Investor guidebook offers the answers for the most frequently asked questions. If you can’t find the answer for your question, please send your question to our customer service by email firstname.lastname@example.org and we will get back to you or call directly to the investor service +358 757 568 603.
Fellow Finance connects safely people and businesses who want to invest and save their spare money with those who need temporary funding. As a lender, you decide on what terms you are willing to lend and the borrowers correspondingly decide whether they want to borrow at your interest rate. Fellow Finance manages all the administration between lenders and borrowers. Both borrower and lender will receive a loan contract which states their direct contractual relationship.
In crowdfunding an organization seeks funding, generally through an online platform, from a broad audience that is willing to support the business project. Peer-to-peer loan is based on the same idea with the distinction that the borrower is a private individual.
Fellow Finance is regulated by the Financial Supervisory Authority of Finland as an Authorised Payment Institution.
Fellow Finance Plc is the leading lending platform in Northern Europe. Fellow Finance is also the only platform in Europe that offers both loan-based crowdfunding for companies and peer-to-peer loans for consumers. Fellow Finance is regulated by the Financial Supervisory Authority of Finland as an Authorized Payment Institution. Fellow Finance is listed on the Nasdaq First North Growth Market Finland marketplace.
Financial Statements Bulletin 2018
Client funds are deposited in several segregated accounts in banks operating in Finland. Client funds are never in Fellow Finance balance sheet and kept separate from Fellow Finance own funds. Read more how customer funds are managed
Borrowers are the only counterparty for investors. A loan contract is a legally binding agreement between a borrower and a lender. Fellow Finance is operating only as a platform linking lenders and borrowers to each other.
International investors are responsible for informing tax authorities of their own country about profits originating from investments through Fellow Finance.
Investing through Fellow Finance is safe. We maintain your anonymity and our website is covered with the hypertext transfer protocol secure. All investment activities include always a risk of partial or total loss of invested capital. The main risks of investing in loans are credit, interest, liquidity and foreign exchange risks. Read more about the risks.
Fellow Finance manages receivables by billing borrowers monthly and, if necessary, reminding of delayed installments through various channels.
With Finnish, Danish and Polish peer to peer loans the credit loss is limited by selling the remaining capital to collections agengies after 90 days of payment delay. The prices vary between the markets and for example with Finnish loans the payment is 53% and with Polish 30% of the remaining capital. You can check the present levels by logging into the investor service and checking the buying percentage from the allocator or go to the Analyze page and check it there from the market tab.
Situations why a loan over 90 days has not been sold
German peer-to-peer loans
If the borrower fails to repay his loan in full, the loan claim is transferred to the German collection agency.
For any loan with a significantly delayed installment, the loan contract can be terminated and the receivables transferred to a collection agency. Business loans usually include at least an entrepreneur's own personal guarantee and often real security such as a mortgage or other company assets pledged as security for the loan.
If a payer of an invoice fails to pay the invoice, the billing fee will be charged from the invoicing party. If the loan amount of the funded invoice is not received from either party, the bill will be transferred to a collection agency.
Anyone who has been identified by Fellow Finance and has given sufficient information about his assets and the origin of the funds to be invested. We will collect this information in accordance with the law regarding prevention of money laundering and financing of terrorism. A company can also act as a lender and open an investor account. For more information, please contact our customer service.
Investing in loans is free of charge. This means no opening, monthly or subscription fees. Only on the secondary market, a seller of a loan will be charged at one percentage (1%) fee of the loan capital sold.
The operating principle of our service is an auction between investors for loan applications. Investors offering the lowest price for the borrower will get selected as lenders for the given loan offer. After that, the borrower decides if he wants to accept or reject the received loan offer. The loan offer always includes just one interest rate which is calculated as an average of the interest rates requested by investors participating in funding of the loan.
For consumer loans the minimum investment amount is 25 € per loan and for business loans it is 100 € per loan. The allocator can also invest with lower amounts in the loan applications to get the loans fully funded and to keep your money working. Loan durations vary between loan markets and you can decide what is your maximum loan duration you wish to fund.
In practise, majority of loans are fully paid back before loan maturities indicating that an average turnover of a loan portfolio has historically been less than half of an average loan duration.
The median portfolio contains 400 loans and has an average between 10 000€ and 40 000€ invested capital.
We maintain a complete anonymity between the lending and borrowing parties. Borrower cannot identify the lender and vice versa. In business lending however, the investors can recognize companies as they are provided business descriptions from companies applying for funding.
You can open an investor account easily on our website in minutes by providing us with the required personal data as well as the information on your financial status and the origin of the funds to be invested. After having your account opened log-in to your investor account and use the make deposit button to transfer funds to your investment account. You can invest in loans manually or set-up a loan allocator that invests automatically in loans according to your personal investment criteria. All loan applications have a credit rating based on their payment history data and our statistical analysis. The number of stars demonstrates how likely a borrower is to repay his loan. Five star rating is the best credit class. Opening your account and investing in loans is free of charge.
Fellow Finance platform offers you two ways to invest. You can invest manually in individual loan applications and / or open the allocator. The Loan Allocator is a tool for automating investing with pre-defined investment criteria. Using the Loan Allocator is an easy way to diversify your investments in many loans. The majority of the investments in Fellow Finance platform is done with the Loan Allocator. Below is a brief description how to set up the loan allocator:
Set the maximum percentage of your total capital you want to invest in each credit class. Maximum shares are not mutually exclusive meaning that maximum shares do not have to sum up to 100 % but they can be set for each credit class freely between 0 and 100%. If an investor wants to invest his whole capital in the two best credit classes he will set a maximum of 100% for both. Now, a loan portfolio will be split between these two credit classes and the distribution will follow the supply of loans in the credit classes.
