Frequently asked questions

About investing in a project

What does it cost to invest via Lendahand?

There are no costs associated with subscribing on our platform nor for providing loans through your account if you pay via iDeal. The repayment process is free of charge as well. When paying by way of creditcard, there are transaction costs of 0,5% + €0,20.

How can I pay?

At Lendahand, you can pay with iDeal for free (requires a Dutch bank account) or with creditcard (VISA or Mastercard). For creditcard payments, we apply a transaction cost of 0,5% + €0,20 per transaction. 

How should I incorporate my investments in my tax report?

The money lent to entrepreneurs via the Lendahand platform should be taken into account in box 3 for private investors.

For business accounts, the return on money lent 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. Two days after your initial payment, your investments are limited to EUR 2,500. Once your account has been validated (normally within 2 working days), limitations will be lifted. 

Maximum

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

Choose a project

Can I also fund loans with a business account?

Yes. When creating an account with Lendahand, you can 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

Do I get a contract if I invest in an entrepreneur?

The legal terms for the loan are part of the terms and conditions. You will get an e-mail with the confirmation of your loan. This email can be regarded as a contract.

What if there is not sufficient funding for a project?

Suppose that a crowdfunding campaign does not deliver the required loan amount. In that case your committed investment will be returned. So far, we've never experienced this as projects we support are promoted to the utmost of our abilities.

Who is the counterparty when I make an investment?

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

Can I also lend directly towards a company?

Yes. From oktober 2016 onwards it is possible to invest directly in companies, without a local partner being the counterpart. With a direct loan the company is consequently the borrower. Generally, lending directly comes with more risks than lending through a financial institution (local partner). This is because the local partner spreads their risks: they have many customers, different regions, are active in different sectors and their loans have different maturities. A company has a more concentrated risk: it is often active in 1 sector and offers a limited amount of products. As the risk that comes with direct lendings is generally higher than an investment through a local partner, the interest is also higher: on average 5-8% on an annual basis. To provide more insight in direct lendings we make use of independent parties for analysis. These results can be downloaded on the project detail page. The analysis can be used for a estimation of the risks, it is however no form of investment advice.

From which countries can I invest in projects via Lendahand?

From every country in the world, except: Afghanistan, Angola, Bosnia and Herzegovina, Botswana, Brunei, Canada, Gibraltar, Guatemala, Guernsey, Guyana, Iran, Iraq, Jersey, Laos, Liechtenstein, Marshall Islands, Montserrat, Myanmar, Nauru, Niue, North Korea, Panama, Papua New Guinea, Syrië, Uganda, United States, Vanuatu, Virgin Islands British, Yemen. 

NB: 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 Lendahand you usually invest in euros. You pay in euros and get repaid in euros. The risks of currency fluctuations are therefore hedged by our local partners.

Starting May 2017 we will also offer projects in which you can only invest in dollars. The minimum investment is 50 dollar. When making a transaction on the website – in case of dollar transactions, this is only possible with credit card – you will see that the payment is in dollars. However your credit card will charge euro’s (unless a dollar account is connected to your credit card). Meaning a separate (dollar) bank account is not needed to be able to invest in dollar projects.

Refunds also take place in dollar. The repayments will be deposited in your dollar wallet (for each currency you will have a separate wallet). You can then choose to reinvest in dollars or have the funds transferred back to your (euro) bank account.

Please note that with each conversion of euro to dollar and vice versa, your bank will charge a fee in the form of a slightly less favourable exchange rate. Also, the bank will charge a fixed fee or a percentage of the total amount. For now, you receive a fixed interest rate of 3,5% (annually) on dollar projects.

Can I cancel my investment?

Yes. You can cancel your investment by sending an e-mail to info@lendahand.com within 24 hours after you have received the confirmation e-mail 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.

About (re)payments and interest

How much interest do I get?

The annual interest rate on euro loans varies from 3-6%. If the maturity of the loan exceeds 24 months, the interest rate will be increased by 0,25%. 

On dollar loans (available since May 2017) a fixed interest rate of 3,5% is paid annually.

How do I transfer the proceeds to my bank account?

Everyone that invests via Lendahand maintains a personal account: My Lendahand. Repayments are transferred to this account (wallet) every 6 months. From your wallet, you can opt to reinvest your funds or have them transferred to your bank account at no extra cost.

How is the interest being calculated exactly?

