Crowdlending Information

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Why you need to open a crowdlending account?

When asked what their biggest financial regret was, adult Americans’ #1 regret was not saving/investing early enough for retirement.

Open a crowdlending account

Don’t make the same mistake! Start investing your money today with an Crowdlending Account. It might sound complicated, but it’s actually super simple and takes only a few minutes and $1 to get started: Sign up, Deposit, Invest. And, you can set it up with 100% guidance from our portal – anybody aged 18 years or older can invest, starting today!

Here’s what you get with a Crowdlending Account:

  • The #1 platform for Crowdlending in terms of ROI.
  • Stronger performance than the S&P 500 — 69.07% vs. 17.90%.
  • The top rating for sustainability.
  • You Pay What Is Fair when it comes to fees.
  • You can request your funds anytime.

The toughest part is getting started. It just takes a few minutes. Your money can change your life and help change your world — for the better.

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Who we are

CrowdPress Crowdlending provides investors with a safe, secure real estate backed investment vehicle and provides borrowers with a hassle free, affordable alternative to institutional lending. We aim to bridge the gap between investors who want to invest for growth and borrowers who need small loans urgently for their next project.

Our Mission

CrowdPress Crowdlending makes financing individual projects and transactions easier for the borrower and secures solid returns for the investor. Using cutting edge technology, we aim to provide a transparent crowdlending platform that successfully connects lenders and borrowers.

Our Members

CrowdPress Crowdlending aims to appeal to a broad spectrum of individual men and women in the P2P lending market. Whether you are an investor, lender, developer; whether you want a loan for a car deposit or paying rent, CrowdPress Crowdlending has a product that will work for your money growth.

Crowdvestor

Someone who lends a micro-loan to someone in the crowd.

Crowdraiser

Someone from the crowd who borrows from someone else in the crowd.

Crowdbank

This is where crowdvestors can find and pick which investments to authorize their investment in.

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What is a membership?

Your membership fee is your principal = your investment capital. You can request your principal anytime, provided it has not been loaned out to someone else; in which case, you would need to wait until your principal and earned interest have been returned; alternatively, you can borrow from the crowd, pending the withdrawal of your own principal.

Once you sign up for a membership, we will match your investment to crowdlending campaigns and loan out your money(= the membership fee you signed up for or principal) to the borrower.

How long do you loan out a principal for?

Usually 10 working days. Crowdlending loans are short-term loans, generally.

Typical interest rates

1 to 15% on average

How much does CrowdPress charge for the service?

1 to 2% on average, not more.

Is this legal/legit?

P2P lending is already possible, while P2B lending is not. The JOBS Act directed the SEC to issue regulations making transactions like this (individuals who might not be ‘qualified investors’ for larger sums investing small amounts in nascent businesses) legal in the US. For e.g both SEC and FSA regulate the P2P lending business in US and UK respectively.

Bank Loans vs Crowdlending Loans

Crowdfunding VS Crowdlending VS Funding VS Fundraising

Introduction

With an estimated value of $490bn predicted by 2020, crowdlending is a form of alternative financing that has, until now, been mostly provided by independent P2P providers. Strict regulatory requirements and risk appetite have hindered banks from extending traditional loans for SMEs or to higher risk borrowers. With crowdlending, loans can be originated off balance sheet with the associated risk diversified amongst the crowd of investors.  Crowdlending simplify your investment journey and maximise your Return On Investment.

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Read and Understand Key Disclosure and Education Information

Since crowdfunding investments are likely to be early-stage ventures and may be highly risky, the JOBS Act and Regulation Crowdfunding include provisions designed to inform investors about these investments and their potential risks.

Companies that conduct offerings under Regulation Crowdfunding are required to disclose, among other things:

  • A description of the business of the company and its anticipated plan of business, including its name, legal status, physical address and website address.
  • A discussion of the material factors that make an investment in the company speculative or risky.
  • A discussion of the company’s financial condition.
  • The names and positions of the directors and officers; the name of each person who is a beneficial owner of 20 percent or more of the company’s outstanding voting equity securities; and additional information such as the business experience of the directors and officers over the past three years.
  • The price of the securities or the method for determining the price.

