Crowdlending is financing through loans https://gadcapital.com/ to companies or individuals that are funded by individuals (or companies). Crowdlending is a direct line of connection between investors seeking profitability and companies that need financing. Investors lend their money in exchange for an interest rate, so when the operation is completed, they will receive the initial amount invested plus the interest generated.
Do you have any questions about the investment in crowdlending? We have made this small guide to solving all the doubts that may arise about the investment in crowdlending.
In the first place, we are going to solve some doubts regarding the crowdlending platform itself.
Doubts of the investment in crowdlending related to the investment platform. The case of MytripleA.
MytripleA is the first and only crowdlending platform that has two licenses to operate: on the one hand, the Payment Institution license granted by the Ministry of Economy and supervised by the Bank of Spain and a Participatory Funding Platform license registered with the CNMV.
What does it mean to be a payment entity of the Bank of Spain?
MytripleA has the license number 6869 of the Payment Institution granted by the Bank of Spain.
Law 16/2009 requires the platforms to be accredited as a Payment Institution for the channeling of money, that is, to be able to make collections and payments between different accounts. MytripleA receives and distributes the funds to the borrower at the time the loan is signed and subsequently distributes the installments to the investors. The money of the investors is deposited in a separate and exclusive account for the investors, therefore the creditors will not be able to have access to this money in case of bankruptcy of MytripleA.
Therefore, in order to perform the crowdlending activity, when intermediating between collections and payments, it is mandatory to have said license or to contract the services of an external one.
Participative financing platform by the CNMV?
MytripleA has the license number 3 of the financing platform granted by the CNMV.
The financing platforms are subject to Law 5/2015 and must have the license granted by the National Securities Market Commission (CNMV). The compulsory nature of obtaining a license is intended to regulate the new market and its participating actors.
This license is mandatory provided that the platform intermediates loans, leaving out the platforms that offer, for example, the factoring service.
The investors’ money that is not invested where it is deposited?
payment account or customer balances account. This account is protected from access by MytripleA creditors.
Second, we resolve some issues that directly affect the investor and its particular characteristics.
Important issues for the crowdlending investor
What is necessary to be an investor? Why are the documents requested?
To be an investor of MytripleA, and in compliance with the law, it is necessary to provide a copy of your ID and a bank receipt, these documents are requested for your own security. The purpose of both documents is to associate the account number and be able to withdraw funds always to your account associated with your investor profile and never to a different one. Once these documents are submitted, your profile will be validated.
What types of investors are there? and, what risks do I assume as an accredited investor?
Once validated, you have the option of being two types of investor, accredited or not accredited, by default you will be a non-accredited investor. Non-accredited investors have an investment limit of € 3,000 per project or € 10,000 invested in a year in the whole platform. To be considered an accredited investor, and have fewer limitations when it comes to operating, individuals must meet any of the following requirements:
- Proof of an annual income of more than € 50,000 or financial assets of more than € 100,000.
- Request to be considered as accredited investors beforehand, and expressly waive their treatment as a non-accredited client.
- Proof of the contracting of the financial advisory service on the financing instruments of the platform by an authorized investment company.
Accredited investors are exposed to higher risks than non-accredited investors because they enjoy less protection. They will be able to invest in the loans without limit.
Third, we are going to see doubts and general uncertainties about the investment in crowdlending.
General uncertainties of crowdlending investment
What is an automatic investment? How does it work? Why I have not entered into a loan that met my requirements?
Automatic investment is a tool to make investments in an automated way, following pre-established parameters of quantity, term, and risk. Only accredited investors can have access to the Automatic Investment tool.
Sometimes, when there are more investors who want to access a specific loan and the amount requested by the company is limited, not all investments become effective. The automatic investment tool follows a cyclical behavior, so those investors that have entered the last investment will go to the end of the list for the next operation.
Is it possible to cancel an investment?
You can cancel your investment and request a refund of your money before the loan is signed.
Can you make a divestment? When can I withdraw the money?
Currently, you can not recover the investment in advance once the loan is signed, so it is necessary that you wait for the loan to be repaid within the established period.
This concept of a secondary market is not provided by law.
Can you invest being non-resident in Spain?
Yes, as long as it is a country of the European Union. You just have to have a bank account in Spain and you contribute the tax residence certificate.
How do you proceed with a default?
Faced with a case of default, we proceed according to the type of operation in which it occurs:
- Operations insured by SGR. After 90 days have elapsed since the first default, the SGR pays the 3 unpaid installments that include the principal plus the ordinary interests of the installments (or the total of the debt with the ordinary interests).
- Operations without SGR endorsement. MytripleA will perform the necessary recovery actions and execute the guarantees obtained from the companies. If the default continues MytripleA will put the case in the hands of a recovery company and/or a law firm to solve the situation as soon as possible.
Finally, we solve some doubts that may arise about the characteristics that concern the operations themselves and therefore, you should consider when selecting your investment.
Uncertainties related to the investment operation in crowdlending
What are the criteria for the approval of projects, what is studied and what data are requested?
MytripleA’s risk department studies each company in detail, taking into account the financial information, the valuation of the additional guarantees and any information obtained from external sources that complement the company’s analysis. In addition, in the case of operations that have the endorsement of a Reciprocal Guarantee Company, the operation must pass the analysis made by the said company to obtain the guarantee.
Can investors know the identity of the SME?
At the time of publication of the operation, various public data of the company requesting the loan is provided, only available to registered investors (I remind you that registration is free), these data include financial accounts or information about the solvency of the company, number of employees, opening date … among others.
In addition, for investors who request to invest in the operation, if they require it, MytripleA will inform them of the name of the company or the corresponding CIF.
How is the rating or valuation of the operation performed?
MytripleA values the loans through the risk department and grants a valuation of A + to F. Being A + the operations with lower risk and F the loans with a higher risk.
If your doubts are about the taxation of the profits obtained through the investment in crowdlending, consult this post with all the answers about taxation in crowdlending.