The loans are paid back in equal amounts on a semi-annual basis. For instance, a loan with a maturity of 12 months will be repaid in 2 amounts after 6 and 12 months, including interest. Naturally you receive interest on the outstanding amount. In the next example we show how the redemptions and interest payments are calculated.

Suppose you invest € 1,000 in project A which is interest-bearing as of January 1st, 2018. The loan has a maturity of 12 months and pays an annualized interest rate of 3%.

- On June 30th, 2018 you receive the first repayment of € 500. You also receive an interest payment of 3% over € 1,000 for 6 months (€ 15). The total payment for the first period is € 515

- On December 31st, 2018 you receive the second repayment of € 500 and an interest payment of 3% over the outstanding notional of (€ 1,000 - € 500) for 6 months (€ 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 3-6% on an annual basis and is paid on the notional amount that is lent to the borrower. Of course, no interest is paid on amounts that have already been repaid (every 6 months).

What is the maturity of the loans Lendahand offers?

These are always 6, 12, 18, 24, 30, 36, 42 or 48 months.

Can a loan be repaid early?

Yes, that is possible. In some cases the entrepreneur can choose to pay back the loan early. For example when the business has been growing faster than the expectations and the loan is not needed anymore. When a loan is repaid early, you get the remaining amount of the loan back together with the built up interest. You also receive 1,5% interest on the early payment. Early repayments are not possible in the first 12 months of the loan.

When do I start receiving interest?

When there are enough funds to meet the required loan amount, the loan will be disbursed on the first day of the following month. Your loan bears interest as of that day.

When do I receive my repayments?

Normally, repayments will be transferred to your wallet within the first 10 working days of the following month. For example: Repayment periods up to September 30th, can expect to see repayments within the first 10 working days of October.

How can I change my bank account number?

Please contact us via info@lendahand.com

Risks

What are the risks of lending money to entrepreneurs?

Our local partners cover the risk of currency exchange rates and loan defaults. They do this by maintaining financial reserves for this purpose . In addition, there is an option to claim their equity if needed. While these measures are intended to minimize the risk to funders, our local partners face risks of their own that could effect their ability to secure a loan. These include: - bankruptcy - currency exchange rates - fraud - operational risks - political and regulatory changes - natural disasters or epidemics.

If you invest direct in a company, hence not via a local partner, risks of default are not covered. As the risk that comes with direct lendings is generally higher than an investment through a local partner, the interest rate is also higher.

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 loans 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?

Local partners must adhere to our mission and work with us to provide loans that are affordable. This insures that local entrepreneurs have access to financing that allows them to grow their business. A local partner must also have a track record. In other words, they must have proven themselves as a meso-credit provider for SMEs. This means (for instance) that the partner must have a solid credit portfolio, along with enough buffers and equity to compensate for unexpected downturns. We also check the organizational structure of the partner and how robust their (internal) procedures are. Finally, the loans that a local partner receives via Lendahand must be in proportion to the partner's total balance sheet. A healthy balance between effectuating influence and independence 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 scenario's the local partner is contractually obliged to comply with these demands.

Lendahand will always conduct due diligence when a Company requests for a direct loan. To provide more insights on risks, an independent partie comes in to perform brief analysis on direct loans. The results can be downloaded on the project detail page of the direct loan. However, this analysis serves primarily as a tool for your own opinion and conclusion. Pay attention to the fact this analysis is not an investing advice.

Does Lendahand provide guarantee on the loans?

No. 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.

Also, for direct loans no guarantee is provided.

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 of EUR 125,000 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 with regards to private and payment details. All sensitive data is sent through an encrypted connection (https). Also, data is stored (encrypted) in a secured facility provided by AWS: the world largest hosting service. Customer documents can only be retrieved by a secured connection and multi-factor authentication.

What happens if the local currency devaluates?

Our local partners and Companies bear the exchange rate risks. We settle the loan, redemptions, and interest payments in euro or in dollar.

Does Lendahand use a third foundation fund?

Lendahand works with LemonWay, a regulated payment service provider. Since LemonWay is a French company there is no 'Stichting Derdengelden' as such. However, LemonWay works in a similar manner and has a license from the French ACPR (Autorité de Contrôle Prudentiel et de Résolution). Your money will be deposited on a protected and secure bank account until the project you have invested in has been fully funded. LemonWay in no way has 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) would go bankrupt trades between Lendahand and payment service provider LemonWay would cease immediately. LemonWay will then transfer the funds in your personal 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). LemonWay will then in consultation with a trustee handle all repayments between the investors and investees up 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 who have trusted money and or financial instruments (such as notes or options) to a licensed bank, 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. The ICS guarantees an amount of up to EUR 20,000 per individual. For more information, go to www.toezicht.dnb.nl/en/2/50-202210

Why is my money going to a payment service provider?

