A Maclear loan is backed by registered real-world collateral — equipment, vehicles, inventory, or company assets — valued above the loan. Coverage is measured by loan-to-value: LTV = loan amount / collateral value, assessed at conservative liquidation value (typically 75–85% of base). Lower LTV leaves more buffer, but collateral reduces loss rather than removing risk.
A private loan on Maclear is secured against the tangible asset, be it a commercial vehicle, a real estate object, equipment for business, or storage or production capacities. These tangible assets are called collateral and serve as an additional protection layer that tries to mitigate the risk of the funds’ loss because of the borrower’s inability to repay the debt. In some cases, the collateral may be additionally reinforced by a personal guarantee or a specific contractual provision aimed at protecting the loan more.
The collateral serves as the mechanism that can be liquidated in case the borrower fails to repay the debt after the required legal proceedings have occurred. Then, in case the legal proceedings have been successful, the investor may be compensated with the funds acquired from the selling of the collateral, retrieving the full amount of the principal or a part of it depending on the value of the collateral compared to the amount of the loan. Still, the realization of the collateral requires legal proceedings and is dependent on the current market conditions that may increase or reduce the value of the asset, thus requiring an actual assessment of the value of the collateral.
The collateral against a loan is a physical asset that secures the loan against it, while the Loan-to-Value (LTV) ratio is a metric that describes the value of the loan compared to the market value of the collateral. LTV is calculated using the following formula:
LTV = Loan Amount / Collateral Value
LTV is never an isolated indicator and is linked directly to the loan. The LTV value differs, Maclear featuring an LTV range between 40% and 200% for the projects on the platform. A more conservative LTV, or the LTV value that is below 100%, means that the market value of the collateral is higher than the value of the loan pledged against it. A higher LTV, or above 100%, means that the value of the collateral is lower than the amount of the loan, meaning that the collateral does not fully cover the debt. It is also important to consider indicators like debt-to-value or repayment history alongside LTV to ensure a complete investment analysis of the project for the investor.
To understand how LTV calculation works in practice, it is necessary to consider the following example of an IT-SME. The company needs a loan with the total amount of €700,000 and enters into a contract with the investor who can provide the funds against the collateral. The investor gives the loan in multiple stages. The company provides several tangible assets, one as collateral against one loan installment. The first stage includes the loan of €146,000 against the company’s operational assets as the collateral with a price of €195,000. At this stage, LTV for the investor is 146,000 / 195,000, or around 75%. Then, in the next stage of financing the loan, the investor provides €48,800 against the owner’s vehicle as the collateral with the market value of €57,400 with the LTV of 85%. Then, the lender provides the last installment of €520.800 against the contract-linked equipment with the value of €651.000. The total value of the collateral against the loan amounts to €903,400, with LTV clearly being below 100%, while the liquidation value was set at €715,800 against the loan of €700,000. In case of liquidation, the investor would be compensated with the funds acquired from the selling of the collateral.
Illustrative: recovery is not guaranteed and can take time.
Loan-to-Value, or LTV, is a metric that evaluates the market value of the collateral against the total amount of the loan. It is calculated using a formula: LTV = Loan Amount / Collateral Value.
Even when the total value of the collateral may be larger on paper, the actual enforcement may be limited to a certain sum calculated with regard to the amount of the loan against it. Because of this, crowdlending recognizes the difference between the base value and the liquidation value of the collateral.
Base value is the total market value of the collateral, assuming that the asset is sold under normal market conditions, while liquidation value is the estimate of how much the asset would cost given that it is sold within a constrained timeframe (often significantly shorter) and that it would be realized during the debt recovery process that produces legal, administrative, and transaction fees or any other costs related to the selling of the collateral.
Maclear usually features a liquidation value that is lower than the base value, with the liquidation value being in the threshold of around 75% to 85% of the base value of the collateral. The exact percentage depends on the type of asset used as the collateral, with vehicles featuring a higher percentage of their base value retained when calculating the liquidation value, while specialized equipment that is usually sold with a discount given a limited timeframe may have a lower percentage.
Liquidation value instead of market value is used under the assumption that, given the time constraints and legal regulations during the liquidation of the collateral, the asset may not reach its base value. The transactional, legal, and operational costs surrounding liquidation as well as weaker buyer demand may affect the factual value of the collateral. This way, the usage of a discounted value that is the liquidation value helps to picture a realistic scenario of the liquidation.
It is valuable to see how the collateral works on the practical examples. These sit alongside deals from other sectors in Maclear’s overview of funded projects. The mechanism behind the collateral is the same — before the project is listed on the market, the platform assesses the assets pledged against the potential loan based on the type of asset and uses the LTV ratio.
