Frequently asked questions

Frequently asked questions

About investing in a project

What does it cost to invest via Lendahand?

There are no costs associated with joining our platform or investing, whether you pay via iDeal or credit card. The repayment process is also free of charge.

How can I pay?

You can pay with iDeal (available for Dutch bank account holders), credit card (VISA and Mastercard), and Bancontact (available for Belgian bank account holders.) No fees are applied.

How should I incorporate my investments in my tax report?

The money you invest via our platform should be taken into account in box 3 for private investors.

For business accounts, the return is charged with company tax.

What is the minimum and maximum amount I can invest at Lendahand?

Minimum

At Lendahand you can invest for as little as EUR 50. This amount can be increased in increments of 50.  

Maximum

Lendahand recommends that you only invest amounts that you can responsibly justify (AFM advises not to invest more in crowdfunding than 10% of funds available). Furthermore, we strongly discourage funders from investing with borrowed money. 

Choose a project

Is it possible to open a business account?

Yes. When creating an account, select either a 'private' or 'business' account. You will need to supply a (recent) Chambers of Commerce copy, the statutes of the company and IDs of shareholders with more than 25% stake.

Create business account

What communication do I receive when I invest in a project?

The legal terms for the investment are part of the terms and conditions. You will always get a confirmation email. Additionally, you will receive an email when the project is fully funded. You can also download the obtained notes per project in My Lendahand.

What if a project does not get funded?

If a crowdfunding project does not deliver the required amount within 60 days, your committed investment will be returned. So far Lendahand has a 100% funding rate.

Who is the counterparty when I make an investment?

When investing via a local partner, this financial institution is the borrower or counterparty. If you decide to invest in a company directly, this company is the borrower or counterparty. With direct investments, all pertinent information can be found on the borrower's project page. Information on investing via a local partner can be found on the local partner page.

Is it possible to invest directly in companies?

Yes. Generally, direct investments come with more risks than investing via local partners. This is because local partners spread their risks: they have many customers, different regions, are active in various sectors, and their projects have different maturities. A single company has a more concentrated risk: it is often engaged in only one industry and offers limited products. As the risk of direct investments is generally higher than an investment through a local partner, the interest is also higher: on average 5-8% annually.

From which countries can I invest in projects via Lendahand?

You can invest if you have an EU Identification document. If you are from outside the EU, please send an email to info@lendahand.com and we will assist you further. 

please note: in some countries certain legal requirements may apply to Investors. It is your responsibility to ensure that such requirements are met.

In which currency can I invest?

At the moment Lendahand offers investments in euros (EUR) and U.S. dollars (USD).

The following applies for euro investments: you pay in euros and are repaid in euros. The risks of exchange rate fluctuations are covered by our local partners and/or entrepreneurs.

For US dollar investments: you also pay in euros and are repaid in euros. However, after a project is fully funded, on the first business day of the next month, the total amount in EUR from the project will be converted to USD at the exchange rate previously set by IbanFirst, our exchange rate partner. Repayments are then converted back from USD to EUR on the repayment day. Find more information on our currency page.

What if I want to cancel my investment?

You can cancel your investment by sending an email to info@lendahand.com within 24 hours after you have received the confirmation email of your investment. The money will then be put on your wallet, and you can either leave it there or transfer it to your bank account.

Can I also invest if I am Belgian?

Yes, you can! Investing works the same as in The Netherlands. However, there are 2 Belgian laws that have to be considered: the prospectus law and the crowdfunding law. Please take note of the content of these laws.

Prospectus law

The offering of the notes is exempt from the obligation to publish a prospectus in accordance with Article 7 §1, 2° of the Belgian Act of 11 July 2018 on the public offering of investment instruments and the admission to trading of investment instruments to a regulated market. Furthermore, in accordance with Article 11 of the same Belgian Act of 11 July 2018, Lendahand is required to publish an information note. This information note is equally not issued under the control of and will not be approved by the Belgian Autoriteit voor Financiële Diensten en Markten/ Authorité des services et marchés financiers. You will find a specific information note in relation to each project on the project detail page.

Crowdfunding law

In accordance with Article 30§1 of the Belgian Act of 18 December 2016 regulating the recognition and definition of crowdfunding, Lendahand, as a regulated investment firm under supervision of Dutch AFM, is authorised to provide alternative funding services in Belgium.

