High Risk and High Interest Business Lending
Crowdestor is a marketplace for direct peer-to-peer lending which allows users to invest directly in loans granted on the platform. The loans are to companies in the areas of transport, real estate and startup projects. All loans are collateral backed and/or covered by the Buyback Fund. The platform launched in 2018 and have funded and facilitated capital to projects based in Latvia, Germany, United Kingdom and Russia.
|Business:||Business lending, Real Estate Lending & Startup Lending|
|Founders:||Gunars Udris & Janis Timma|
|Countries:||Belgium, Cambodia, Estonia, Georgia, Germany, Japan, Latvia, Lithuania, Malaysia, Poland, Russia, Spain, Thailand, UAE, UK, Ukraine, USA & Worldwide Businesses|
Office location in Tallinn
Table of Contents
Crowdestor Pros & Cons
Characteristics of Loans
12% – 20%
3 – 24 months
Buy-back Guarantee ✔
Minmum Investment ⇙
Direct Investment Structure
Loans on Crowdestor
Crowdestor has a simple and informative single page for every project listed on the platform. What you see below is the first thing you will see when browsing through the available projects. Here Crowdestor displays some basic useful information about the loan: Interest rate, duration of the loan as well as the minimum and maximum funding amount.
Below, the page is divided into different section that can vary depending on the project. They will provide you with additional information about the project. Often, you will find four sections containing information about the project: ‘Summary’, ‘Loan’, ‘Collateral’ and one project specific question answered. The summary gives a short description about the project, what the money is going to be used for, why and when. The loan information reveals whether the project is covered with a buyback guarantee, how often the interest payments are paid and when the loan is repaid. Below information about the loan, there is a sample of the interest payments on a 1,000 investment in the project.
The collateral section gives an idea of the project and how you as an investor is protected. Besides the Crowdestor buyback guarantee (which will be explained in the section below), the collateral is usually displayed in the project by the end – but in all projects with a buyback guarantee the collateral agent is the “Buyback Guarantee Fund”. No budget or financials are available to look through, but when the platform has to cover the amount if the borrower defaults, it might be more appropriate to look at the financials of the buyback guarantee.
Buyback Guarantee on Crowdestor
To increase the financial security of the lenders on Crowdestor, they have created the “Buyback Guarantee Fund” with an initial investment of 50,000 euro. To keep up with the increasing number of projects to be covered with the guarantee, the platform is devoting a 1-2 % commission of the projects funded to the fund. They expect the fund to reach 100,000 euro by the end of 2019. The first project covered by the guarantee is seeking 100,000 – 250,000, so with the value of the fund as it is today, it is very fragile to bankruptcies. The current value of the fund at any given time will be published on the website. Read more about Buyback Guarantees here.
Direct Investment Structure
There are two different types of investment structures in P2P investing:
- The direct structure means you are buying a claim against the borrower directly.
- The indirect structure means you obtain exposure to a loan by investing in a loan issued by a platform company to the loan originator.
Crowdestor is a traditional lending-based crowdfunding platform and every loan is structured in a direct investment structure. This makes it easier to better evaluate the risks involved since you know that you are lending directly to the company/owner of the property.
Crowdestor is a new platform and the number of loans is not that impressive, but the website is simple and easy to use. Below is displayed how browsing the investments manually looks like. Scrolling down the page you will be able to see the name of the projects (17 as of writing), interest rate, duration of the loan, name of the project and the location. The interest rate ranges between 12 % and 18 % which is considered very high, but it is not without risk. The funding process is set with a minimum target for the lowest funded amount acceptable for the company to take up the loan and a maximum target of the largest amount the company is interested in borrowing.
Crowdestor does not yet offer automatic investing but is said to be working on renewing their platform to make both auto-invest and a secondary market available in the future.
Early Exit Option on Crowdestor
Crowdestor offers the option of exiting some investments early. This platform offers a special kind of early exit that differs from other platforms, it is neither bought out by third-party investors or the platform itself – it is bought out by the borrowers themselves, who will also be the ones determining the amount of funds meant for the buy-out and discount rate. Not all borrowers will be ready to offer such an option, as not every company will have funds available for unexpected procedures like that so investors will fill out an application when they intend to Early Exit which the borrowers will comply with if they have funds ready for it.
Nice to Know for Investors
Registering at Crowdestor is simple and easy to do. Whether you’re an individual investor or investing as a company, creating an account requires just your name, email and a password. After creating the account, you will receive an email with instructions on how to register. The platform complies with KYC (Know Your Customer) and you therefore need to provide an identification document and additional information to be able to withdraw money from the platform. Thus, you can create an account and invest, but you will have to complete the KYC before unlocking withdrawing.
Deposit & Withdrawal Process
Depositing funds to your investor account is done in three steps:
- Transfer money to your Crowdestor account from your bank with traditional bank transfer or TransferWise.
- Your funds will be available for investment within the day of confirmed arrival (usually 1-3 banking days).
- After the funds are received and added to the account, you will receive an e-mail confirmation.
Withdrawing funds is very simple if you are already KYC validated. You just click the “withdraw funds”, enter the desired amount and wait the 1 to 3 business days before the requested amount will land in your account. There is no minimum withdrawal restrictions and no further additional fees or commission for withdrawing the funds – except maybe from your own bank. Remember, depending on their fee structure, your own bank might charge fees for handling the transaction or exchanging currency.
The portfolio overview is as with most new platforms not that developed. Crowdestor does not yet provide a cashflow analysis or any useful statistics on your invested projects. The portfolio overview could be improved, and it probably will as more and more projects are launched on the platform.
Unfortunately, we do not provide tax related consultations and we recommend that you apply to your tax adviser regarding this issue.
Please let us know if you have any questions by writing to email@example.com
Crowdestor FAQ: “Do i have to pay tax on the interest earned?”
Though the platform do not provide tax consulation, they do give a report in january for the previous year, upon which investors can pay tax in their country.
Crowdestor does not have a chat function on the website but reply on email to whatever questions you might have. They usually answer within a few business days. Even though it is a new platform, they were qualified to answer the questions we had, are straightforward and do not seem to try to avoid any sort of questions.
Who Can Invest?
Is Crowdestor Safe?
In case Crowdestor platform stops operating the investors investments are kept safe from the company that owns the platform, since all loan security and contracts are held separate by Crowdestor Security Agent OÜ because it is a separate company from the daily operations company. If the investments in itself are safe is another question, and it depends on the individual loan project to that specific company, but as there is also a Buyback Guarantee fund to cover some loans there are more than one layer of security when this is present – though the amount funded on the platform compared to the Buyback Fund value is very little (33 million compared to 360 thousand) as they slowly build up capital in the fund.
Please note that this overview may contain affiliate links. It means that a commission is earned if you decide to invest after using the link – of course without additional costs to you. The information on this site does not constitute investment advice and is solely to give you a simple and easy overview of the platform. Always conduct your own due diligence and consult your financial advisor before making any investment decisions.
* Historical return is not a guarantee of future return. The average interest rate is directly from the platforms website crowdestor.com at the day of the last update of the article: April 20. 2020