Crowdfunding as an investment

At the other end of the spectrum we can find crowdfunding as an investment in its 2 different forms, equity crowdfunding and crowdlending. The main difference between the 2 is the fact that in equity crowdfunding the money is invested in a company in exchange for a participation in the company, meanwhile in crowdlending the money is lent to a company or project and you will get your money back through a fixed payment schedule, with a fixed interest.

Although both are meant to finance companies or projects, with the expectation to receive the funds back with a return, there are big differences between the two, the main difference being the risk assumed.

Equity crowdfunding

In equity crowdfunding you become a shareholder of the company, and you have no guarantees whatsoever to get back your funds. In theory, if the company goes well, you can multiply your investment various times. However, in case things go bad, you can loose the complete investment.

There is no fixed time horizon, no guarantees to get back your funds, and only when you sell your participation you can cash in on the gains.

Crowdlending

Crowdlending is different: you lend the money to a person, company or project and they have the obligation to pay back the money with a fixed payment schedule and at a fixed interest rate. From the first month you are receiving interest and repayments on your money invested, meaning that from the first month you are already getting back part of your capital.

Since there is an obligation to pay back from the beginning, loans are only given to companies or projects that are already generating cash, and typically start-ups do not comply with this rule. Because of this, start-ups generally apply for equity crowdfunding and more established companies or projects do so for lending.

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What is Crowdlending?

Crowdfunding allows organisations or small and medium companies to be financed directly by the a large group of people, the “crowd”, without resorting to the services of a traditional bank or other financial institution. In crowdlending a large number of unrelated people lend directly small amounts in exchange for a financial return through a commercial loan agreement. Advantages for companies are achieving funds where banks don’t finance, diversification of funds, or marketing. For small lenders advantages are higher returns, complete transparency and the possibility to have direct impact.

Crowdlending has grown rapidly in recent years due to several factors:

  • The rapid development of Internet and new online technologies and the fact that people feel increasingly comfortable making online transactions
  • The lost in trust in the traditional banks because of the financial crisis and all the scandals that have emerged
  • Investors demand for more economic, ethical and transparent products, especially since the onset of the global financial crisis

Crowdfunding is a model that started in the 90s as an alternative way to finance cultural projects through donations. However, since then it has developed strongly and currently 4 types of crowdfunding exist:

  • Equity: investment directly in the equity of companies or projects. For example, an entrepreneur seeking money to set up his business, starts a crowdfunding campaign and people who trust in the business, invest and become shareholders.
  • Loans: lending to companies or individuals (crowdlending). People invest their money as a loan and acts as a micro-bank. This is generally considered to be less risky than equity, since there is an obligation to pay back the funds, with a pre-agreed payment calendar.
  • Donations: contributions to a cause (for example the TV3 Marathon). Participants contribute with nothing in return, beyond personal satisfaction.
  • Reward: contributions to a project, like the production of a book or a movie, in exchange for a small compensation, such as a copy of the book or a ticket to see the movie.

CrowdPress Crowdlending belongs to the second type (lending) specialized in financing low-risk investment projects, and is leader in Spain in this segment. CrowdPress connects companies and investors in a fast, transparent and easy way, providing affordable financing to local impact projects and higher returns to investors. No intermediaries, no banks, and fast and efficient operations.

A “classic” win-win situation where good projects get funds, investors receive a higher interests to those obtained through banks and there is a positive impact on environment for instance in funding projects with reduction in Carbon Dioxide emissions.

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Thoughts on Crowdlending:

Perspective #1 – Why micro-crowdlending?

Nothing is FREE. Nothing! Anything free is anti-competitive and lack of competition almost always leads to poor products/services. And “Interest Free” rate is the height of blasphemy. A no-interest loan is misnomer!

So say you have started a business. You are producing 1000 widgets a day. Your widgets are top-notch. The phone is ringing off the hook. But you need a $10,000 machine to keep up with orders. The bank does not make loans to companies that have been in business less than two years. You have an acceptable risk profile to me, but not to the bank.

