Crowdlending: Bonds 1 - Loans 0

Regulated in France in the last quarter of 2014, the crowdlending (or participatory financing in the form of loans), can be carried out under different statutes: the status of IFP-Intermediary in Participative Financing or the status of CIP - Participative Investment Advisor. The two statutes do not meet the same regulatory requirements, the level being higher for the CIP, and do not offer the same products, although in both cases they are low balance sheet operations constituting the indebtedness of a company.

The IFP status allows to propose to individuals to lend to companies of their choice a maximum amount of 1000EUR in a maximum outstanding loan of one million euros with a maturity limited to 7 years. The lender is reimbursed a portion of the principal and interest every month. The loan instrument is a classic loan contract, signed between the parties. It should be noted that the inter-company loan is not currently authorized in France.

The CIP status allows individuals and legal entities to lend to companies of their choice through the issuance of a bond issue. A bond is a financial security which corresponds to a debt security representing a loan. The support of loan is a contract of issue of debt securities.

Like equity securities, bonds are transferable, unlike loans. Moreover, the limit of the outstanding loan set at one million euros must be respected but the bondholder can lend the company the amount of his choice. The maturity and terms of repayment - payment of interest each year and of the principal on the maturity date in most cases - are also freely determined between the parties.

Bonds, a real freedom of choice compared to the traditional loan, for the lender as well as for the borrower!