A Maclear-funded project is a vetted small-business loan, split into investor claims and backed by registered real-world collateral. Before it goes live, the borrower passes due diligence — UBO, financial, and collateral checks — and receives an internal risk score. Investors then fund the loan and receive monthly interest until repayment. Returns are not guaranteed.
A Maclear-funded project refers to a notion that describes a crowdfunding campaign that has successfully been completed with the investors financing a business loan that is backed against provided collateral. Investors can purchase a smaller claim that represents a portion of a larger loan needed for the business owner. Upon reaching the target set by the business, the fundraising campaign is considered complete, and the borrower has to begin repayments of the interest to the investor based on the agreement.
However similar crowdlending may seem, the borrowers differ across the industry of the project, the risk score, the financing purpose, and the terms of the loan. While some need intensive capital investment to purchase better operational equipment or develop a software system that will provide a better backup to their business, the others want to finance production expansion or the marketing campaign to boost the sales. Private loans given to the businesses by the investors span across different industries, including IT, entertainment, construction, healthcare, logistics, and many others.
Return is measured as AROI, or Annualized Return on Investment, the indicator that calculates the expected return in comparison to the principal being held. AROI gives the possibility of the evaluation of crowdlending debts as a metric designed specifically to access the claims before maturity. AROI is a metric that works with an expected value, not with a guaranteed outcome.
The project undergoes prior due diligence before being listed on the platform. It assesses the repayment history (in case the borrower is a repeat one), sectoral risks, the structure of the loan, and the borrower’s financial situation before proceeding with the loan. Due diligence is needed to reduce the borrower-related risk for the investor, not eliminate it completely. Then, the investor may get transparent information about the borrower and make a weighted investment decision. The review begins with the proof of ownership (UBO verification) and then the assessment of the company’s operational history, managerial board, decisions, and corporate documentation. Any financial statements are analyzed against the existing liabilities or unpaid debts (if those exist) to determine the credibility of the borrower. Then, the platform gives the borrower an internal risk score ranging from AAA to D. In case some country-related or industry-related risks appear relevant, Maclear assesses them too on a case-by-case basis.
The assessment of any potential collateral suitable for the backing of the loan is also an important part of due diligence. Equipment, business assets, property objects, vehicles, or any type of tangible asset suitable for the collateral is assessed based on their base value and the liquidation value after the calculation of the necessary legal and transactional costs and a discount (if necessary). The value of the collateral is then put against the loan with the use of the Loan-to-Value (LTV) metric that demonstrates whether the value of the collateral covers the loan against it completely.
Maclear vets every borrower individually before listing the investment project on the market to determine and confirm the ownership, the financial performance, the quality of management, and the value of the available collateral. Even when the borrower wants to take another loan when they have already been successfully lent to before, Maclear will run another due diligence before listing the project from the same borrower to verify the current, actual financial situation.
Crowlending overall is not a risk-free venture because borrower-related risk as well as liquidity risk cannot be entirely eliminated regardless of the mechanisms used to mitigate them. However, before listing the project on the market, Maclear runs the due diligence described above. On top of that, the platform calculates the base (total) value of the collateral pledged against the loan and the liquidation value of the asset. Having assessed this, the platform then calculates the LTV to determine how strong the loan is secured by the collateral. After all the essential checks and the calculations of the collateral value and the LTV, Maclear assigns the project an internal risk score on a scale from AAA to D.
The forms of collateral differ enormously, from corporate cars to real estate objects. Securing the loan against collateral is only one of the mechanisms that helps to reduce the borrower-related risk. The overview is given in the table below.
An internal risk score is an indicator of the perceived risk coming from the borrower based on their credibility. It is derived from multiple factors like the current financial situation, the structure of the loan, sector-specific constraints, the collateral against the loan, and the calculated LTV ratio. The internal risk score is the final result of due diligence and has a value between AAA and D for every project.
When the project is successfully through the process of due diligence, it is listed on the market, where the investors may purchase small claims of the project by buying individual claims. The minimum amount for purchasing a claim is €50 per claim. The investors can buy multiple claims for one project rather than having to pay for the full amount of the loan. Crowdlending gives many investors the opportunity to purchase claims in one project and receive the fixed interest payments after the crowdlending campaign has successfully ended.
At the end of the crowdlending campaign, the borrower starts repaying the debt according to the schedule defined by the initial agreement with the investors. The interest is usually paid on a monthly basis and is a fixed income that does not include the repayment of the principal. The principal is repaid only after the project has reached maturity, with the investors able to get their funds back. Usually, there is no option to exit earlier since P2P claims are designed in a way that they have to be held until maturity. However, some platforms (including Maclear) offer the Secondary market where the investors may sell a claim earlier with a discount and with the payment of 2.5% as a seller’s fee. However, the returns are not guaranteed, as they depend entirely on the demand for the asset from the other investor, and liquidity of the asset may be partially lost in case it is sold with a discount.