What is Impact+?

Impact+ is a private investing product for investors who want to invest amounts of € 25,000 or more in our projects. It offers investors the convenience of investing with impact without hassle. With Impact+, Lendahand will handle the investments for you, without additional costs. Visit the Impact + page for more information.

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About (re)payments and interest

How much interest do I receive?

The annual interest rate on investments varies from 2-8%, depending on the type of investment.

How do I transfer the proceeds to my bank account?

Everyone who invests via Lendahand has a personal account: My Lendahand. Repayments, including interest, are transferred to this account every six months. You can choose to reinvest your repayments or have them transferred to your bank account at no extra cost. Want to change your wallet settings? Go to Settings

How is the interest being calculated?

Your investments are paid back in equal amounts on a semi-annual basis. For instance, an investment with a maturity of 12 months will be repaid in two parts. You’ll receive payments after 6 and 12 months, including interest. In the next example, we’ll show how principal and interest payments are calculated.

Suppose you invest € 1,000 in project A which is interest-bearing as of 1 January 2020. The loan has a maturity of 12 months and pays an annualized interest rate of 3%.

- On 30 June 2020, you will receive the first repayment of € 500 as well as an interest payment of 3% over € 1,000 for that 6 month period (€ 15). The total amount for thefirst period is € 515

- On 31 December 2020, you will receive the second repayment of € 500, as well as an interest payment of 3% over the outstanding notional of (€ 1,000 - € 500) for that 6 month period (€ 7.50). The total payment for the second period is € 507.50

Are the interest rates the effective yearly interest rates?

Yes. The effective interest rates at Lendahand varies between 2-8% on an annual basis and are paid on the notional amount that is sent to the company. No interest is paid on amounts that have been repaid to the investor.

What is the maturity of the loans Lendahand offers?

Anywhere from 6 to 48 months in 6 month intervals.

Are companies allowed to repay the investments early?

Yes. In some cases, the company can choose to pay back the invested money before the scheduled date. For example, if the business has been growing faster than expected and they want to pay off their debt. When an investment is repaid early, you will receive the remaining amount together with the accrued interest. You will also receive a 1.5% interest on the early payment. Early repayments are not possible within the first 12 months of the project.

When do I start receiving interest?

Once a project is fully funded, the money from all investments will be transferred to the company on the first day of the following month. You will start accruing interest as of that day.

When do I receive my repayments?

Repayment periods are every 6 months, so you will usually receive money in your account around the 10th working day of the month every 7th month. For example, if you invested in a project that was fully funded on the 30th of January, you would receive your first repayment around the 10th of August.

How can I change my bank account number?

You can change your bank account via your ‘My Lendahand’. Choose 'Change bank account' and upload a copy of the new account’s bank statement, or transfer €0,01 from the new bank account to your wallet. You will receive a confirmation email confirming your change was successful.

What procedure is there in case of restructuring and/or the default of an investee?

- In case of payments in arrear, a new payment schedule is drawn up (with or without other creditors) together with the investee. We also call this restructuring. In such situations, the interest that should be paid back in any month is in principle deposited into your wallet. For the notional amount, the following principle counts: the longest outstanding amounts will be repaid first. The new payment schedule will also be integrated into your My Lendahand environment. 

- When an investee indicates that it is no longer able to meet its payment obligation, all investors become competing creditors, and should there be any return of funds, these are distributed pro-rata among those investors. In your My Lendahand environment the concerning projects are placed under Written-off investments.

Risks

What are the risks of investing money?

The risk level depends on the specific project. Local partners cover the risk of currency exchange rates and defaults on Local Partner investments. They do this by maintaining financial reserves for this purpose. Aside from that, there is an option to claim their equity if needed. While these measures are intended to minimize the risk to investors, our local partners face risks of their own that could affect their ability to secure your investment. These include - bankruptcy - currency exchange rates - fraud - operational risks - political and regulatory changes - natural disasters or epidemics.

With direct investments, risks of default are not covered. As the risks are higher, so are the interest rates.

