It is not uncommon for people to have liquidity needs that can only be covered by a loan. Be it, because the old car no longer comes through the strong brand, either because the dream kitchen is spontaneously available on special offer, or is it because a business startup is planned. As a rule, the first thought is the way to the bank. As much as the banks are promoting their loans, it may be impossible for a potential borrower to get the funding. Self-employed people know the problem when it comes to applying for an installment loan. Customers with poor credit ratings are also not among the target group of bank advertising. Business founders pose a very special risk, which the banks prefer to avoid. But there are alternatives.
Crowdlending – the credit from private to private
Long established in Anglo-Saxon countries, credit has also found its place in the financial landscape from private to private in Germany. The assumption that it must always be a bank that grants a loan is refuted by numerous platforms for credit brokerage. On these platforms, credit seekers meet on the one hand and investors on the other.
For private investors, lending privately offers the opportunity to generate regular interest income without their capital being exposed to price fluctuations on the stock exchanges. As a rule, a project is not financed by a lender. Rather, many people participate with smaller amounts in the financing. In this way, they diversify their risk and create a loan portfolio with different maturities and different interest income analogous to a portfolio of different time deposits. Crowdlending takes place in the private sector, crowdfunding is aimed at larger investments.
What collateral is there for investors?
The operators of platforms, which mediate loans from private to private, pay attention to the creditworthiness of the applicants when applying for the application. A credit check or a credit check is a prerequisite for a borrower to present his project on the platform, of course anonymously. Settlement, payment and repayment of the amount is subject to fiduciary supervision. It depends on the borrower how convincingly he presents himself and his planned financing project to find investors.
However, the fact is that even people with a weak credit rating on such a platform certainly have the chance to obtain a loan. The same applies to self-employed or prospective entrepreneurs. The possible credit default risk must be priced into the interest rate, then there are also investors with higher risk affinity, some of which participate in the financing.