Wisefund is a digital peer-to-peer lending platform for individual lenders to invest in European SMEs that wish to grow their businesses. The purpose of the P2P platform is to enable ordinary people to invest in trustworthy businesses across multiple sectors of the economy. By mediating and monitoring investments, Wisefund build a bridge between private lenders and company borrowers.
Last updated: May 25. 2020
|Company:||Wisefund Capital OÜ|
|Operating in:||Poland, Switzerland, Netherlands, Czech Republic, & Germany|
Office location in Tallinn
Table of Contents
Wisefund Pros & Cons
Characteristics of Loans
5% – 21%
3 – 18 months
Buy-back Guarantee ✔
Minimum Investment ⇙
Direct Investment Structure
Loans on Wisefund
Wisefund is a peer-to-peer lending platform that only focuses on the practice of having individual lenders invest money in business through online services. Through Wisefund, businesses can borrow funds from multiple lenders for certain purposes such as project development or increasing operating capital and, thus, achieving more rapid business growth.
This means that only loan type available on Wisefund is business loans. However, Wisefund carefully selects what businesses are allowed to enter the platform by scrutinizing all aspects of each business to such a degree that they feel comfortable guaranteeing that borrowers are businesses with established histories, operations, and assets.
In the section “Browse Projects”, visitors that are interested in becoming investors can browse through projects that are available for investment. When hovering the mouse over a possible investment, the interested visitor can see how much funding is still needed before the project is complete. From the “Browse Projects” page (see attached screenshot below), you can find the following information:
- How much funding is needed in total
- The duration of the loan
- The interest rate of the loan
If you decide to become an investor, all you have to do is go through a simple registration process, which you can read more about further down in this article. After having successfully registered and logged in to the platform, you get access to a differently looking overview page on which you can apply filters covering subjects such as the organisation(s), you would be interested in investing in (e.g. advertising, agriculture or wholesale), and in what business are you would like to invest your money, as it appears from the screenshot below.
When clicking on a project, investors are taken to a project overview page where all necessary information about the specific projected is presented (see attached screenshot below). Here, you can find additional information such as:
- Number of investors that have already partly funded the project
- How often the interests will be paid out
- The specific termination date of the loan
- Thorough project description and company background
Buyback Guarantee & Payment Guarantee on Wisefund
For Wisefund, it is highly prioritised that investors can feel rather safe about entrusting their money to small and medium businesses with a desire to grow. Therefore, most loans – but not all – come with extensive guarantees, for instance a buyback guarantee.
The buyback guarantee that Wisefund offers is a three-step buyback guarantee on principal for defaulted loans in order to secure investments. In order to offer the most comprehensive guarantee, Wisefund has joined forces with third-party partners who will cover possible loan defaults. This makes the guarantee different from others who provide the guarantee itself, it can be a problem but it can also be good that someone else than themselves is overseeing this. This agreement serves as a guarantee that investors can always sell any defaulting loan or loan that accrues over 60 days of late payments to a 100% rate from the principal to one of the third-party partners. This means that investors bear no responsibility on defaulted loans, which are covered by the buy-back guarantee.
Note that the buyback guarantee does not cover unpaid interest rate payments.
What Happens if Wisefund Closes Operations or Becomes Insolvent?
In peer-to-peer lending, you’ll find two different types of investment structure. These are:
- The direct investment structure
- The indirect investment structure
In order to understand what happens, if a P2P investing platform goes bankrupt or becomes insolvent, you need to first understand how these two structures differ from one another. The direct investment structure, to take that one first, implies buying a claim against the borrower directly. The indirect investment structure, on the other hand, implies obtaining exposure to a loan by investing in a loan issued by a platform company to the loan originator.
With Wisefund, the investment structure is direct. This means that you are lending directly to the borrower and not a middleman which then lends to the borrowers. It also means that investors hold claims against borrowers and not the platform in case of going bankrupt or becoming insolvent.
Assets as Collateral
Wisefund writes on the platform that all borrowers are businesses with established histories, operations, and assets. Nevertheless, when clicking on a specific loan to see more data, you are not explicitly informed about what kind of asset the business in question has.
