DIVERSIFYING OUR SOURCES OF FINANCING AND NOT DEPENDING EXCLUSIVELY ON BANKS: LOANS FROM ENTITIES OTHER THAN BANKS OR BANKING ENTITIES: CROWDLENDING OR CROWDFUNDING

 

  1. APPLICABLE REGULATIONS

First regulation in Spain àAct 5/2015, of 27 April, on Promoting Business Financing (“LFFE”).

·         More accessible, flexible bank financing for SMEs, encouraging the recovery of bank credit.

·         Advancing in the development of alternative means of financing.

 

Two-fold

objective

  1. CONCEPT OF CROWDLENDING

This is an alternative method of financing that consists of lending money between PERSONS (P2P, “peer to peer”) or between persons and COMPANIES (P2B or P2C “peer to business” “peer to company”), via Internet, to finance projects that have a positive impact on society and/or the environment.

As with traditional loans, the money is lent to provide liquidity in exchange for previously agreed interest rates (amount, periodic payments, etc.).

  1. HOW CROWDLENDING OPERATES

1) CONTACT with the crowdlending platform by the person who needs financing.

            Information must be provided on:

  • The project to be carried out
  • The amount of the loan required
  • Details must be provided on the accounts of the person requesting the loan.

2) An analysis of the situation is carried out to determine the operation’s RISK.

If the project is approved, INVESTORS decide where or not to back it. Apart from profitability, investors seek transparency and decision-making capacity regarding the cause they are using their money for.

  1. INVESTOR

ACCREDITED INVESTORS

Businesspersons who individually meet at least 2 of the following conditions:

  • The total of asset items is equal to or greater than €1 million.
  • The amount of their annual turnover is equal to or greater than €2 million.
  • Their equity is equal to or greater than €300,000.

Natural persons who, having expressly waived their status us NON-accredited investors:

  • Demonstrate annual income of more than €50,000 or financial assets of more than €100,000.
  • Demonstrate that the financial advice service regarding the platform’s financing instruments has been contracted by an authorised investment services company.

NON –ACCREDITED INVESTORS

Those who do not meet the above requirements or so request in writing.

Investors who do not provide funding to a participatory financing platform project within twelve months will lose their status as accredited investors.

Non-accredited investors are subject to an investment limit of €3,000 in the same project and €10,000 in twelve months in projects of the same participatory financing platform.

  1. ADVANTAGES
  • Find out more about the how the money provided in the loan is to be used and can offer greater profitability.
  • A faster way to obtain financing as everything is done online.
  • Crowding platforms offer guarantees to investors, because in order for a project to seek financing through one of these platforms, project promoters must show their capacity to meet payments.
  • It allows for greater transparency as no fees or additional costs or sale of other products associated with the entity are established for this type of loan.
  • A very interesting aspect for the company is that these loans are not registered in the Bank of Spain’s Central Credit Register (CIRBE).
  • It allows the borrowing company to diversify its sources of financing.

Contributing Advisors