The investors are paid on a monthly basis with a fixed interest payment on most projects that are financed through crowdlending. The principal is repaid only after the claim has reached maturity.
Here is how the expected return on investment is calculated using the AROI. The investor purchases a €100 claim for the project that has the interest rate of 14.8% per annum. The period that the claim has to be held until it reaches maturity is 6 months. Now, using the formula to calculate the interest, the calculation of the expected interest goes like this:
€100 × 14.8% × (6 / 12) = €7.40
Then, the calculation of the AROI is required to determine what expected returns from investment can be: AROI = (Expected Earnings / Principal Purchased) × (365 / Remaining Holding Period). Provided that the interest, as well as the remaining holding period, is already known, the following calculation happens:
AROI = (€7.40 / €100) × (365 / 182.5) ≈ 14.8%.
This means that the investor who has purchased a €100 claim on a project with six months until maturity can expect the returns of €7.40, or 14.8% in the equivalent in percent.
Illustrative only. Returns are not guaranteed and depend on borrower performance.
The investment always carries a certain risk that cannot be completely removed by any underwriting process, no matter how thorough it is. However, the platforms have multiple mechanisms that help to mitigate the borrower-related risks, including the Secondary Market for the earlier sale of the P2P claims, the Provision Fund for the retention of temporary interest payments in case of a disruption, the collateral to secure the loan against a tangible asset, and other solutions. Alongside due diligence, these tools form a coherent multi-layered framework for risk mitigation, although they can never completely eliminate the borrower-related risk.
Maclear’s Provision Fund functions like a pool of the reserves formed from the 2% fees. When the investor faces a temporary disruption in interest payments, the Provision Fund provides these payments to temporarily mitigate the issue with the borrower. Yet, if the borrower fails to continue the payments after 60 days, the legal enforcement of debt collection is possible, with the potential liquidation of the collateral.
A Maclear loan is backed by real collateral and supported by a Provision Fund, but capital is at risk: borrower default, country and concentration risk, and limited liquidity mean partial or total loss is possible — collateral and the Provision Fund reduce, but do not remove, this risk.
The projects funded by Maclear have a different risk profile, the structure of the loan, the terms of the financing, and a different internal credit score. The projects financed by Maclear come from different sectors, including IT, construction, healthcare, and logistics. All these projects have been secured against different forms of collateral with varying LTV rates and carried different risks to the investor.
The loans differ in terms of the borrower’s needs, including the interest rates that typically fall within the range between 14.5% and 16.9% and the timeframe for the maturity of the claims, varying from several months to more than a year. The internal risk scoring also differed, ranging from AA to BB. Maclear also tries to run due diligence to differentiate all the businesses and evaluate the credibility of the borrower on a case-by-case basis. The projects financed by Maclear include LeadX Digital, WEST AGRO GROUP, and ULTIMA FINANCE, which present entirely different risk profiles and types of projects and differ in terms of financing purposes.
A Maclear-funded project is a vetted small-business loan, split into investor claims and backed by registered real-world collateral. Before it goes live, the borrower passes due diligence — UBO, financial, and collateral checks — and receives an internal risk score.
Maclear runs prior due diligence every time a borrower wants to secure a loan on the platform. Due diligence includes UBO checks, financial and collateral checks, and the assessment of the industry-specific and project-specific risks connected to the country where the project is and, sometimes, to the purpose of financing. Then, the project receives an internal credit risk score based on Maclear’s analysis of the factors above.
If the borrower stops paying, the collateral backs the loan. The collateral comes in many forms, including property objects, commercial vehicles, business assets, and other types of tangible assets. After 60 days with the interest paid through the Provision Fund, Maclear can start the procedure of the collateral liquidation once all the legal proceedings have occurred.
The investors are usually paid their interest on a monthly basis. The principal is repaid only when the claim has reached maturity. Usually, it is impossible to exit a P2P claim earlier. However, a limited option exists through the Secondary Market where the investor may sell their claim before maturity, provided they find another investor who is interested in buying it.
No, the return of the funds is not guaranteed even if the collateral is realized. If the borrower goes bankrupt, the circumstances may appear that the value of the collateral may not cover all the legal expenses entirely. It also depends on the type of the collateral, the LTV, and the conditions on the market.
The content of this article is provided for informational and educational purposes only. It does not constitute investment, financial, tax, or legal advice. P2P lending and crowdlending investments carry a risk of partial or total capital loss. Past performance is not indicative of future results. Liquidity on a secondary market is not guaranteed. Readers should conduct independent research and consult qualified advisors before making any financial decisions. Availability of products and services may be restricted in certain jurisdictions.