As part of the AFM license for investment firm 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). LemonWay takes care of the payments. This collaboration offers you more security, since your money is placed on a protected bank account immediately after you have made your payment.

What happens when LemonWay goes bankrupt?

The money of investors already on the (shielded) bank account of LemonWay will not be part of the bankruptcy. Bank BNP Paribas will then handle the case. Money outstanding with Local Partners and Companies (direct loans) will be handled by a to propose curator.

What happens when a local partner goes bankrupt?

When a local partner goes bankrupt, there will be a chance that you lose (part of) the amount you lend. Obviously Lendahand will try to recover outstanding payments, but the success rate will be limited in such situations. For the investor there is no possibility to take action against the financial institution. From a legal point of view the local partners are separated, therefore it is recommendable to spread loans across different local partners.

About entrepreneurs requesting for 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.

What criteria should entrepreneurs meet with in order to secure a loan?

Our local partners screen applicants thoroughly. At a minimum, the potential client must be or have:

- Good moral character by good standing in the community as well as any associations or organizations of which they are a member;

- At least 3 years in operation with a clear indication of sustainability;

- Able to generate income to repay the loan (business must show at least 3 years of profitability);

- Compliant with legal requirements such as the payment of required taxes, permits etc.;

- Free of any legal process involving non-payment of loans, non-compliance with legal contracts and/or involvement in illegal activities;

- Verifiable experience in debt servicing (no past due loans 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.

Which entrepreneurs can ask for a loan via the 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.

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About local partners

Who are the local partners of Lendahand?

These are so called NBFI's, Non-Bank Financial Institutions: financial entities without a banking license that provide financial services while under the supervision of local or national supervisory institutions.

Local partner overview

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

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

Are these local partners commercial companies or social enterprises?

One of the most important criteria Lendahand has with regards to local partners is that they must have a social mission. When commercial purposes are of main importance an institution will not be considered for a partnership with Lendahand.

Do local partners investigate social impact of the provided loans?

Yes. Even though research on the impact of loans is very time consuming, our local partners execute impact studies. Apart from that we ask all our partners to enter the expected impact when uplaoding a new loan request. Finally, Lendahand also executes their own research on the impact of loans.

See impact

Do your local partners use pre-funding?

Yes, usually the local partner pre-funds the loan. That way the company has access to the money before the loan amount is raised on our platform. This is important since many small companies request a loan when they need the money on short notice. For instance, they receive a large order and need to hire more people. Obtaining a loan through crowdfunding takes some time and that is why our local partners pre-fund the loan.

Until now all offered projects have been fully funded. However, it is possible that a project has been pre-funded already 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 a meso-credit?

Since Small and Mediumsized Enterprises (SMEs) in emerging economies are often not suitable for traditional business loans (often starting at EUR 100K) or microfinance products (often below EUR 1,000), Lendahand offers meso-credits to these companies at a fair interest rate. The principle with meso-credits revolves around self-sustainability that ultimately allows the entrepreneur to remain as independent as possible.

What is the impact of Lendahand?

It's our mission to create new jobs at companies in developing countries and to facilitate families in gaining access to basic needs. This is our way of fighting poverty. To do this it's important to keep track of the results. That's why we have a separate impact page on our website.

See impact

What is the remuneration policy of Lendahand?

Lendahand has a payment policy based on the Law remuneration policies of financial undertakings. The policy applies to all employees of Lendahand and aims to ensure that rewards do not result in undesirable risks or behaviour with regards to the specific services for affiliates and or regarding the soundness of Lendahand.

Remuneration Lendahand pays all employees a fixed monthly income, which is not dependent on targets. The management of Lendahand earns an average income of 48,000 euros gross per year (2018).

We do not work with guaranteed variable remuneration.

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. Also, a Supervisory Board has yet to come (EoY 2018). For that reason, the remuneration policy is aligned with the Compliance Officer.

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

Why Lendahand?

Lendahand was founded in 2012. Creating new jobs for companies in emerging countries and enabling people to improve their access to basic needs is our mission. This way we want to alleviate poverty.

