Arrangement: We have agreed to a recovery plan with the business (will not be longer than 10 working days)

In Administration:: We are committed to recovering the full amount with the help of our legal team and the administrators.

In Default: This company has been taken to court to recover the funds.

Recovered: The loan has been recovered.

Written-Off: The legal team attempted full recovery but was unable to retrieve the remaining amount of the loan.

Alerts

Text & Email: Investors of the loan can opt-in to receive either text or email messages providing updates on a change of status or repayment. Investors can also contact the recoveries team at any time for further updates.

Risk warning

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.

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