How it works
Accredited investors and institutional investors (funds, corporations) are eligible to invest in companies by utilizing SyndiCrowd Funding LLC investment platform. We make it easy to generate high returns from investment opportunities in companies secured by credit controlled, relatively safe pools of collateral in the real estate, consumer credit and auto-finance sectors. Below are our answers to FAQs. Please contact us for more information. Build a diversified portfolio of investments today!
- What is the type of the investment vehicle?
Private placement investments such as Borrower Dependent Notes (BDN) are issued by SyndiCrowd Funding LLC to investors. Notes represent investment capital used by Syndicrowd Funding LLC, per the terms of notes, to lend funds to companies. Investment capital is secured by combined collateral of pools of loan originators. Investment returns are generated by Syndicrowd Funding LLC from lending to a borrower. Interest payments from a borrower are passed by Syndicrowd Funding LLC to an investor. Risk is mitigated by combining borrower’s collateral into collateral pools of potential loan books of borrowers, based predominantly on real estate investments, consumer credit and auto-finance companies which ordinarily could not access this type of borrowing before the JOBS Act was passed. All investment opportunities are “private placements” of debt securities that are not publicly traded. Debt securities are subject to holding requirements and are intended solely for investors who do not require liquid capital until debt maturity.
- How do these investments generate profit?
Interest is paid back to investors monthly, quarterly or semi-annually by Syndicrowd Funding LLC with rates directly linked to the performance of real estate, consumer or auto-finance companies. We make every effort to ensure BDNs operate as regular fixed income instruments.
- Who issues the BDN?
SyndiCrowd Funding LLC is the issuer of the Borrower Dependent Notes (BDN). Investors don’t own property through real estate investments and they don't own a claim on the underlying loan books but the terms of notes ensure that returns are directly related to the performance of loans issued by Syndicrowd Funding LLC to individual companies. Collateral of loans is based on companies’ underlying assets which are combined into collateral pools.
- How are these investments secured and safeguarded through SyndiCrowd Funding LLC?
SyndiCrowd Funding LLC lends exclusively on secured basis to each finance company. Each finance firm provides loan books, which include investments in properties as collateral for the funding that SyndiCrowd Funding LLC offers. These loan books, as per the terms of the BDN, are secured by underlying assets, which in the case of cars can be repossessed, and properties, whereby each loan is secured through a first lien position. Adequate project control and oversight measures are included in the underlying loan documents.
- How does SyndiCrowd Funding LLC monitor risk of borrowers?
SyndiCrowd Funding LLC monitors total amount borrowed by each borrower to make sure it doesn’t exceed approved amount. SyndiCrowd regularly evaluates value of underlying collateral and reviews financial statements of each borrower. Underlying collateral is directly tied to the borrowed amount and cannot be used as collateral for other loans. SyndiCrowd also makes sure that security documents are drafted properly.
- What issues should investors be aware of?
SyndiCrowd Funding LLC encourages all investors to review BDN documents thoroughly. The company makes every effort to establish appropriate loan covenants, loan provisions, courses of action in case of non-performing loans.
- What happens if a BDN stops performing?
One of the benefits of our investment products is that these notes can’t stop performing, although returns can fluctuate. Since returns are generated from diversified pools of loans, diversification greatly reduces the chance that any single loan will cause serious fluctuations of the entire portfolio of loans, above historical average, over time. Some loans may go into partial or full default, but thanks to diversification across many borrowers, portfolio performance of the pledged loan pool is unlikely to be affected significantly. It is the responsibility of a company, as the recipient of the investment from SyndiCrowd Funding LLC, to pursue action that will reduce or mitigate the loss from a partial or full default of a loan. The costs of such actions, which in extreme cases can include repossession of properties or vehicles, will be reimbursed to the note holders (investors in SyndiCrowd Funding LLC), thereby reducing the impact of any short-term losses.
- What companies does SyndiCrowd Funding LLC invest in?
SyndiCrowd LLC invests in three categories of originator loans: auto loan, consumer loan and real estate loan companies. Auto Loan Finance Companies are underserved by banks and finance companies. They represent a vast untapped opportunity for investors.
The second category is consumer/personal loan companies. These companies usually lend on unsecured basis for personal, family, or household purposes. Consumer loans are monitored by US government regulations for consumer protection.
The third category is Real Estate Finance firms which are also interchangeably referred to as mortgage finance firms or trust deed investment firms.
This market is dominated by small and medium size family owned firms. Their lending is mostly concentrated in the general vicinity of a metropolitan area where firms are located. Conventionally, private finance firms generate capital through family and friends to conduct their lending operations.
In the case of auto finance firms, many originate their lending via close business ties to local auto dealerships. Their customers (borrowers) are usually referred by the auto dealers themselves.
Interest rates on car loans range from 8% to 25%, depending on credit quality of the borrower and value of the collateral. The collateral is the purchased vehicle. Each car, van or other vehicles (as applicable) is equipped with a tracking and engine disabling device. If a full default were to occur, the vehicle would be disabled and repossessed.
In the case of real estate finance firms, the loans are made as short-term bridge or ‘fix and flip’ loans. The collateral pledged is usually a first lien position on the underlying real estate asset. Given the value of collateral and very conservative LTVs of extended loans, borrower default rates are statistically low. We ensure that the experienced lenders we work with make provisions in the underwriting process to balance the LTV and interest rate to minimize potential loss of yield on a loan book. Moreover, the relationships and knowledge of local auto or real estate markets ensure that the repossessed property (car or real estate asset) reaches market quickly and allow for a relatively fast return of principal. Our research indicates that the underwriting process of a private money lender is much deeper than that of a typical bank. Additionally, since such businesses are relatively limited in scale due to lack of affordable/optimal financing, they have a very manageable number of individual borrowers. Hence, they can conduct deeper due diligence and use broader relevant metrics in the underwriting process..
- Why use SyndiCrowd Funding LLC to access this lucrative untapped market?
The JOBS Act, especially the passing of Title II and III, made whole new investment avenues available, with this one such opportunity that is only now a reality. Not only does the Act enables small and mid-size auto-finance and real estate companies to improve their liquidity, it also creates new investment opportunities for those looking for higher than average returns.
SyndiCrowd preselects specialist lending firms according to strict criteria of financial health, business strategy, legal and licensing compliance and owners’ reputation.