Crowdestor Reviewed | Funding SME's in Europe with P2P Lending

Crowdestor was founded in 2017 in Latvia by Gunars Udris and Janis Timma. The platform has funded loans throughout Russia, Europe and Asia. Loans on Crowdestor all come secured by some form of collateral and guaranteed by some form of Buyback that the platform offers. Crowdestor reports an unusual amount of late payments but remains a highly profitable Peer-to-Peer lending platform for the majority of investors.

Go to Crowdestor.com

Our rating:

2.02

Types of Loans on Crowdestor

• Personal loans
• Mortgages
• Business loans
• Car loans
• Payday loans
• Invoice finance
• Development loans
• Bridge loans
• Renovation loans
• Student loans
• Debt consolidation
• Wedding loans
• REIT loans
• Small Business loans
• Cash advances

Crowdestor Loan Characteristics

• Loan duration3 - 18 Months
• CurrencyEUR
• Buybacks Yes
• CollateralYes
• Available inGlobal
• Returns rate12% to 36%
• Default Rate27%
• Recovery Rate
• Fees
• Bonuses

Crowdestor Features

• Auto-invest
• Manual selection
• Secondary market
• Pooled investments
• Regulated
• API Integration
• High liquidity
• Quick withdrawals
• Secured Loans
• Loan originators
• Equity based
• Credit based
• Diversified marketplace
• Award winning

Who is Crowdestor?

Crowdestor is a Latvian Peer-to-Peer lending platform that specializes in lending to small to medium sized enterprizes or SME's. Crowdestor was founded in 2017. The minimum entry deposit is 50 EUR, and the interest rate is solely determined on the projects the investor chooses. There are various types of loans that can be funded on Crowdestor, not only SME's. They also offer loan requests from real estate developers and a smaller fraction of their market consists of consumer loans.

Lender/Borrower Ecosystem

Crowdestor is both the platform as well as the lending / borrowing service. All funds are held in a special purpose vehicle, in the case of Crowdestor going bankrupt, investors funds are protected by a third party bank.

Crowdestor claims that they are more of a peer-to-business platform rather than peer-to-peer. However, the platform itself is really a combination of the two, which in result, produces in an incredibly interesting and diverse ecosystem. The interest rates range from 12 percent to 40 percent. The loans that come at 12 percent are backed by a mortgage or a business, and the loans on the higher end are loans for game developers and movie producers. Both the diversity and the uniqueness of the marketplace is something that should always be welcomed in an alternative finance ecosystem.

Crowdestor's dedication to actual protection of users funds is lacking in execution. While there are programs that aim to support investors who make bad decisions, there is not enough to mitigate the overall damage and portfolio losses some investors experience on Crowdestor. Crowdestor's buyback guarantees, while promising principal, do not always work as intended when put to practice.

Other policies such as, Crowdestor's Provision Fund, gives investors the option to put down five percent of their portfolio to help restructure late loan payments for the defaulting borrowers. Crowdestor is unable to always return principal on projects that default with buyback guarantees. Therefore, the P2P platform has implemented mitigation programs in place for the entire ecosystem. This is to help the unfortunate investors to still receive their interest payments while allowing borrowers room to breath.

General Data

How to Borrow?

Crowdestor only offers business loans. borrowers must be registered in the EU and can only request the loan for business purposes. These borrowers have to undergo a series of tasks and document uploads in order to receive a loan approval. Loans can be issued for all sorts of reasons such as, property acquisition, business acquisition, new employees, renovations, new projects or rebranding.

Registration & Withdrawal

It takes a few minutes to register. After verifying an address, number and standard KYC, users can deposit. There is a 100 EUR minimum deposit after which, users can manually invest. The website itself is very user friendly, and Crowdestor makes frequent successful updates to their level of transparency and website quality.

It is recommended to deposit in EUR to avoid loss on currency exchange, as most of the platform operates with EUR.

For free EUR deposits we recommend the following online banks:

• TransferWise
• N26
• Revolut

It generally takes 1-3 business days for funds to appear in the account. Crowdestor does not charge any fees for deposits and withdrawals, however, depending on the transaction fees of a given bank, users may be charged by their bank for exchanging and handling fees.

