In this article we go on the risks of Crowdlending and its possible solutions , like any investment the investment in Crowdlending has its risks, but they are very moderate risks and that can be tempered to the point that they are almost negligible, here we are going to show you which are those risks of Crowdlending and how to avoid them.
Risk 1: Possible total or partial loss of the investment.
1.- The investor must select very well the project in which he will invest , for this the Crowdlending company will select only stable companies with solvency and ability to pay, they will give you all the information you need, both on the solvency of The company, as well as the reasons why it requests the financing, will also give you access to its annual accounts, assign a payment capacity ratio, they will tell you the interest rate and the return period; then it should be each investor who makes his particular analysis and finally decide whether to invest in a project that has greater profitability, even if it involves more risk, or if you prefer to invest in something safer to ensure the return of the investment even if you get a profit something smaller.
2.- Diversification . From Crowdlending.es we have always advised our investors to diversify, as this ensures a positive return yes or yes. That is, if we are going to invest € 5000, rather than doing it in a single project, it is better to invest € 50 in 100 different projects, so if there is an unpaid, we would only lose that small part that would be largely compensated by the returns positive results obtained in the rest of the investments.
3.- Invest in those Crowdlending companies that are licensed with the CNMV to operate as Participative Financing Platforms (PFP) and in those that have a coverage system, guarantee fund or guarantee of repurchase in case of default , all this will minimize the possible risk of total loss of investment.
Risk 2: Possible scams, because all the processing is done remotely.
Solution: The Crowdlending company requires a lot of documentary information and also the electronic signature for the signing of the loan contracts, it also makes sure that the person signing is the person who has the sufficient empowerment to do it and, finally, also has an Insurance of Civil Liability of hundreds of thousands of euros that serves to respond to an irresponsibility of the Crowdlending company, if any. In addition, Crowdlending companies also require real guarantees from administrators in the form of a personal guarantee in such a way that, apart from the company’s assets, they also respond with their present and future personal assets.
Risk 3: The money deposited in the Crowdlending company’s account can disappear if the company goes bankrupt.
Solution: The money will never disappear, since the Crowdlending company, in the event of dissolution, has contracted a service with an external legal counsel that will return the money to all the investors and will be pending to collect all the installments of all the operations that still have not been earned. The money in the Crowdlending company account is also covered by the Deposit Guarantee Fund since they also use accounts in traditional banks to have the money deposited and make the transfers of the intermediated loans.
Risk 4: The Bank of Spain and the CNMV supervise the applications so the Crowdlending company can manipulate the scoring and give it a better rating to make it more interesting.
Solution: Crowdlending companies would never do that, it would be like throwing stones on their own roof, they are interested that the less delinquency there is better, therefore they will never give anyone a better scoring than they really have, that’s why there is no need for supervision from the Bank of Spain or the CNMV, they verify the solvency of the Crowdlending company and the veracity of its audited annual accounts.
Risk 5: Lack of transparency in information and communication of failures .
Solution: The Crowdlending companies know that there is a pillar of their credibility, for this reason they offer daily information online of which are their failures, the amount of them, as well as of the total volume of loans granted, the interest rates to the that have been granted, that the amount of loans is legal, the delinquency ratios in real time. The whole process is transparent and the information later, too.
Risk 6: The investor can not recover his liquidity if he needs it before the end of the operation.
Solution: Crowdlending companies are creating secondary markets where investors can sell their share of the debt to interested third parties who will take their place at the time of collecting interest not yet accrued and the outgoing investor will be able to recover the money invested and the liquidity of your investment without having to wait for the end of the repayment term of the loan.
Risk 7: Obtain lower returns than advertised due to lack of information.
Solution: The investor must always have the maximum information and that is known by the Crowdlending companies, that’s why in the Marketplace, a place where the investor has all the requests for financing from the promoters to be able to make their investments, it comes out with all luxury of detail the amount, the interest rate and best of all is that the investor will always be respected the interest rate for which bid in the auction although the average interest rate finally set, and that will be paid by the developer , be lower than the one offered by the investor in the auction.
From Crowdlending.es we can help you to avoid all these risks and advise you, based on your risk profile, on which are the best investments in all Crowdlending platforms in Spain, also from our website, and thanks to our APP application, You can invest in all of them, as well as track them without having to leave our website, all thanks to the computer toolbox Control Panel that will allow you to control all your investments from the same web site without having to waste time entering and leaving each Crowdlending platform where you have made an investment.