Why would I not be able to go to a website and take a calculated bet that a company can repay me a micro loan at an interest rate that is sufficient to cover my risk profile and my profit expectations.

Risk profile is simple. If one in ten loans are not repaid, then 1/10th of my assets are gone. Thus to break even, a 10% per annum interest rate is required.

My Profit expectations are for a 12% return on my working assets. I can get 6% on tax free risk free municipal bonds, twice that is fair.

Now some among the crowd will say 22% is outrageous. It’s not as if you can borrow that amount, and return say 40% on that equity.

The best solution would be to have people bid on making those loans... A market for micro-credit provides precisely that. Then individuals could make credit decisions based on their experience, and profit expectations. And if you want to bid down the loan to zero, then that is your right, absolutely!

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Perspective #2 – Is lending small amounts really add up overtitme?

Have you ever heard the expression “Money makes Money? This is it! While others do that via the stock exchange with automatic trades – buying and selling shares – you have an opportunity to invest and reinvest as many times as you wish your 100$, 200$ and up to 1000$ in a personal loans to a business or individual, who’s been vetted, with an acceptable risk profile but whom the bank cannot extend a loan to because of rigidity.

CrowdPress is the solution.

Accumulation amount results from capital, time and yield.  Of these capital is the least significant.  If the Canarsie Indians had taken their $24 over to Chase when they sold Manhattan Island and invested it at 8%, they would now have more money than the total of all financial assets in the world.

Time and yield are what makes the money. A $10,000 initial investment plus $100 regular monthly contribution could turn into $105,917 in 20 years assuming 8% rate of return, according to Goldman Sachs Invest Regularly.

Just investing one dollar on January 1, 1950, without contributing any additional dollar, would have become as much as $4,259.77 on December 31, 2013 (63 years) according to  JP Morgan Investment Insights.

 

Perspectives #3 Pros vs Cons of P2P Crowdlending

Pros

Low Interest Rates

One of the most attractive benefits for P2P borrowers are the low borrowing costs. P2P platforms have low overheads so they can afford to charge less interest. In stark contrast, banks have extensive branch networks & thousands of employees to pay. In order to cover their vast operating costs, banks have to charge higher interest rates & add on a range of additional service fees.

Faster Funding

Borrowers applying for a P2P loan don’t have to experience the slow, frustrating, multi-layered bureaucracy that accompanies large financial institutions. Instead, technology driven P2P providers are able to make quick assessments & decisions so borrowers can speedily receive the funds they need. It’s common for P2P borrowers to apply for a loan and get approved the same day, receiving their funds a week or two later. Compare this to the average bank loan application that usually requires borrowers to wait several months! Check out this infographic – Bank Vs P2P.

Easy Application Process

P2P platforms have a quick and easy application process. Borrowers complete a simple online application (approximately 20-30 minutes on average) which is then assessed to determine credit rating and assign appropriate interest rates. Qualified applicants then evaluate their options and pick the most suitable loan. Once a loan package has been chosen, a profile is published on the platform where it can be viewed & funded by potential lenders. Traditional banks simply cant compete with the ease and speed offered by P2P platforms.

Other pros:

  • Extraordinarily high returns in the range of 12% to 36%.
  • Segregates borrowers into different risk categories and assigns interest rates.
  • Loan portfolio diversification according to risk appetite of investors.
  • Stringent underwriting process to ensure a pool of creditworthy borrowers.
  • Periodic payments in the form of EMIs.
  • Legally bound contract (offer, agreement, consideration) between investor and borrower.
  • Principal protection depending on the risk category of borrower.

Cons

Lack of Privacy

If you value your financial privacy or have a proprietary idea that you don’t want shared, a P2P loan may not be the best choice for you. Borrower information is published online for potential lenders to view. Unfortunately, most lenders don’t favour borrowers who present an incomplete profile or hold back on business plan details. To have the best chance of getting funded, borrowers need to provide important details so their plan looks attractive to lenders. This is not ideal for your privacy, but it is a necessary part of the P2P loan process.