There is also some operational risk at Lendahand. An example might be that Lendahand is unable to find shareholders to finance their activities. In such a case, Lendahand will handle outstanding investments at the best of its ability. At the same time, our ability to legally address non-payment from local partners becomes understandably difficult.

How does Lendahand minimize the risks?

Every local partner must share our social mission to ensure local entrepreneurs can access affordable financing, allowing them to grow their business. Local partners must also have a 'track record'; they must have proven themselves as a reliable credit provider for SMEs.

For instance, this means a solid credit portfolio and enough buffers and equity to compensate for unexpected downturns. We also check the organizational structure of the portfolio company and how robust their (internal) procedures are. Finally, the investments must be in proportion to the total balance of that portfolio company. A healthy balance between effectuating influence and being independent is crucial. If you would like to receive more information on the financial indicators we employ, please contact us via info@lendahand.com.

When currency exchange risks become too high for a local partner, Lendahand will urge the local partner to cover these risks. In some scenarios, the local partner is contractually obliged to comply with these demands.

Lendahand always conducts due diligence when companies request funding. The results can be downloaded on the project detail page. However, this analysis is not investing advice.

Does Lendahand provide a guarantee?

Usually we don't. Local partners take care of the repayment, even if (some) entrepreneurs are unable to do so themselves. If the local partner is for some reason unable to repay then there is a chance of partial or full loss of your money. For this reason, Lendahand only selects financially solid partners based on strict criteria.

For most direct investments, there is no guarantee. However, currency risks are covered.

Sometimes, and only for some direct investments in Africa, our partner Sida, part of the Swedish government, will guarantee a maximum of 50%. Read here more about guarantees with Sida. Projects with Sida guarantees are indicated explicitly on the project page.

Does Lendahand have a license or exemption?

Yes. The Dutch Authority Financial Markets (AFM) has provided Hands-on B.V. (with trade name 'Lendahand') in September 2016 with an investment firm license in accordance with article 2:96 of the Financial Markets Supervision Act (Wft). Placing orders on Lendahand's website is therefore an AFM regulated activity. Lendahand also meets its minimum capital requirements following its license as required by De Nederlandsche Bank (DNB).

Lendahand uses an exemption from an approved prospectus that is available up to EUR 5 Million per year. 

How safe are my personal details?

We adhere to strict safety requirements concerning private and payment details. All sensitive data is sent through an encrypted connection (https). Also, information is stored (encrypted) in a secured facility provided by AWS: the world’s largest hosting service. A secured connection and multi-factor authentication can only retrieve customer documents.

What happens if the local currency devaluates?

Our local partners and companies bear the exchange rate risks. We settle the investments, redemptions, and interest payments in euro.

Does Lendahand use a third foundation fund?

Lendahand works with Intersolve EGI: a Dutch financial institution specializing in payment settlement and electronic money. To be able to offer these financial services, Intersolve EGI must comply with the applicable financial legislation. Intersolve EGI is therefore supervised by De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM) and owns a license to act as an Electronic Money Institution (and therefore also has a license as a Payment Institution). Your money will be deposited on a protected and secure bank account until the project you have invested in has been fully funded. Intersolve has no access to these funds. Once the project is fully funded, the money is transferred to the local partner or company in question.

What happens with my money if Lendahand goes bankrupt?

If Hands-On BV (containing the brand name Lendahand) went bankrupt, trades between Lendahand and payment service provider Intersolve EGI would cease immediately. Intersolve will then transfer the funds in your wallet to your bank account (Note: if at this time the project you have invested in has been fully funded and the money has thus been transferred to the local partner, these funds will not be transferred back to your bank account). Intersolve will then, in consultation with a trustee, handle all repayments between the investors and entrepreneurs until the final repayment of the last project has taken place.

Additionally, Lendahand is part of the investor compensation scheme (ICS). This scheme aims to compensate individuals and small businesses with trusted money and or financial instruments (such as notes or options) to a licensed bank, an investment firm, or a financial institution. In case the financial firm is unable to meet its obligations arising from claims related to the investment service (in other words, if Hands-On BV is not keeping track of the acquired notes by investors in the Wge depot correctly). The ICS guarantees an amount of up to €20.000 per individual. For more information, go to www.toezicht.dnb.nl/en/2/50-202210

Why is Intersolve EGI handling my money?