By choosing investing at market rate the loan allocator will follow the market rate in bidding. The market rate is calculated as an average of ten past loans funded and describes at what price investors are willing to lend in each credit class. Investing at market rate option will ensure that you are bidding at a competitive rate and will get your capital deployed. You can set a floor level under which the allocator will not follow in bidding. Using investing at market rate also decreases the need to follow and monitor your loan allocator settings to ensure efficient capital deployment.
You can also set a fixed interest rate for every credit class. If you use higher interest rate than the market rate, investing will be slower than average, as other investors will have better offers for the borrower than you. Mutually, if you bid lower than the market rate you will get your capital deployed faster.
When investing at market rate you can set a minimum interest rate (floor price) for your offers below which your loan allocator won’t bid.
With this option you set the maximum amount you want to invest in one loan. The rule of thumb is to invest in at least 100 different loans – this way you can significantly reduce the credit risk. Thus each loan within a market should have no more than 1% of your total capital invested in that market.
The maximum duration of a loan you want to invest in. The majority of the loans have longer duration – as this is advantageous for the borrower. On the Fellow Finance secondary market you have an option to sell loans to another investors if you wish to liquidate your investments before the loan maturity.
The maximum loan amount is not typically limited because it limits the loan volume and slows down investing speed. Generally speaking, small loans focus more on lower credit ratings and shorter loan periods and large loans for better credit ratings and longer periods.
Minimum cash balance sets the amount which you wish always to be available for a withdrawal. Your loan allocator will only invest if the cash balance is over the set minimum cash balance. To maximise your returns and benefit from compound interest we recommend to keep this at zero.
As a rule of thumb – the tighter the settings the slower the capital deployment speed. Our customer service is happy to assist you if you have any questions about opening the allocator.
The secondary market improves liquidity of investing by offering an opportunity to sell loans to other investors if necessary. To start investing in secondary market loans you need to switch the secondary market option on. The purchase price is expressed as a percentage you want to pay for the remaining open loan capital of a loan for sale. To have a loan purchased on the secondary market the loan parameters need to fit in to your primary market criteria (duration, interest rate, amount). You can speed up your capital deployment by turning the secondary market option on. You can also acquire loans where the borrower has demonstrated good repayment behavior.
You can set up your loan allocator to buy loans that are in payment schedule and / or have payment delay. When purchasing delayed loans, the purchase price is determined according to the number of days the loan is late from its due date. In the case of loans that are on time, the purchase price is determined according to the number of instalments that have been paid earlier.
You can do instant online money transfer with Trustly which works with the most common banks in 29 countries.
If your bank isn't included in Trustly service you need to make a wire transfer to any of the below accounts. As a reference number you need to use one of the Loan Allocator account numbers that you will find on the ‘Account Statement’ page on ‘Deposit Money’ tab depending on which market you want to invest your money in.
Fellow Finance customer accounts
Manual investment may be cancelled due to one of the following reasons:
Credit risk can be efficiently managed by diversifying your investments in many loans. This is done easiest by using the Loan Allocator. In Fellow Finance Loan Allocator is the most common way to invest. In addition to diversification you can also set the levels how much you are willing to invest in each credit class.
For example, a typical setting of Finnish consumer loan allocator:
Investing at the market rate is the preferred option for an investor. By investing at the market rate your Loan Allocator will always find loans to invest in which then reduces the cash drag (uninvested capital) on your account. By setting the maximum amount you will invest per one loan you can diversify your total investment capital efficiently. This means you should not invest more than 1% of your total investment capital in a single loan.
You can update your personal information by signing in to the online service and changing your information on the ” My information” page.
All deposits wire transferred to Fellow Finance follow the regular booking schedule between banks. Therefore, it may take some time that your deposit become visible on your account. If your deposit has not been booked by a reasonable time, please send us an e-mail and we will track down your payment.
Withdrawals done before 4 pm on weekdays will be transferred around 6 pm in Finnish time. How fast your withdrawal is visible on the bank account is depending on the booking schedule of your home bank. If the payment does not appear on your account by a reasonable time, please check your ”My information” page and please verify that you have added a correct account number.
When the borrower pays an instalment to the repayment account managed by Fellow Finance, the capital and interest are booked to investor accounts according to the investor’s share of the loan.
If the tax domicile of an investor is in Finland, a withholding tax of 30% is deducted from interest payments. The withholding tax does not apply to consumer loans or investors with tax domiciles outside of Finland.
The payments are settled in a single batch once every night. The key figure capital accounting debt in the portfolio shows the amount that is going to be settled in the next nightly settlement.
In the settlements small rounding differences may arise. This happens because the repayments are always rounded to a full cent. The accumulated rounding differences will be settled alongside with the repayment of last instalment of a loan.
If the loan is issued in a currency other than the currency of the investor account, the changing exchange rate affects the settled repayment in the amounts booked. In currency conversions the daily European Central Bank’s day rate is applied.
Customer has the right to find out what information has been collected and stored about him. If you want to get a report of what information we have stored of you, please contact our customer service.
You can unsubscribe your marketing permission and customize your reporting settings by logging in to the online service and there under the “my account” section.
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