Crowdfunding in the Netherlands: Record-Breaking Growth and Consumer Loans on the Rise

Last year, a total of more than 1 billion euros in crowdfunding was raised by private individuals and companies, a growth of 48 percent compared to last year and “a record”, says entrepreneur Gijsbert Koren of Crowdfundingstats.nl. More than 18,000 projects have been funded.

Traditionally, it is the young companies that raise the most money from the general public. This usually takes the form of a loan on which interest is paid. Charities and creative people also know how to find crowdfunding.

Bigger bite

Just like consumers, they have been taking an increasingly large bite out of the total amount that is collected in recent years. Last year that was 72 million euros, in 2021 more than 30 million and a year before that more than 13 million. Just under 40 percent of all crowdfund projects were labeled consumer loans last year, it appears facts van Crowdfundingcijfers.nl.

Solar panels, a new car or camper, sometimes even a wedding, consumers crowdfund for everything, says Robert Leclercq, co-founder of Lender & Spender. His company is the only crowdfunder in the Netherlands that connects private individuals who have money to spare with people who need it. “There are many more of these so-called peer-to-peer platforms abroad,” he says.

Strict loan rules for consumers and an interest rate cap for lenders make it more complicated in the Netherlands to attract both borrowers and investors. And with that to make money for platforms such as Lender & Spender, which takes an annual commission on the amounts lent. “That’s why it hasn’t taken off here yet,” says Leclercq.

To grow

Nevertheless, enthusiasm is rising and the company says it is doing better and better. “After the pandemic, we started to grow,” says the owner. Since 2017, more than 23,000 loans have been taken out for an average amount of 10,000 euros. On the other side of the spectrum are more than 5,000 investors who on average lend just under 50,000 euros per investor. To date, they have received a total of almost 7 million euros in interest.

For a few years now, these investors have also included some larger investors, says Leclercq. “We want to have enough money in house, because we don’t want to sell people no,” he says. The company offers investors an ‘expected net return’ of 4.7 percent, so it’s not a guarantee. In any case, it is a lot more than you get, for example, if you put your money in a savings account.

Digital ballotage

According to Leclercq, the interest for borrowing money is somewhere between 7 and the maximum permitted 14 percent, depending, among other things, on the risk profile of the borrower. “For example, if you have more room in your monthly budget, you can borrow at a lower interest rate,” says the entrepreneur. Precisely because the interest rates are competitive, according to the owner, more and more consumers are interested in crowdfunding.

According to Leclercq, anyone who wants to borrow must go through a fairly strict digital ballot to determine whether there is sufficient income. “We are no different from other lenders on the back, maybe even stricter.” He calls the application process itself simple. This is usually done through intermediaries, parties or advisers who refer customers and receive a commission for this.

Personal loan

You can also take out a loan from banks for a new car or renovation, usually in the form of a personal loan. You will receive the loan amount in one go into your account. Every month you pay a fixed amount in interest. These interest rates vary depending on the amount, term, risk profile and purpose for which the loan is used. Borrowing money for a new car or renovation is usually slightly cheaper. The rates below are indicative.

A loan of 5,000 euros in the ‘other’ category with a term of 5 years:

– ABN Amro: 11-12.9 percent
– ING: 9,1-10,7 procent
– Rabobank: 9.8 percent

‘Night sleep’

A crowdfund loan can be arranged in a day, although applicants are required to sleep on it for a night before they can agree. “Can be annoying if you want to tap that car on Friday afternoon,” says Leqlercq.

After all, it is not without risk. For both the borrower and the investor. Thus, a small portion of the loans should be written off, because they are no longer repaid. “If that happens, you will lose at most a small part of your investment,” says financial advisor Amanda Bulthuis of Geld.nl, who sometimes also forwards her customers to the crowdfunder. “Your investment is spread over several loans, so the risk is lower.”

Borrowing money, costs money

According to the Netherlands Authority for the Financial Markets and the Consumers’ Association, many consumers see crowdfunding as less risky than investing in funds or shares, but this is often unjustified. The advice: do proper research into the risks and never invest more than 10 percent of the freely investable capital in crowdfunding.

And for the borrower: borrowing money costs money. Taking out a loan seems very easy, says information officer Nibud. But there are always risks involved. Responsible lending is therefore the motto.

2023-08-22 05:03:56
#Consumers #finance #cars #extensions #crowdfunding