As part of the AFM license for investment firms, it is required that operational activities carried out by Lendahand (maintaining the website, contracting of local partners, legal issues, etc.) are strictly separated from financial transactions (payments made through the website). Intersolve takes care of the costs. This collaboration offers you more security since your money is placed on a protected bank account immediately after making your payment.

What happens when a local partner goes bankrupt?

When a local partner goes bankrupt, there’s a chance you’ll lose (part of) your money. Lendahand will try to recover outstanding payments, but the success rate is limited in such situations. For you, as an investor, there’s no possibility of taking action against the financial institution. Therefore, it is recommendable to choose several different projects.

About entrepreneurs requesting a loan

What interest rate do entrepreneurs pay?

We want to be the cheapest alternative for the companies that need funding. Providing mesocredits to entrepreneurs in often rural areas is a very labour intense process. It is comparable with the cost structure of microcredits. A huge number of loans with a relatively small size puts quite some administrative pressure on local partners. Also, these loans have to be monitored and obviously repayments have to be collected at the right time at the right place. Furthermore, partners have to pay local taxes and they have to take a provision at their balance sheet for possible non-repayments.

Since our SMEs do not have access to micro credits or bank loans, they often need to borrow from 'loan sharks' that may charge more than 100% interest per year. Even if they had access to micro credits, they would still be paying 30-50% annually. According to the New York Times (2010), the global average interest rate for microfinance loans is 37%.

On average, our SMEs pay around 1-3% interest per month. Lendahand will launch new propositions structurally for which the central theme is lowering the interest entrepreneurs have to pay.

Which criteria should entrepreneurs have to meet?

Our local partners screen applicants thoroughly. The potential client must be or have:

  • Share our values and mission;
  • At least three years of profitability;
  • Able to generate income to repeat the investment;
  • Compliant with legal requirements such as the payment of required taxes and permits;
  • Free of any legal process involving non-payment, non-compliance with legal contracts or involvement in illegal activities;
  • Verifiable experience in debt servicing (no past due fundings with any private or government lending institutions or banks);
  • Socially relevant: the business offers clear and solid benefit to it's stakeholders, such as: employment generation, care for labourers and other workers, payment of wages and taxes, adherence to principles of fair trade, care for the environment, concern for the community at large.
  • Our local partners will never finance the following projects:

  • Projects that cause harm to people and the environment;
  • Projects that are illegal and immoral;
  • Projects that exploit and/or employ children younger than 16 years of age.
  • What kind entrepreneurs can ask for a investment via a local partner?

    Small and medium sized enterprises, 2-100 employees, in the area of farming, retail, wholesale, production or services. Applicants should have a 'moral compass' and have to prove they want the best for the enterprise, people, the community and the environment.

    Choose a project

    About local partners

    Who are the local partners of Lendahand?

    Our local partners are so-called NBFI's, Non-Bank Financial Institutions. These are financial entities without a banking license that provides financial services while under regional or national supervisory institutions’ supervision.

    Local partner overview

    Which criteria do local partners have to meet to cooperate with Lendahand?

    Every local partner must share our social mission to ensure local entrepreneurs can access affordable financing, allowing them to grow their business. A local partner must also have a 'track record'; they must have proven themselves as a reliable credit provider for SMEs. For instance, this means a solid credit portfolio and enough buffers and equity to compensate for unexpected downturns. We also check the organizational structure of the company and how robust their (internal) procedures are. Finally, the investments must be in proportion to the total balance of that company. A healthy balance between effectuating influence and being independent is crucial. If you would like to receive more information on the financial indicators we employ, please contact us via info@lendahand.com.

    Are these local partners commercial companies or social enterprises?

    One of the essential criteria Lendahand has regarding local partners is that they must have a social mission. If commercial gains are prioritized at the expense of social impact, an institution will not be considered for a partnership with Lendahand.

    Do local partners investigate social impact?

    Yes. Even though research on our investments’ impact is very time consuming and expensive, our local partners execute impact studies where they can. We also ask our partners to give an estimate of the expected effects when uploading a new request.

    See impact

    Do your local partners pre-fund projects?