Marketplace

The marketplace stands out in its design and ease of use. The platform is responsible for the loans issued. The borrowers, in general, are European business owners or international movie makers. There are other loan types, however, these are the most prevalent. The rest are far and few in between. The less frequent loans requests include: delivery of medical supplies, wood supplies, farming supplies and food & beverage supplies.

The amount of information divulged also stands out even among the best Peer-to-Peer platforms. There really is more data dedicated to one project on Crowdestor than any other platform. In general the marketplace is clearly catered and fine tuned to aspects of the project that are essential for the investor to know.

Important Data to Look out For Included:

Development Loans

• Projected IRR
• Business Plan and/or Ready Buyers
• Property Size
• Registration or Deed of Property
• Collateral

Business Loans

• Location of Store
• Proof of Business
• Projected IRR
• Business Plan
• Product
• Team
• Projected and Past Revenue of Business
• Collateral
• Buyback Guarantee

Movie Production Loans

• Location
• Proof of Script/ Movie
• Actors
• Funding Rounds
• Equity for Loan
• Business Plan
• Ready Buyers
• Production Company

The data presented does not end there. Crowdestor really does go above and beyond to provide as much information to the investor ready at hand.

Risks Involved

1. Default Risk - When a loan defaults there is no guarantee that lenders will see even their principal return.
2. Inflation Risk - The risk of inflation where a user's capital is locked up whilst slowly lowering its value due to economic despair.
3. Management Risk - The fees associated on the platform and the general health of Crowdestor’s employees.
4. Marketplace Risk - The risks associated with Crowdestor itself going bankrupt. In such a case, a legal team would take over liquidating Crowdestor and redistribute the remaining capital. In such an event lenders can expect to see a substantial reduction in their capital and returns.
5. Callable Risk - Loans can be paid back early, meaning less or no return in interest.
6. Diversification Risk - There is a necessity to diversify your investment on Crowdestor.
7. Economy Risk - If there is an economic collapse borrowers are less likely to pay back their debt as they most likely won't have the means. Similar to the default risk, but on a larger scale.
8. Pricing Risk - The risk associated with Crowdestor’s ability to properly identify who is a good borrower and who is a bad one.

As per Crowdestors statistics, about a third of their loans go into late payment. While late payment could be great for the investor because it means the interest ultimately increases, it's also a red flag. The more loans that are late, the riskier it gets for the entire platform.

There is a high level of risk investing with Crowdestor. There is no auto investing tool, and there is no clear credit rating or guarantee that a project will pay back it's loan. Instead, Crowdestor provides all borrowers and investors a 14 page credit report. While a 14 page report is great for all included, it's utility needs to be accurately reflected by the performance of the platform.

Investing into projects such as cinema or medical development is going to be either highly profitable or not at all, historically speaking. Investors are required to do their due diligence to a much greater degree if choosing to go with Crowdestor. That being said, there are few platforms in the P2P lending space that provide comparable returns.

Crowdestor does not provide a secondary market which means an investor may suffer from lack of liquidity.

Investment Strategy

One of the greater strengths of Crowdestor is how diversified their marketplace is. There is so many different kinds of investments to choose from. It's also difficult to find movie production funding in a peer-to-peer lending platform.

All loan cycles range from three months to 18 months, loans range anywhere from 10,000 to 500,000 EUR. Borrowers are required to pay at the very least 15 percent interest on the loans they take from Crowdestor.

There is only the ability to manually select. However, this is preferable in a SME lending market, as investors can choose the businesses they understand. It's not like a loan originator who issues out thousands of loans and the investor picks a loan out as if it were a lottery.  On Crowdestor, and on other P2P platforms like October and Kiva, there is an element of knowing your borrower, what they do and whether or not you believe in it.

The key to using Crowdestor is to select loans in industries that you, yourself, are familiar with.

Customer Service

The support consists of phone support and email support. Which are both satisfactory. The wait time for phone support ranges from 5 - 10 minutes and email support replies in about a business day.

Crowdestor is also available on many social media platforms. Twitter, Facebook and Telegram are places where investors and borrowers can get in touch with Crowdestor's team. Investors who are in need of assistance from someone with authority can go to these channels, which are all considerably active.

