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Crowdestor during COVID-19

Despite the enormous problems connected by the Coronavirus and the scams of some platforms, I remained loyal to Crowdestor, who was able to quickly reorganize itself, with the limits imposed by the situation.

I refer to the e-mail sent on April 29 by Artur Geisari, recently promoted to head the SME section: many medium and short-term projects and with contracts from 3000 to 40000 euros are now being proposed to the investors community. An excellent idea, considering that the much more expensive ongoing projects were frozen until June 2020 by the recovery period. Of the 57 projects I am invested in, 2 have so far given up the 3-month suspension period (CRP-2406 Construction company, CRP-2771 Beverage distributor) and from 6 July 2020 the CRP-2644 Mafia stars will return the interests as foreseen in the initial program.

For those interested, I report the full email of Geisari:

Dear Investors community.

Recently I have joined CROWDESTOR as Head of SME. First, I want to thank you for your warm welcome and wishes. I have received numerous messages and invitations both on Facebook and Linked and replied with the utmost respect. With a few of you, we had professional discussions on why you invest, what your preferences are, and what you would like to CROWDESTOR to improve on. Thanks all of you for that. We will keep this in mind.

With this letter, I want to give more explanations to a couple of most commonly asked questions towards my responsibilities, specifics of SMEs, and experience.

What are my responsibilities at CROWDESTOR? I am responsible for a new direction CROWDESTOR develops – quick, robust, automated, and standardized SME lending so that borrowers gain access to fast and accessible funding, and investors have an understanding of decision making. My second responsibility is to make sure that this new direction is scaled to as many European Union countries, as possible.

What is the SME segment? The segment chosen has its peculiarities. The deal size is much smaller – starting from 3’000 EUR per project. The average loan size is planned to be around 40’000 EUR. The main pain point of SMEs is to get funding. If they have time, they wait for long-term bank financing. If not, the options are slim. Most of the SMEs can afford to borrow at rates from 16 up until 30% because their margins can cope with such rate. Plus, in the Baltics, such rate is widely acceptable and many non-bank lenders are charging double-digit rates. Even big and reputable non-bank lenders aim to charge SMEs 30 and even 40% APR.

The typical borrower has been working for 4 years, has 500 thousand EUR revenue, 7 employees and steadily growing business. He is still too small for bigger and cheaper bank financing, yet already a financially stable company. 

The deal with each SME is structured as a loan to the company, with a personal guarantee of owner of the company. It’s a common practice within the business lending industry where both parties are liable for the liabilities takes. 

Personal guarantee provides extra security for the funding deal. It disciplines borrower to pay, because the guarantor is liable with all his/her assets for to company loan. It covers reputational risks of the shareholder because after personal bankruptcy or criminal case, everyday life becomes more complicated and it’s hard to do business as usual. 

What is my experience? I am in SME lending business since 2015. Currently, I hold co-founder and CEO positions at Monify, where we have lent 15 million EUR to 450 SMEs in the Baltic States and Poland. The current outstanding loan amount is 4 million EUR. We have achieved lending automation to the point where SME can have a loan offer in 33 minutes. 

Is there any conflict of interest between CROWDESTOR and Monify? In Q1 2020, the majority of shareholders of Monify decided to suspend expansion and to stop issuing any new loans, only focusing on the current portfolio management. 

Since my vision is to enable millions of SMEs to gain access to funding, and CROWDESTOR was planning to scale up its operations and concentrating on growth, I was happy that I had this opportunity to join their team as Head of SME. The two roles are not conflicting in any way.

Talk to you soon in the next episode of 10in10. Please don’t forget to send your questions.

Artur Geisari


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