    Yes. We believe this is important because many small companies need the money on short notice. For example when the company receives a large order and needs to hire more people. Lendahand has a 100% funding rate, however it is possible that a project has been pre-funded by the local partner but does not get fully funded on the Lendahand website. In that case, the local partner will use alternative sources of funding for that specific project.

    About Lendahand

    What is the impact of Lendahand?

    Our mission is to fight poverty in emerging markets by investing in people and businesses. Our projects create new jobs in developing countries and enable families to gain access to basic needs.

    See impact

    What is the remuneration policy of Lendahand?

    Lendahand has a payment policy based on the Dutch Law remuneration policies of financial undertakings. The policy applies to all employees of Lendahand and is aimed at ensuring that employees rewards do not pose any undesirable risks and/or behaviour to the sustainability of Lendahand.


    Remuneration Lendahand pays all employees a fixed monthly income, which is not dependent on targets. Employees do obtain options. The management of Lendahand earns an average income of EUR 61,000 gross per year (2020).
    We do not work with guaranteed variable remuneration

    The decision on remuneration policy

    The remuneration policy is drawn up by the management. Because Lendahand is a relatively small enterprise a remuneration committee will not be set up. However, the remuneration policy is aligned with the Supervisory Board annually.

    Adjusting policy

    The remuneration policy shall be reviewed at least once a year to determine whether the policy meets management’s requirements, the applicable laws and regulations, and investors’ interests. The types of remuneration that can encourage undesirable behavior will be examined and how the remuneration policy provides for appropriate action. If necessary, the assessment can be done more often.

    Why Lendahand?

    Lendahand creates new jobs in emerging markets and enables people to improve their access to basic needs. This way, we contribute to the UN’s following Sustainable Development Goals:

    1 no poverty

    2 zero hunger

    6 clean water and sanitation

    7 affordable and clean energy

    8 decent work and economic growth

    The Sustainable Development Goals (SDGs) were adopted by all United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity by 2030.

    In which countries is Lendahand active?

    Colombia, Mexico, Nicaragua, Zambia, Indonesia, Uganda, Mozambique, Georgia, Moldova, Cameroon, South Africa, Mongolia, India, and Kenya, to name a few. Every year we add more countries to our portfolio, see our partner page.

    View partners

    What is the competitive advantage of Lendahand?

    Lendahand is the only crowdfunding platform where you can invest in SMEs in upcoming economies and sustainable initiatives at an interest rate between 2-7% per year.

    What is the business model of Lendahand?

    Our borrowers (issuers) pay an average interest rate of 7,8% per year to Lendahand. Consequently we pay on average 4,25% interest to our funders. Our gross margin is around 3% (and maximized at 4%).

    How does the legal structure of Lendahand work?

    Possible debt instruments officially termed “Notes” are issued to the crowd (also called investors) when they want to invest via Lendahand. These notes are similar to bonds but cannot be resold.

    The provider of the debt instruments to the public is called an ‘issuer.’ At Lendahand, these are either the financial institutions that finance the Small and Medium Enterprises (SMEs) in emerging countries, or entrepreneurs that raise capital on our platform themselves. Issuers only access the Lendahand website for projects when they comply with the admission requirement and quality standards beforehand. This includes the acceptance of the conditions for using the platform.

    The crowd can select one or more projects (propositions) that he/she can finance by purchasing notes (or similar instruments) worth €50 each. Once the payment of the investor is successful, the purchase agreement is established. This agreement is entered under the condition precedent that the project (the proposition) will meet enough registrations. Investors accept the Terms and Conditions in which the purchase agreement takes part. Once the proposal is fully funded, the condition precedent is completed, and the notes are issued to the investors who have registered to the respective proposition. There are no exemption rights with regards to investments in requests. All investments are done via the website and are handled automatically and in order of entry.

    What should I do if I have a complaint?

    Email info@lendahand.com or call + 31 10 717 18 15. Lendahand will address all complaints with the utmost urgency and take any appropriate measures to (re)assure our funders. All follow-up communications will be done via e-mail, using the email address saved in our system unless otherwise indicated. This is done to ensure that there is a reproducible digital archive of communications. Complaints are reviewed by Dutch law as well as our Terms and Conditions. As a licensed investment firm, Lendahand is also a member of KiFiD, a Dutch foundation with its main purpose to handle complaints within the financial services industry. If we’re not able to solve the complaint, we’ll follow KiFiD’s advice.