Since Wisefund does not offer automatic investment, all investing will have to be carried out manually by investors. Although automatic in general comes in handy, it is not a huge problem that it is not an existing feature in the case of Wisefund. The reason is that most of the available projects are relatively large, and they are not funded very quickly (mainly because of the fact that the platform is rather new). Therefore, investors have plenty of time to review the project and invest, if they would like to do so.
Unlike many other platforms, Wisefund does not offer an AutoInvest function. Instead, investors can invest in loans with the amount of funds that are available in the investor’s account at the time of the available investment opportunity – and solemnly by clear consent of the investor.
As mentioned above in the section “Manual Investing”, automatic investment is not a much-needed feature on Wisefund anyways, since most projects are quite large and the funding process is rather slow – mainly due to the fact that Wisefund’s platform is still pretty new – which leaves investors with enough time to review a project’s details and decide whether to invest or not.
Secondary Market - How to sell a loan on Wisefund
The secondary market is where investors can exit investments earlier than anticipated by selling loans back to the market. Wisefund has just recently announced the release of a Wisefund Secondary Market.
Investors are currently able to sell loans back to the market at a lower price than the loan value. Although this means that you will lose money, it enables you to quickly exit the investment, and interested buyers can acquire certain value loans at a reduced price.
In addition, Wisefund offers another option to exit an investment earlier than the loan maturity, but this option is only valid for those investors who have chosen to cover projects with a fee-based buyout guarantee. This means that investors can still sell investments back to the platform, but it comes with a fee. The fee for selling a loan back to the platform before maturity is normally between 10 and 15 % which is relatively high compared to other P2P platforms.
Nice to Know for Investors
Registration Process on Wisefund
Registering on Wisefund is not much different from registering on any other peer-to-peer lending platform; you sign up by completing out a formula in which you have to provide the platform with your personal information, and – as a last step – you will have to verify your identity by providing a valid passport or ID card.
Before accepting you to the platform, Wisefund will check your identity in order to know who exactly is joining their network.
Deposit & Withdrawal Process
When your registration has been successfully completed, and your identity verified, Wisefund will send you an email with bank details for depositing funds to your account. All deposits will be reflected on your investment account and are immediately available for either investment or withdrawal.
Please, note that Wisefund only works with SEPA transfers.
Funding Method for Wisefund
When you are logged in on the Wisefund platform, you will gain access to a “My Account” section under which you will be presented with a summary of all of your lending activity (see attached screenshot below). Among other things, you can check:
- How much money you have available in your account (“Free to Use”)
- How much money you have invested (“Invested”)
- How much money you have earned in interest rates (“Earned Interest”)
This depends on your residence country laws, but most likely yes, your earnings will be taxed as lending is considered an investment activity. As a lender, you get interest without a tax deduction. Interest earned from any of the loans qualifies as unearned income for taxation purposes i.e., money earned from investments. You’ll need to show the interest you receive in each tax year on your self-assessment returns. To calculate this figure, you can download this information from My Account and use it to help you complete your annual self-assessment tax return.
Wisefund FAQ: “Is any tax due on what I earn through lending?”
For any questions, Wisefund refers to their comprehensive FAQ section. However, if you do not find what you are looking for, you can contact Wisefund on email, either email@example.com, if you are experiencing any issues, or firstname.lastname@example.org, if you have other inquiries. It is also possible to reach Wisefund by calling the on the phone on +372 560 93 520. They are answering the phone Monday to Friday from 9.00 to 17.00. During weekends, support is closed.
Who can invest on Wisefund?
Any person can be a lender on Wisefund as long as one meets the following criteria:
a) be over 18; b) have valid passport or ID card; c) have a European Union bank account; d) you are a resident of a country from the European Union (EU) and European Economic Area (EEA) and Switzerland.
Wisefund FAQ: “Can anyone become a lender at Wisefund?”
Is Wisefund regulated?
Wisefund is not regulated by the Estonian Financial Supervisory Authority as they presented their business model setup it was confirmed that they do not need a authorization by the authorities to operate the platform.
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 due diligence and consult your financial advisor before making any investment decisions.