7 tips for choosing the best Crowdlending platform as an investor

Crowdlending has tremendously altered the landscape of lending and borrowing money. Whether individuals are seeking consumer loans or business owners looking for a financial boost — digital loans have made funding more accessible to everyone.

For investors, Crowdlending also offers an alternative way to invest effortlessly. When choosing a platform to invest on, there are some factors you should keep in mind. To name a few, here are 7 tips on how to select the right Crowdlending platform for you.

1. Transparent platforms are trustworthy
You should look for platforms that are transparent and have no hidden fees. Understand before you invest what the fee structure looks like and what you have to pay and when.

2. Risk assessment should be in place
As with any investment, there’s always an element of risk. Look for a platform that openly tells you how they evaluate the risk of a project. And what information they use to determine risk categories.

3. Contingency plan in case something goes wrong
What happens if the crowdlending platform you invest on goes bankrupt? Would you be able to get your money back? Is your money in the hands of the crowdlending platform? While choosing a platform, it’s essential to ensure that your money is handled by a robust money manager.

To give you an example, at Acredius, we have a bankruptcy-remote structure in place. Our banking partner, TMF Group, provides loan servicing for us. This means that they channel the money from investors to the business owners on our platform, and vice versa. We do not have access to the funds invested in our projects. If Acredius were to go bankrupt, TMF would still exist and service the loans. As an investor, you can be sure to continue receiving your payments. Hence, it’s vital to look for platforms that are willing to address how your investments will be dealt with in case of bankruptcy.

4. A global pool of investors
Look for a platform that accepts international currencies. This shows that they have a global pool of investors.

5. Minimum investment amount should not be so high
Most people assume you need to be rich to start investing. That is not true! In Crowdlending you can invest from as little as CHF 10 up to any amount you like. However, in Switzerland, starting with CHF 2’000 is considered a good amount to diversify your portfolio.

6. Withdrawal policy
Different platforms may have different regulations. However, it’s useful to know that in general, once a project is financed, you are unable to withdraw from the investment. That said, some platforms offer a secondary market allowing you to sell your existing investments to other investors at a discount.

7. Platform with a positive track record
As an investor, you’ll want to invest on platforms that have successfully financed projects in the past and where borrowers and investors have had positive customer experiences. To ensure this, check out their testimonials and success stories.

We hope that these tips have helped you feel more confident in choosing the right Crowdlending platform. Let’s get your investing journey started!

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