    How can I delete my account?

    Send an email to info@lendahand.com. Your account will be deactivated after the last repayment.

    About creating an account

    Why do I need to provide an ID?

    We are legally required because of the Law for preventing money laundering and financing of terrorism (Wwft). We ensure that we only use your ID for verification. Your citizen service (BSN) number on the ID will not be visible.

    Which documents do I need to provide?

    In case of a personal account:

  • Identification document
  • You need to upload a clear picture of your passport, EU ID card, or EU driver’s license, which holds all personal information, as well as your citizen service number.

    Please upload a JPG or JPEG, not a PDF. If you choose to upload a scan of your ID with your smartphone, make sure your scan does not have any glares. Also, we ask you to upload a picture of yourself or take a selfie with your smartphone.

    In case of a Business account we also ask for

  • Identification documents co-owners.
  • For every person in your company which has more than 25% ownership an ID is necessary. For Foundations and Associations, all board of directors need to provide an ID.

  • Abstract of Chamber of Commerce
  • The abstract cannot be older than 3 months.

    Why am I being redirected to Onfido during the identification process?

    Due to the WwfT, we have to check your identity. The verification of your identity is done by our partner Onfido. Through their software, your ID is verified in real-time with a picture of yourself.

    Why are you asking for a selfie/picture?

    Onfido checks your identification document in real-time with your selfie, so we can verify that you are actually the same person as on your identification document.

    About USD investments

    Is the investment process the same as with EUR projects?

    Yes, making investments in USD projects work largely the same as all of our other projects. Investors can make investments in projects in increments of €50, and all payments will be made in EUR, via any of our currently available payment methods.

    Is the repayment process the same as with EUR projects?

    The repayment process is slightly different due to the added conversion process. On the last business day of every month, iBanFirst will give Lendahand a conversion rate that will be fixed for the next 30 days. After companies make their repayments, the USD amount will be converted back into EUR using that exchange rate. On each repayment day, around the 15th of each month, the repayment amount due to you, principal and interest, will be deposited into your Lendahand wallet in EUR.

    Can I have a separate USD and EUR wallet in my Lendahand account?

    Our payment service provider does not currently offer the option of USD wallets due to the very strict American supervisory institution.

    Do I need to create another account or wallet to invest in USD projects?

    No, as our payment service provider does not support USD wallets for investors, it is not necessary to have another account or wallet to invest in USD projects. All investments and repayments will be in EUR.

    How much interest do I receive?

    Due to higher interest rates in the U.S. market, the interest rates Lendahand investors will receive on USD projects will be around 0.5-1% higher on average (after conversion costs), compared to similar EUR projects. This difference can go up or down over time depending on interest rates in the U.S. However, it’s worth noting that interest rates in the U.S. have always been higher than in the EU in recent history.

    Is there a difference in risks compared to EUR deals?

    Investing in projects held in USD comes with the added risk of currency fluctuations. It may cause you to lose money when converting money back from USD to EUR. This risk will be present when you receive your repayments, as the conversion rate from USD to EUR may be less favorable than the rate when you originally made your investment. Vice versa, you could also receive a more favorable exchange rate at the time of your repayments.

    Do the local partners or iBanFirst hedge the currency fluctuation risks?

    Most of our local partners hedge currency fluctuations against their local currency (in which they generate revenues and pay their expenses). Typically, Lendahand also agrees with the local partner the maximum amount of unhedged loans. With the USD loans, some companies will no longer have to hedge, as their local currencies are pegged to the US Dollar. This means they do not fluctuate against the USD (whereas they do fluctuate against the euro). iBanFirst could technically hedge the EUR-USD exchange rate up to two years, but this is something we currently do not offer.

    What happens if the exchange rate goes down between the time I invest in a project and the time it gets fully funded? Will iBanFirst cover the exchange rate?

    In this situation, the local partner will receive less money in USD than what they had expected at the time the project was uploaded. However, it also means that their loan (and therewith repayment obligation) would be lower in USD. For you as an investor, nothing changes, as you will still have invested the same amount of euros.

    How do I know if I’m investing in a USD or EUR project?

