TFGcrowd approached Financial Thing in an effort to provide information about its European based crowdfunding business. Here is a Q&A session that I conducted with TFGcrowd in March 2020. Please note I do not currently invest money through TFGcrowd.
When was TFGcrowd established?
TFGcrowd was registered in 2018, but the first projects were rolled out in 2019.
Can investors from countries outside the EU loan money through TFGcrowd?
The general requirement for investors to invest money with TFGcrowd is to be at least 18 years old and have a bank account in one of the European Economic Area authorized bank or payment institutions. Investors also have to successfully pass our due diligence on-boarding process. Hence, as long as our investors meet these requirements, they are able to loan money via TFGcrowd, even though they are from countries outside the EU.
For new investors, can you give a brief explanation of how TFGcrowd works?
TFGcrowd acts as a liaison between investors and businesses looking to be financed. For investors, the process itself is rather straightforward and simple, anyone who meets TFGcrowd requirements, namely, is at least 18 years old and holds a bank account in any of the EEA authorized banks or payment institutions can register with TFGcrowd and invest money in any of TFGcrowd’s available projects. All the information on each project reveals background details, annual return rates and loan terms and is available on the TFGcrowd website.
What is the minimum deposit and investment amount for each loan?
The minimum investment amount is 100EUR, however, there is no minimum amount for settled deposits.
How much annual interest can investors potentially earn on each loan?
The average return rate for our projects is 17% annually.
Which countries do you accept loan applications from?
Loan applications are accepted from EU only, however, there are certain cases when TFGcrowd funds projects outside EU as well.
What due diligence is performed on each potential loan?
In order to assess borrower’s ability to repay the loan, each application is thoroughly examined in regards to its reputation, financial background, and current commitments. After the vetting process, our experts evaluate the business plans, financial reporting, and loan security proposals.
What security is given by borrowers as collateral for loans?
Each project has its own security provided by the borrower, normally it would be a company asset or property, but in some cases when we think it’s not enough to cover the cost of the project, we add shareholders’ personal guarantees as well. Detailed information regarding pledges securing the loan is always available in the project description.
How many loans have been repaid so far?
There are 16 loans that have been fully repaid (as of March 2020)
What are the benefits of lending to European businesses?
The main advantage of lending to European businesses is the stability that is ensured by a well-developed economy. During these turbulent times it is particularly beneficial that the majority of our investment projects are located in stable European economies such as UK and Germany. The governments of these countries have sufficient means and there are already measures in place to help businesses through coronavirus crisis. The support packages received by governments ensure business continuity and consequently do not influence payouts to our investors.
What is the Buyback Guarantee that you offer? How is this funded?
There is Buyback guarantee in place protecting interests of our investors. 2% of each successfully funded project goes into the Buyback Guarantee fund ensuring our investors 100% of the nominal value of their investments as well as accumulated interest in case of borrower defaults.
TFGcrowd invests its own money into some loans. How much money do you invest and is this money a first loss if the loan borrower defaults?
There are just a few TFGcrowd projects where the company itself invests on their campaigns. As for investment amounts, there is no fixed percentage of the proportion invested as the amount depends on the project.
As for payment priority, when we are participating as investors ourselves, there is no difference in terms of payouts between us or other investors.
It also gives us more control over the investment.
What are the lending risks investors should be aware of?
Investment always has an element of risk, and crowdfunding is no exception. Even though we believe in secure investments as one of our core values and our top priority when selecting investment campaigns, there are certain risks involved and our investors can access detailed information regarding it in the Risk Section available on the TFGcrowd site.
Has TFGcrowd experienced any loan defaults?
As of March 2020, TFGcrowd hasn’t experienced any loan defaults.
What is the process for recovery on defaults?
In case of any defaults, there is Buyback guarantee in place. These funds are kept in a separate segregated account and if a borrower defaults, TFGcrowd will compensate the invested amount as well as the accumulated owed interest.
How is TFGcrowd funded as a business?
TFGcrowd is privately funded by the company founders and its business partners.
Is TFGcrowd a profitable company? If not when do you expect to be?
Although TFGcrowd is a relatively new company in the market, it is profitable and its profitability keeps increasing. Therefore, TFGcrowd is able to develop and is currently investing resources to improve our website capabilities.
What happens if TFGcrowd goes out of business? How are loans serviced?
In the case TFGcrowd goes out of business, we will do our best to ensure investors interests are satisfied and handled in the best possible manner. TFGcrowd is a platform that facilitates investment projects, so loans are written between borrowers and investors. If TFGcrowd were to go out of business, an appointed administrator will continue handling loan payments on behalf of the investors.
Has the Covid-19 situation affected your business?
The Covid-19 situation has affected all the business worldwide and TFGcrowd is not an exception. Due to changing circumstances in the business environment, TFGcrowd has a settled rigorous action plan to be able to move forward and to reach our roadmap goals within previously settled timelines. Most importantly, we work remotely to keep our staff safe and to ensure business continuity. One of our top priorities is to maintain open communication with our investors and keep them up-to-date regarding the current projects and situation of our company.
Additionally, to meet the current demands, we have now changed the focus of the investment campaigns by selecting sectors that produce virus curbing essentials (for instance, disinfectant, hand sanitisers and food supplements) and by selecting the campaigns that are now in high demand due to the spread of the virus.
Please note that I currently do not invest money through TFGcrowd. This page is provided for information only.
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** This information is not financial advice and has been prepared without taking your objectives, financial situation or needs into account. You should consider its appropriateness for your circumstances. All investing carries risks. Opinions expressed in this review are opinions based on my own personal experiences. The FSCS does not cover peer to peer lending and your capital is at risk. Please don’t invest more than you can afford to lose. **