The borrower’s business model determines how the specific collateral will be pledged against the specific loan since different companies would likely prioritize different assets. IT companies may provide operational infrastructure or business assets; agricultural businesses may pledge the loan against machinery for farming; manufacturers may provide vehicles or storage capacities. Different asset types naturally mean different liquidity and asset depreciation; that is why every piece of collateral should be assessed individually against a specific loan rather than by some universal formula that converges the valuation.
The table below gives the overview of the collateral calculated on the Czech IT infrastructure project.
| Deal (sector/anonymized) | Collateral Items | Base Value | Liquidation Value | Loan Amount | LTV |
|---|---|---|---|---|---|
| Czech IT infrastructure SME | Company operational assets | €195,000 | €146,000 (75%) | ||
| Owner's vehicle | €57.400 | €48,800 (85%) | |||
| Contract-linked equipment | €651.000 | €520.800 (80%) | |||
| Total collateral | Combined collateral package | €903.400 | €715.800 (79%) | €700,000 | Around 98% |
Data of financed projects as of publication date. A track record reflects past performance only and does not guarantee future results.
The collateral’s design tries to reduce the potential financial losses of the investor in case the borrower goes bankrupt or fails to repay the debt timely because of different circumstances. Despite the collateral reducing the risks related to the borrower, it cannot eliminate them entirely. Overall, the type of the collateral determines how much value can actually be acquired in case of the asset’s liquidation. In case the asset that is pledged as collateral is registered, it can provide an additional source of recovery beyond the cash flow by improving the legal grounds for the recovery of funds. Still, the realization of the collateral largely depends on the market conditions and the exact situation when the liquidation occurs.
Collateral cannot eliminate the risk of default entirely but can reduce the default loss. When paired with the platform’s due diligence that assesses the borrower’s credibility and the ability to repay, as well as the use of the Provision Fund as another mechanism to ensure temporary payment of the interest in case of some disruption, the default-loss risk may be reduced in a quietly effective manner. Yet the Provision Fund only gives a temporary solution and is not equal to a buyback guarantee.
Collateral reduces potential losses but does not eliminate them; recovery is not guaranteed.
In case of the borrower’s default, the legal procedure regarding the collateral realization begins after a certain timeframe. For Maclear, it works like this. During the first 30 days the investor continues to receive interest payments through the Provision Fund. Later, in case payment disruption continues, soft debt collection begins and lasts until day 60 with the interest payments continuing. After that, the legal enforcement procedure (including collateral liquidation) may fully begin. However, it is impossible to give any specific recovery timelines, as they depend on a specific case, the type of the asset, and the legal proceeding itself. Recovery is not guaranteed.
Returns in Maclear are calculated using Annualized Return on Investment (AROI). Supposedly, the investor buys a claim worth €100 that will reach maturity in 6 months. The expected interest payment is €7.6. To calculate the returns by AROI, we use the following formula: AROI = (Expected Earnings / Remaining Period) × (365 / Principal Purchased). As a result, the AROI of the project would be around 14.8%.
Illustrative example only. Returns are not guaranteed and depend on the borrower's performance.
A collateral, or a tangible asset pledged against the loan, backs the Maclear loan. The collateral can come in many forms, including, but not limited to, property objects, equipment, business assets, and machinery.
LTV, or Loan-to-Value ratio, is calculated by using the following formula: LTV = Loan Amount / Collateral Value. LTV can have a more conservative value, meaning that it is below 100%, which would mean that the loan is fully backed by the collateral, or above 100%, which would mean that the market value of the collateral is lower than the amount of the loan.
Liquidation value is a factual value of the collateral at the time of it being sold during the process of its liquidation. It differs from the base value because liquidation value is lower (usually, 75-85% of the base value) due to the legal costs and a limited timeframe for the liquidation of the collateral.
In case of the borrower’s default, the platform may continue repaying the interest to the investor through the Provision Fund. After 30 days, the platform may start soft debt collection while continuing the interest payments. In case the debt obligations remain unresolved, the platform may start the legal proceeding with the liquidation of the collateral to repay the outstanding debt after 60 days.
No, lower LTV is not necessarily safer. Although a lower LTV shows that the loan is fully secured against the collateral with the market value that exceeds the loan amount, the investor has to consider other factors like industry-specific risk, macroeconomic risk, liquidity risk, and the difference between the base value and liquidation value in each particular case.
No, collateral does not guarantee repayment. In fact, the collateral can mitigate the risk related to the borrower’s default, but the recovery process and its result depend on the specific situation. Furthermore, the collateral may differ in the asset’s type, market value, liquidity, and other aspects that need to be evaluated on a case-by-case basis.
Maclear AG is a Swiss-based P2P lending and crowdlending platform headquartered in Switzerland. The company operates as a financial intermediary in the non-banking sector and is a member of PolyReg SRO, in compliance with Swiss financial regulations including AML, KYC, and GDPR. Maclear offers retail and qualified investors access to vetted business loan opportunities, with built-in risk assessment, a Provision Fund, and a Secondary Market for liquidity.
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.