    When you visit our projects page you will see the following project information: issuer, amount, maturity, annual interest, repayment terms, and currency, listed as either EUR or USD. Also at the top of the project page, it will be explicitly stated if a project is in USD.

    At what point in time is the exchange rate determined?

    On the last business day of every month, iBanFirst will give Lendahand a conversion rate that will be fixed for the next 30 days. This rate will be used for all transactions during that month, including investments and repayments.

    What is the role of iBanFirst?

    Lendahand, iBanFirst and Intersolve are working together and iBanFirst handles the USD payment transactions to the partners.

    How will iBanFirst fix the conversion rate?

    By entering into flexible forward contracts to buy EUR and to sell USD (and vice versa for repayments), iBanFirst offers very attractive rates for currency conversion, significantly cheaper than banks. iBanFirst adds a fee to the interbank mid-rate. We’ll fix the exchange rate at 14.15pm of the last business day, such that the exchange rate prior to the surcharge of iBanFirst is very close to the official ECB exchange rate for that date. Yes, investors do pay part of the conversion costs (the costs are split between local partners and investors), but we strive to offer an interest rate which is net (i.e. after conversion costs) 0.5-1.0% higher compared to similar EUR projects.

    Do I always get paid back in euros?

    Yes, on each repayment day, around the 15th of each month, the repayment amount due to you, principal and interest, will be deposited into your Lendahand wallet in EUR.

    Is the interest rate entrepreneurs pay different from EUR projects?

    Yes, it will probably be 1.0 - 1.5% higher. This is justified as interest rates on the USD are currently higher and local partners save on conversion costs compared to receiving funds in EUR and they do not have EUR currency exchange risks anymore.

    Is the competitive advantage of Lendahand the same as for EUR projects?

    It depends how you compare this. Compared to other lenders with funding costs in EUR we believe this is an attractive and strongly priced offering. Compared to lenders which have their funding cost in USD and therefore do not have to convert from EUR to USD, we have a slight disadvantage. However, more importantly, by gaining the ability to offer USD investments, many more businesses who have not been able or have not been prepared to otherwise borrow in EUR will now be able to get funding through Lendahand.

    About local currency investments

    Who is TCX?

    TCX is a Netherlands based development finance institution that was established to ensure that international financing flows into developing countries can be provided without exposing providers and recipients to exchange rate risk. TCX achieves that by offering currency derivative contracts to international lenders allowing such lenders to denominate loans in the local currency of their borrowers. To offer this service in a financially sustainable fashion, the TCX model is designed to generate a marginal profit. TCX is a professional hedge-provider that is regulated by the Dutch financial sector supervisors AFM and DNB. The fund is supported by several European governments, including the Dutch government, and a wide range of development finance institutions active worldwide. TCX started operations in 2007 and has since gradually expanded. TCX’s creditworthiness is rated as good and stable (“single A”) by the rating agency S&P. For more information visit the company website: www.tcxfund.com

    Which exchange rate applies for investments in local currency?

    In the valuta hedge contract, TCX uses the exchange rate that the central bank of the concerning country publishes daily at a certain time.

    Why would a portfolio company choose or not choose for funding in local currency?

    Ultimately, an entrepreneur has two possibilities. He can choose for financing in euro with a lower nominal interest, but with the corresponding exchange risks and insecurities, or choose for financing in local currency at a higher nominal interest, without risks but with predictability.

    What is the role of the Lendahand FX Foundation?

    The Lendahand FX Foundation (LHFX) has been established to enable cooperation with TCX. For various reasons, [in consultation with AFM and DNB] it has been decided to use a different entity for this cooperation than Hands-On BV, the company under which the Lendahand platform falls. The conclusion of currency hedge contracts is a particular task, which differs from the activities performed by Hands-On BV as a platform manager. The LHFX Foundation has been established to deal exclusively with the conclusion of currency hedge contracts with TCX and to act as an intermediary between TCX and the Lendahand platform. This separation of responsibilities and payment flows, and therefore of liability, as well as having a separate governance structure for Lendahand's local currency business, ensures proper and sustainable operations. The foundation will perform her duties on behalf of Hands-On BV based on a service agreement between both parties. The foundation is allowed to outsource certain operational tasks to Hands-On BV, but will always keep the overview and the final responsibility. The foundation has an independent board consisting of 2 members.

