Real estate crowdfunding
Property crowdlending is a way of financing property projects that is becoming increasingly popular with both investors and property developers.
Property crowdfunding: what are the benefits for investors?
Table of contents
What is crowdlending?
crowdlendingis an English term meaning "participatory lending". Crowdlending is one of the forms of participatory financing (also known as crowdfunding, or "crowd funding" in French).
The crowdlending consists of collecting "interest-bearing loans for companies to finance their development or to carry out specific operations"..
Like crowdfunding, crowdlending is a business financing mechanism that allows citizen savings to be mobilised.
In practice, crowdlending enables investors to make a financial investment in the form of a loan to a company.
In the property sectorCrowdfunding is a way of financing property development activities or property projects by making a public appeal for savings via a crowdlending platform (often in addition to bank financing).
Who is property crowdlending for?
All players in the real estate sector can use real estate crowdlending. The size and risk of the project are important criteria.
As far as investors are concerned, property crowdlending is a form of investment open to the widest possible range of people. Depending on the type of project and the platform you choose, you can invest in property via a crowdfunding campaign from as little as a few hundred euros.
What types of property projects can be financed using equity crowdfunding?
Equity crowdfunding is best suited to short-cycle property projects (2 to 5 years).
For example, you can use crowdlending to :
- Financing a property development ;
- Financing the purchase of a property with a view to resale;
- Financing a property holding company to carry out several property transactions;
- Refinancing a company in the property sector;
- Financing a retail, office or association property project;
- To finance a hotel business, a coliving project or a mixed-use project (combining residential property with other uses such as restaurant space or offices).
To check whether your property project can be financed by crowdfunding, be sure to check the conditions set by the crowdfunding platforms you are considering.
To submit a property application to BeeBonds, developers must propose a project that meets the following conditions:
- Project with a minimum total cost of 2,000,000 euros;
- The bank financing is granted;
- You wish to raise a minimum of 500,000 euros via crowdlending (this amount representing a maximum of 75% of the bank's own effort);
- You have a permis d'urbanisme purgé de tout recours.
For more information on the property projects financed by BeeBonds, take a look at our crowdfunding campaigns (current and past).
What are the advantages of real estate crowdlending?
For investors who lend their money to a company, the advantages of crowdlending are many:
- <Higher potential return: The interest rates offered on the platforms are generally higher than those on savings books;
- The satisfaction of supporting businesses, the real economy, employment and value creation.
For property professionals, crowdlending offers a number of advantages:
- A source of complementary financing to other methods of property financing, such as bank loans, friends & family financing and institutional financing;
- A lever on equity (with BeeBonds, you can raise funds up to 75% of the equity required by the bank) ;
- A way of obtaining funding quickly (depending on the project and the platform chosen);
- visibility for the company and its project as part of the fundraising campaign ;
- A direct link with investors.
What are the risks associated with crowdlending?
Like any investment, crowdlending involves risks for investors. In particular, lending to SMEs involves the risk of total or partial loss of the amount invested.
Each crowdlending application has its own level of risk. To assess this, we invite you to consult the information and descriptive notes relating to the project.
In Belgium, the information provided to investors is subject to the regulations applicable to alternative financing (compliance with which is ensured by the FSMA - the Financial Services and Markets Authority). FSMA studies confirm the increase in amounts financed via crowdfunding (without disclosing information on the default rate).
Crowdfunding property projects: returns and interest rates for investors
The returns offered to investors vary depending on the platform, the type of property project and the risks involved.
On the BeeBonds platform, the average gross interest rate for property investments is around 7.7% with a net yield of around 5.4% (after withholding tax).
Property crowdfunding: what are the conditions?
For investors, it is essential to have a valid investor account on a crowdlending platform. Make sure that the crowdfunding platform you wish to use is authorised by the Financial Markets Authority (FSMA).
The first requirement for the project owner is to have a property project with proven sales or rental potential. At BeeBonds, the company must also have a track-record and a bank loan to complete the project. BeeBonds provides 75% of equity financing.
Property financing: how long does a crowdlending campaign last in Belgium?
A real estate crowdlending campaign can be launched within a few weeks (once the BeeBonds selection committee has approved the application).
To save time, we invite project sponsors to submit a file as complete as possible.
The campaigns are then presented to investors for a period of 10 days (subject to extension).
Real estate crowdfunding in Belgium: examples of campaigns
1st ranking mortgage
Finance the acquisition of 6 properties in Gooik, Halle and Sint-Pieters-Leeuw, their renovation and the sale of 22 flats.
The growing popularity of crowdlending in Belgium
In Belgium, participative investment and crowdlending are enjoying a boom. growing popularity. According to a FSMA study published in 2020, crowdlending represents 70% of amounts financed by crowdfunding in Belgium.
Source: Study by the Financial Services and Markets Authority (FSMA) - Crowdfunding market July 2018-June 2020
In the period from July 2018 to June 2020, FSMA identified 140 successful crowdfunding campaigns that raised a total of €69.24 million. By way of comparison, projects carried out during the period 2012-2017 raised to raise a total of 40.02 million euros.
The organisation of equity crowdfunding campaigns is subject to the following conditions a strict legal framework to protect investors.
How are the crowdlending applications proposed on the BeeBonds platform analysed?
The process of analysing applications submitted to BeeBonds and setting up campaigns is extremely rigorous:
- Submission of funding applications : Applications submitted to the BeeBonds platform must be documented. The the submission process is online ;
- Validation by the selection committee : Applications that meet the BeeBonds platform's eligibility criteria are assessed by their selection committee, which is made up in part of independent experts;
- Financial analysis : the dossiers are analysed by our partners (Deloitte and PWC), who rigorously check the information presented. This analysis is the subject of a descriptive note on the project, which is offered to investors;
- Information note : The information memoranda are entrusted to Deloitte Legal. These documents contain all the applicable terms and conditions. The notes are subject to compliance with the regulations applicable to participative financing and are sent to the FSMA.
With BeeBonds, discover and invest free of charge in the projects of crowdlending in Belgium and benefit from attractive returns on your savings.
Do you have questions?
It's simple: the amount that the company has to repay to investors at a high rate represents only a small part of the project's financing (around 20%).
The company pays:
- To the bank: a low rate but for a high amount;
- To the investors: a high rate but for a much lower amount. So the company can pay high yields to investors without putting the project at financial risk.
For each bond, the 'coupon' is the regular income generated by each bond based on the interest rate paid to bondholders.
Interest is paid once a year on the anniversary date of the bond issue.
The amount paid is based on the rate set out in the information memorandum.
Interest is paid directly into your bank account (entered in your investor profile).
The capital is repaid on the maturity date of the bond set out in the prospectus.
Funded companies are obliged to provide quarterly reports informing you of the progress of the project.
You can consult this information on the BeeBonds platform (in the project section).
For individuals resident in Belgium, The 30% withholding tax is deducted at source from the amounts you receive;
As a result, you do not have to report this income on your tax return and you do not have to pay any other tax on this income.
For companies, interest is paid gross.
All investments entail risks* The projects proposed by BeeBonds are analysed by a team of experts (financial and legal) and validated by its selection committee. The results of these analyses are included in the information memorandum and the descriptive memorandum for each project (available on the BeeBonds website). BeeBonds.com).
For each project financed on the platform, BeeBonds sponsors a beehive in partnership with the urban beekeepers U Keepers.
The Bonds offered are debt instruments. Making a loan to an SME exposes you to the risk of losing all or part of your investment. For individuals resident in Belgium for tax purposes, the interest received is subject to a withholding tax of 30%. Before investing, please read the information note relating to the project.