Presentation Skills are Important

If you want to get your loan funded, you must have a good narrative and the facts to back your story up. P2P loan platforms require borrowers to sell themselves or their business to a wide audience of potential lenders. The audience will often include professional and non professional lenders so it can be difficult to know what they are looking for. At a base level, borrowers must show why they are a good investment and convince lenders they will get their money back. If a borrower cannot present their story effectively, they may never get their loan funded.

No Funding Guarantees

Even if a borrowers credit score is at a respectable level and they pass all requirements, their loan can still fail to attract any funding. Lenders may dislike the presentation or simply disapprove of the purpose of the loan. Another potential problem facing borrowers is the risk of only receiving partial funding as there may not be enough interest to fund the entire loan.

Other Cons:

  • Borrower’s defaulting on the loans.
  • Delayed EMIs increasing the opportunity cost of your principal.
  • The lackluster attitude of the P2P firm in assessing the creditworthiness of the borrowers.
  • P2P firms can best initiate a civil suit against a defaulter, hence to minimize this risk, PDCs are collected in order to make it a criminal offense to file suit against the borrower (Bouncing of cheque, is a criminal offense under Negotiable Instruments Act, 1881). This is not a very sound practice.
  • Lack of regulations governing the P2P lending marketplace.
  • Efficacy of the credit rating algorithms.

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Four Tips

While investing in early-stage businesses may bring rewards, it also carries risks. These tips can help you determine if a crowdfunding offering is right for you.

1. Ask yourself if you can handle the risk—and the potential loss of your investment. Both are real possibilities when it comes to companies that issue securities using crowdfunding. The venture may not succeed. Startups and early-stage ventures can and do fail. You should be able to afford, and be prepared to lose, your entire investment. If you are risk-averse, are just starting to invest, have only a little money to invest, or may need the money in the short term, crowdfunding investments likely are not for you.

2. Read and understand the educational and financial information, and all disclosures, provided by the issuer and crowdfunding intermediaries. If you are working with a financial professional, or seeking information over a crowdfunding platform’s communication channel, ask direct questions about the investment, including worst-case scenarios. It’s also a good idea to seek a second, or even third, opinion especially when it comes to highly speculative investments. This might include checking with an accountant who understands financial balance sheets and likely has no vested interest in the investment.

3. Recognize that fraud is a possibility.  As with all investment opportunities, the possibility of fraud is real. Protect yourself by understanding the tactics a fraudster might use—and how to avoid them. As noted above, check out investment professionals using BrokerCheck and go to FINRA’s Funding Portals Web page. Under Regulation Crowdfunding, offerings must be conducted through a registered broker or funding portal. A basic Internet search is also valuable. Proceed with caution if you turn up legal or regulatory concerns about company officials, or news reports that raise other red flags.

4. Revisit your financial goals. Setting clear, prioritized goals—each with steps to achieve the goal, a price tag and a time frame—will help guide your investment approach, including whether crowdfunding offerings have a place in your portfolio. Basic strategies such as asset allocation and diversification can help manage risk and make sound investment decisions.

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Conclusion

A good P2P lending firm can maximize the pros and minimize the cons through the nature of its operations and services. One such firm can help you earn high returns without much risk and hassle. A firm that carries out a robust underwriting process to protect the interest of its borrowers; it assesses the profile of borrowers on 50+ social and quantitative parameters using its proprietary risk assessment model.

An interest rate and a risk category is then assigned to each borrower based on the assessment. It also follows a stringent physical verification process. This ensures that an investor has access to a trustworthy pool of borrowers across different risk categories so that he/she can diversify his loan portfolio easily. The entire process is online and hence highly transparent. The firm will also offer principal protection to its borrowers depending on the risk category of the borrowers they have invested in. CrowdPress follows up the interest payments with borrowers and hence makes sure that the payment does not get delayed.

This makes CrowdPress a more reliable option as compared to some random P2P firms in the marketplace.

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