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A. What is Crowdfactoring?

  1. Crowdfactoring is the practice of lending money to businesses through online services that match lenders directly with business borrowers; against an unsettled and unsecured invoice (receivable).
  2. 3circlefunding provides an alternative social funding channel that facilitates the intermediation of Social Lending Loans – Crowdfactoring. Lenders can fund business borrowers’ loans on the platform. These loans are for a specific amount, settled in full over a short set period of time (single settlement date) with a fixed discounted rate.

B. 3circlefunding Beneficial Services

  1. Perform identification and verification of business borrowers
  2. Execute a credit check of both borrower, debtor and assign an indicative credit rating
  3. Electronic exchange of Crowdfactoring loan agreement contracts
  4. Collection, receipt, and distribution of loan repayment from borrowers
  5. Management and apportionment of repayment to lenders
  6. Secondary selling market for the sale and purchase of Crowdfactoring loan parts before maturity

C. Crowdfactoring versus. Crowdlending

  1. The main difference between Crowdfactoring Loans and Crowdlending (peer-to-peer lending) is the business borrower offers a discount rate against the pending settlement amount of an invoice that will be paid by a debtor. The lenders therefore fund the short term liquidity of the business (advancement amount) in return for the full settlement of the invoice by the borrower. There are no monthly repayments, as the loan is settled in one payment by the business borrower. Therefore, the gain for the lender is the (discount rate) percentage difference between the advancement amount invested and the amount of the invoice paid. Example: The outstanding invoice from the debtor is 50,000 CHF. The business which awaits the settlement of invoice offers a 2% discount in order to pre-finance this invoice now. Therefore, the investor funds the invoice now at CHF 49’000 CHF (which will be settled in 1 to 4 months). Upon settlement of the invoice the investor receives the full settlement of 50,000 CHF.

  2. Crowdfactoring loans are unsecured and unsettled invoice business loans. Business borrowers provide a pending unpaid invoice as an incentive to lenders to fund the loan. Settlement of the invoice by debtor or payment by the business borrower to the lenders is not guaranteed by 3circlefunding GmbH.

D. Operational Effectiveness - Reduced Costs for Users

3circlefunding offers Crowdfactoring services and operates entirely online. Therefore, 3circlefunding runs with lower overheads and operating costs and provides these services more competitively and cost effectively than traditional financial institutions.

E. Platform Advantages

As a result of the operational effectiveness, business borrowers can fund their short term liquidity requirements at lower interest rates whilst lenders often earn higher returns compared to other savings and investment products offered by mainstream financial institutions. 3circlefunding apply a listing fee for the loan application process and credit checking the borrowers and a service fee for providing the match-making on the platform. Transparency of the fees can be accessed here

F. Users' Control

  1. The discount rate percentage, short duration (1-4 months) and loan amount are fixed by the business borrower.
  2. The indicative credit rating is applied by 3circlefunding on the basis of an analysis of both the borrower's and debtor’s credit history. 
  3. Successful loan applications are then posted on the platform for lenders to assess and fund directly. 
  4. Autoinvest enables lenders to set-up automatic bids by predefining investment criteria. 
  5. All liability and investment decisions are at the lenders own choice and discretion.