    Why are currency risks covered for investments in local currency and not for investments in USD?

    The fluctuation risk between dollar and euro is easier to oversee and estimate than the risk between the euro and the local currency of an emerging market. The interest rate differential between euro and dollar is typically more limited too. The operational costs to hedge the euro/dollar risk are significant. In contrast, the risk over the maturity (maximum of 3 years) of a dollar project on the platform is manageable and limited. Therefore, we think it is a responsible choice not to hedge that risk and an investor can decide for themselves if he/she is willing to take the euro/dollar risk.

    In the case of unknown and volatile emerging market currencies, we find that it would be irresponsible to leave the currency exchange risk to the investor. Therefore, we offer entrepreneurs the choice between financing in EUR, USD, or their local currency. If the entrepreneur chooses local currency funding, we hedge the currency exchange risk with TCX.

    What does the partnership between TCX and KfW mean?

    Just like with EUR and/or USD investments on our platform, as an investor, you risk losing your deposit when an entrepreneur defaults. The intervention of TCX and KfW, the German development bank, does not minimize or eliminate this risk.

    TCX hedges the exchange rate risk on the local currency projects to make sure potential fluctuations and depreciation in the entrepreneur’s local currency against the euro don;t result in losses for the investor or the entrepreneur. KfW minimizes the risk TCX takes by guaranteeing potential credit losses on the currency exchange in case an entrepreneur defaults. In case of a default the KfW will pay the credit loss on the currency exchange to TCX. To make this possible, KfW is financially supported by the German Ministry of Environment, BMU.

    In which case would the currency hedge contract with TCX not be valid?

    There are certain cases in which TCX has the right to end the currency hedge contract for a specific local currency loan. For example, in case:

    • a payment due from Lendahand FX (LHFX) to TCX under the currency hedge contract, due to non-payment by the entrepreneur, cannot be paid by LHFX for more than 180 days, and the loan and currency hedge contract are not restructured within that period to eliminate the late payment.
    • LHFX and/or Hands-on BV fails to comply with certain information requirements, particularly regarding the timing and amount of payments received from the entrepreneur.
    • LHFX and/or Hands-on BV changes owners, and TCX, for whatever reason, does not want to continue the contract with the new owner.
    • LHFX and/or Hands-on BV loses its relevant licenses and/or otherwise seriously fails in its obligations to regulators (AFM and DNB).
    • TCX is no longer considered solvent based on the agreements made with TCX's shareholders, including the Dutch government, and must be liquidated in which case all of TCX's outstanding contracts will be settled.

    If TCX terminates the currency hedge contract for any of these reasons, Lendahand converts the outstanding loan into a euro loan. From that moment on, the entrepreneur runs a currency risk, which indirectly leads to greater credit risk for you as an investor. This conversion takes place at the exchange rate at that time. Exchange rate fluctuations that affected the outstanding loan are thus made permanent. When the entrepreneur repays the euro loan, a settlement still takes place with TCX so that you as an investor receive exactly your deposit and the agreed interest.

    What risks does an investor face on local currency financing?

    As an investor on a local currency loan, just as with a euro loan or dollar loan, you basically run the entrepreneur's entire credit risk. If the entrepreneur cannot pay the interest and/or repayment owed by him, the investor will not receive the expected interest and/or repayment either. However, this credit risk is in principle lower than with a euro loan or dollar loan. Since the entrepreneur is not exposed to exchange rate risk on loan, there is less risk of not being able to repay the loan because of a drop in the local currency's value.

    Investing in a local currency loan does not expose you to direct currency risk; you get the euros you invest paid back in euros, with the corresponding interest in euros, as long as the entrepreneur pays back his loan.

    Suppose, however, that TCX terminates the currency hedge contract between the Lendahand FX Foundation and TCX for valid reasons. In that case, the outstanding amount of the loan will be converted into a euro loan at the exchange rate at that time. The entrepreneur will then be exposed to currency risk on the euro loan from that moment on, and in principle, that means more credit risk for the investor.

    The currency hedge contract with TCX covers the currency risk for the entrepreneur and investor; therefore, if TCX cannot meet its obligations under that contract, it could result in a loss for you as an investor.