He is considered as the generic or the mother of financing between individuals. As you know, there are different modalities of Crowdfunding that are:
- Donation Crowdfunding
- Reward Crowdfunding
Today we focus on Crowdlending, which is the specific market of MytripleA. There are other ways to name it as P2P Lending or P2P Loans or loans between individuals.
The infographic of the crowdlending alphabet
To begin, we have created the following infographic where we summarize the most characteristic points of crowdlending: the alphabet of crowdlending, where with a simple glance you will get to the idea of what crowdlending is.
Crowdlending: The origin
As we have said before, Crowdlending has its origin in Crowdfunding, which emerged in the 90s as a funding model to finance small projects of artistic or cultural nature through the function of the so-called patrons or individuals who contributed their money in the form of a donation or in exchange for a non-monetary reward.
Over the years, Crowdfunding has evolved and developed new models of alternative financing such as Equity Crowdfunding or Crowdfunding of loans called Crowdlending, where individuals who offer their money go from being patrons to investors and individuals and companies They can get loans through texastitleloan.net.
What is Crowdlending?
Crowdlending is financing through loans to companies or individuals that are funded by individuals. It comes from the English words “Crowd”, crowd and “Lending”, loan. The financing requested by the company is covered thanks to many small contributions from large people who lend their money. These investors receive a monetary consideration in return, that is, the interest rate paid by the SME or company, and the intermediary crowdlending platform remains a small commission.
We leave you here a video where Sergio Antón, CEO and Co-Founder of MytripleA, does a Webinar at Spain Business School where he tells what Crowdlending is and its comparison between Spain and other countries where this type of alternative financing is widespread. Watch the video here:
Why does Crowdlending arise?
Over the last few years, a series of factors have been generated that have led to the emergence and consolidation of Crowdlending as an alternative financing system for both business and private projects:
- The contraction of bank loans: Before the outbreak of the economic crisis, at the time of requesting and obtaining a bank loan, there were hardly any obstacles. Since a few years ago, the picture is very different, banks cut their financing tap and companies and individuals have had to find new methods and alternatives to get financed, a solution they have found through Crowdlending.
- The rise of the Internet: the Internet has been a revolution in many aspects of today’s society. Online communities have allowed many individuals to be contacted in order to unite interests, as is the case with Crowdlending platforms.
- The rise of the collaborative economy: ” Share instead of own ” is the phrase that summarizes the new economy of today’s society. Only through collaboration between individuals, without the intermediation of large institutions or companies, can the needs of purchasing products, acquiring services or obtaining financing be met, as in the case of Crowdlending.
How does a Crowdlending platform work?
The Crowdlending platform exercises all the actions prior to the publication of the project: documentation request, the study of the operation … Once approved, it is published on the platform, which is where investors will lend their money. Once the project collects all the funds requested, it becomes a loan and the platform is responsible for collecting the fees and distributing the corresponding amount to each investor.
We give you an example …
Pyme requests € 20,000 for the purchase of material. The transaction is studied by MytripleA, is approved with a maximum rate of 7%, the SME accepts and publishes on the platform (this 7% is maximum, not final).
Investor 1 has some savings and decides to lend € 2,000 to the maximum rate (7%). Investor 2, which is accredited, lends € 10,000 to 7%. Investor 3, who knows the company and is also accredited, decides to lend € 8,000 to 3%, which is much more than what they give him in his bank and also helps the SME to get a more attractive final interest rate.
Therefore, the final rate of your loan will be the weighted average of all the units: 5.4%.
Crowdlending regulation: What law regulates Crowdlending?
In April 2015, the new Law 5/2015 on the Promotion of Business Financing was published, which encompassed the Crowdlending platforms. This law marked several guidelines for the operation of these platforms, such as having to classify investors between:
- Accredited Investors: no limits on investment
- Non-accredited investors: investment limit of € 3,000 per project and € 10,000 in the last 12 months for all platforms
This law also marked the obligation to develop this activity, to have the Participatory Financing Platform license granted by the CNMV. MytripleA has the # 3 license of the Participative Financing Platform by the CNMV and is also the only platform with a Payment Entity License by the Bank of Spain, license number 6869.
5 steps to getting financing through Crowdlending
Requesting financing for companies by crowdlending is extremely easy. These are the 5 steps.
1. Complete the application
It is necessary to complete a simple and quick assistant in the section request a loan from the platform itself. Once the application is completed with the required documentation, we can proceed to the next phase.
2. Study and evaluation of the operation
The platform performs the study of the operation and evaluates it with a rating. In the case of MytripleA, with a valuation of A + (lower risk) to F (minimum valuation that the company must obtain to be published). Based on this rating, the platform sets a maximum and fair interest rate for both parties.
3. Publication of the operation
The approved operation is published in the Marketplace and that is where investors lend their money at the interest rate set by the platform. Even if they wish, they may reduce their profitability in favor of lowering the interest rate of the company.
4. The money in your checking account
Once the amount is completed by the contributions of multiple investors, the money is transferred to the company.
5. Unique dedication to your business
From this moment you can focus only on your business. The platform will be responsible for collecting the fees and distributing it among the investors who have participated.