Transparency & Security

Crowdestor provides a lot of transparency. They display all of their statistics, and as mentioned above, they divulge serious amounts of information on all of their borrowers. Many platforms may feel that it is not necessary to supply the information of their borrowers, so it's always a plus to see a platform that does.

The fourteen page credit analysis report is also a huge boost to their determined approach to providing transparency. However, the company does suffer from a large percentage of late payments and a considerable amount of defaults. In regards to their platform, their blog is updated regularly to assist those investing on their platform and aims provide a better financial perspective on the market as whole. This is done by frequently updating readers on new regulations, local developments, and new types of asset classes to look out for.

Their F.A.Q section is also expansive and aims to answer as much of customers queries as possible.

The approach to fund recovery is also laid out on their website. They have three forms which they utilize.

Due to the diversity of their marketplace there are few approaches to fund recovery which are appropriate for the loan type.

• Selling Collateral
  • Selling the piece of property associated with the loan, usually returns principal and some interest. Collateral is sold for business and mortgage loans.
• Debt Restructuring / Payment Prolongation
  • Increases the loan cycle delaying payment, forgiving on interest but increasing overall yield. Debt restructuring is applicable to all forms of loans.
• Selling Debt to Third Party Service
  • Sends debt to a debt collector, which generally takes time and drastically reduces yield. Selling debt is only valid for borrowers who have completely defaulted and have no intention or ability to pay back their loans.

Crisis Management

Eastern Europe is always hit very hard by global economic turmoils. Covid-19 resulted in the loss of many peer-to-peer lending platforms. Those who overcome the turmoil are without a doubt the ones the market will look up to when the crisis ends. Fragile businesses have no place in the lending industry. Crowdestor did their best to roll out financial campaigns to help assist investors and borrowers.

In finality, Crowdestor is still alive and kicking. While they may have not had ideal performance they are still thriving and still issuing loans.

Our Readers Have Asked:

Is it safe to invest with Crowdestor?

No investment is ever "safe". There is an inverse relationship between risk and reward, the more risk you take the higher your reward as well as the chances of losing your investment.

How much money will I make with Crowdestor?

Crowdestor proclaims that investors on their site make anywhere between 12 - 36 percent in yearly returns. Crowdestor is all manual-investing into business loans that are considerably high risk. Crowdestor is not a platform for beginners and should be considered risky even for P2P lending standards.

What are the risks?

Crowdestor default rate ranges between 26 - 28 percent, historically speaking, investors can at the very least expect a third or more of their loans to be very late or completely defaulted.

Why do I need to submit ID verification?

Know-Your-Customer or KYC protocols are a standard and necessity to protect your investment account from bad actors and hackers.

Is P2P lending a ponzi scheme?

Some Peer-to-Peer lending platforms are dishonest and shady. The industry is still in nascent stage and while there are definitely some illegitimate companies, there also many honest, hard working and profitable ones. Crowdestor is certainly one of those companies that is honest, hard working profitable but with a risky business model.

Where is Crowdestor located?

Vīlandes iela 6-6, Centra rajons, Rīga, LV-1004, Latvia

Watch & (L)earn

Discover more about Crowdestor in this short but informative video.

Pros, Cons and the Verdict

Crowdestor aims to be a top tier peer-to-peer lending platform. Their niche marketplace of movie production is something that should be encouraged in the emerging peer-to-peer lending space. Yet something needs to be said about the unusual amount of loans in late payment. The entire world is enduring economic turmoil and societal unrest, and such reasons undoubtedly affect the credit market. Those who can overcome the times, solidify their position for the future, but such a task is far easier said than done.

On the positive side, Crowdestor brings a lot to a peer-to-peer lending portfolio in terms of loans that are going towards businesses that are productive and profitable. The marketplace also offers an attractive IRR, which many platforms can not provide and if they do, they suffer similar late payments and loan defaults. Crowdestor's resource allocation to transparency is something that should also be embraced. Many platforms today prioritize privacy over trust. Crowdestor takes a step forward in understanding trust and transparency are key to a successful lender/ borrower ecosystem.

Go to Crowdestor.com

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