Also, Lendahand contributes to the following Sustainable Development Goals of the UN:1 no poverty2 zero hunger6 clean water and sanitation 7 affordable and clean energy 8 decent work and economic growthBy 2030, extreme poverty should be eliminated.

In which countries does Lendahand provide loans?

At the moment in Colombia, Zambia, Indonesia, Uganda, Georgia, Mongolia, India, Kenya and Cambodia. Every year we add a few countries to our portfolio.

What is the competitive advantage of Lendahand?

Lendahand is simply the only crowdfunding platform where you can invest in SMEs in upcoming economies and/or in sustainable initiatives at an interest rate between 3-6% per year.

What is the business model of Lendahand?

Our borrowers (issuers) pay an average interest rate of 7,35% per year to Lendahand. Consequently we pay on average 4,25% to our funders. The other 3,10% is our gross margin. In 2018 our margin is maximized at 4%.

Is Lendahand a member of Branchcooperation Nederland Crowdfunding?

Yes. Lendahand is member of the branch association 'Nederland Crowdfunding'. After a thorough internal audit we have been granted a membership.

How does the legal structure of Lendahand work?

Legal structure since the obtained AFM-License on the 9th of September 2016 (on our website it is always indicated per project which Terms and Conditions apply):

To make investments via Lendahand possible debt instruments like bonds are issued to the crowd (also called lenders or investors). The provider of the debt instruments to the crowd 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 get access to 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 is able to select one or more projects (propositions) that he/she can finance by purchasing bonds (or similar instruments) worth 50 euro 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 proposition is financed fully, the condition precedent is met and the bonds are issued to the investors who have registered to the respective proposition.

Legal structure prior to the obtained AFM-License:

Lendahand Finance BV issues bonds (securities) to lenders (the crowd). In this way, Lendahand Finance BV invests collected money through the equity of our affiliated partnership with loans to our local partners abroad. The operational activities of Lendahand (website, marketing, IT) are part of a separate entity: Hands-On BV.

What should I do if I have a complaint?

Complaints can be sent by e-mail (info@lendahand.com) and are typically answered in one (1) workday. They can also be addressed through the chat function on our website or by phone (+ 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 e-mail address that is saved in our system unless otherwise indicated. This is done to insure that there is a reproducible digital archive of communications. Complaints are reviewed in accordance with Dutch law as well as our Terms and Conditions.

As a licensed investment firm, Lendahand is also member of KiFiD, a Dutch foundation with it's main purpose to handle complaints within the financial services industry. If Lendahand is not able to solve the complaint, KiFiD will advice and Lendahand will have to follow the advice given.

How can I unsubscribe?

If you want to stop investing via Lendahand and unsubscribe at our platform, you can send an e-mail to:  info@lendahand.com. After the last payment at your bankaccount, your account will be deactivated.  

What is LemonWay?

LemonWay is a regulated payment service provider located in France. The company was founded in 2007 to offer innovative solutions regarding secure payment, banking, credit card and the internet. Since the 24th of December, 2012 LemonWay is recognized by the ACPR (Autorité de Contrôle Prudentiel et de Résolution) in France with the Inter Bank Code (IBC) 16568. LemonWay is officially registered in the Netherlands with the Dutch Central Bank. LemonWay offers payment solutions for crowdfunding platforms, marketplaces, e-commerce sites and mobile payments.

What does it mean to be regulated?

Placing the projects (propositions) on the Lendahand website is an AFM-regulated activity. Lendahand also complies with the capital requirement set by De Nederlandsche Bank of EUR 125.000.

Lendahand facilitates the offering of the bonds or financial instruments on the Lendahand website in accordance to the Securities Giro Act (SGA). Lendahand as an authorized investment firm will keep independently a collective deposit in the sense of the SGA whereby every issue of bonds creates a separate collective deposit.

In this structure the bonds of the issuers become inserted and held in the concerned deposit. These pieces qualify as SFA-conform kept financial instruments which have been separated from the assets of Lendahand and therefore are protected as such. The issued bonds by the crowd are always excluded from a possible bankruptcy of Hands-on BV (which carries the brand name Lendahand).

The offerings of the issuers themselves are not supervised by the AFM. Therefore a warning banner is shown on some pages of our website. This banner only informs visitors about the fact that the offerings on the website are exempted from the obligation to publish a prospectus approved by the AFM. Lendahand and the issuers we work with, make use of this exemption prospectus obligation that applies to EUR 5 million per issuer per year.