Crowdlending, also known as peer-to-peer lending (P2P lending), is a relatively new phenomenon in Denmark - but crowdlending as an investment opportunity and platform has existed for many years in countries such as the US.
Nevertheless, due to the economic boom and other trends, this type of investment is growing rapidly in Denmark and the rest of Europe. More and more people are taking an interest in crowdlending - and we understand why!
Crowdlending offers a lot of attractive opportunities for you as an investor. If you want to ride the wave, you can learn more about the crowdlending concept here and get started quickly with your first crowdlending investment.
At its essence, crowdlending is an investment in loans.
You may have heard of crowdfunding, which is a type of fundraising where money is raised to launch a pre-defined project. Crowdlending is similar to crowdfunding, but in this case, individuals are able to provide loans to other individuals or businesses who need the money for a project.
To help borrowers raise the amount, a group of people, i.e. a "crowd", will gather the sum of money and create a pooled loan. Ultimately, the lender is supposed to get the loan back plus interest. Crowdlending is done through platforms like Fundbricks, and all platforms must be approved by the Danish Financial Supervisory Authority.
With crowdlending, you make money by investing in loans without any bank involved - the money simply goes directly from the private investor to the person who wants a loan. In this way, crowdlending is based on building communities of owners, where even a small amount of money gives you access to larger investments.
In Denmark, crowdlending loans are known as P2P loans, which originates from the English term "Peer-to-Peer (P2P) lending". Originally, crowdfunding was primarily used to finance loans to private individuals. However, over time, the crowdlending industry has evolved to include funding for other areas as well.
Today, you can invest in P2P loans in various areas, including personal loans, business loans and real estate loans. Crowdlending opens the door to exciting investment opportunities where you can back different types of loans and potentially earn attractive returns.
The terms crowdfunding and crowdlending can be a bit tricky to navigate.
Basically, crowdfunding has no financial gain for the backers, who only get the joy of seeing the project completed, if enough money can be raised. You can read more about crowdfunding here.
Crowdlending essentially works on the same model, but with crowdlending you actually have the opportunity to make a financial return. This is because the money you throw into the project acts as a loan that has to be paid back to you, along with a predetermined interest rate, which is often quite high.
Crowdlending is therefore extremely advantageous - both for the investors and the borrower or project manager. In addition, crowdlending will open up the possibility for private investors to invest in projects that they believe in. And crowdlending can, for example in real estate projects, allow the group of investors to concretize their investments and at the same time follow the project.
With us, your wealth is lent to real estate developers who have solid Danish real estate projects in the pipeline and need financing to complete the construction of the properties.
This allows you as a private investor to earn a solid interest rate gain on lending your wealth to the individual investment project.
The real estate developer gets the opportunity to complete their project and secure a revenue stream.
The investor receives a high return of typically 7-10% p.a. and with repayment after typically 6-18 months. Investors receive a share pledge in the individual project company.
As with any other investment, investing through crowdfunding comes with risk.
Success with crowdfunding at Fundbricks typically requires prior knowledge of real estate investing, and we always recommend that you thoroughly familiarize yourself with the projects you choose to invest your money in and consider your own risk appetite.
A major advantage of investing via crowdfunding versus investing in stocks and bonds, for example, is that you don't have to pay brokerage and management fees.
The real estate developer or project company offering the investment bears the costs associated with it.
Crowdlending is an excellent addition to your diversified investment portfolio. Furthermore, investing in real estate construction, as you can here at Fundbricks, will also protect your investment portfolio from stock market volatility and provide a more stable return. This is because there is minimal correlation between stocks, the real estate market and P2P loans.
In other words, negative fluctuations in the stock market will not directly affect crowdfunding investments. Over time, low correlation will ensure the most stable portfolio for all investors in a crowdfunding project.
Read more about the importance of a diversified investment portfolio here.
In addition, many crowdlending platforms spread the loan between multiple investors, thus spreading the risk of the investment.
When you earn a return on your crowdfunding investments, remember to pay tax on the profit. Crowdlending is treated in Denmark in the same way as other lending relationships, which means that your interest income must be declared as capital income. It is important to be aware of the tax obligations of crowdlending to ensure proper reporting and compliance with applicable tax rules.
Crowdlending is a transparent and flexible investment alternative. And crowdlending is a fast-growing investment opportunity - you can read much more here about investing and learn everything you need to know before you embark on your investment adventure..
At Fundbricks, you can immediately start investing via crowdlending, and we are one of the first to offer crowdlending in Denmark. We also make sure that the processes run smoothly and connect the lender and the borrower.
We follow the money laundering guidelines.
Select the amount you want to lend for each property project.
Receive cash repayment of your loan as well as returns when the property project is completed.
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