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What is the difference between bullet and full bullet payment schedules?
Bullet repayment schedule means that loan interest is being paid periodically and principal amount is being paid at the end of the loan period. Full bullet schedule indicated that both interest and principal are being paid at the end of the loan period.
What is the difference between development, bridge and business loan?
Development loan is a loan used to finance the development's planning process or the development/construction of the property itself. A bridge loan is a short-term loan used to meet current obligations before securing a permanent financing option, enhancing the value of the property or selling the underlying asset. A business loan is a loan used to raise capital for supporting the day-to-day activities of the firm, business expansion, acquisition of equipment or goods, cover pending obligations (taxes, etc.). Despite the loan type, all EstateGuru's loans are secured with a mortgage.
What is a stage loan?
Many developers face the challenge in which the current value of their development object does not enable them to raise the capital that is needed to complete the development object entirely. As EstateGuru only lends against the current value of the collateral not the future value, then for development loans we often make use of the stage financing method. This means that when the first investment round of an object enables the borrower to increase the collateral value of the property by developing the object further, then in the context of the given LTV the investment amount can increase via next stages of the loan. All loans are funded solely based on the current value of the object and a precondition for every stage is a new updated valuation report of the collateral.
Who can borrow on EstateGuru?
Only companies registered in and with a bank account in Estonia, Latvia, Lithuania, Finland, Spain and Ireland can currently borrow through EstateGuru. We will have to perform "know your customer" checks and approve your real estate project before you are allowed to post your loan application on EstateGuru.
What type of loans can be funded on EstateGuru?
Property backed loan applications in Estonia, Latvia, Lithuania, Spain, Finland and Portugal which are approved by our team can access funding through EstateGuru. However, there is no limitation on the type of projects that can be submitted for approval. As long as the loan application has a property element to it and the property is capable of being used as security against the debt, you are free to submit it for approval.
How is my loan funded on EstateGuru?
The borrower signs up on EstateGuru and fills in the loan request. EstateGuru will assess the borrower’s creditworthiness, business plan, and the appraisal report of the collateral, to ensure the borrower is able to make the loan repayments and to avoid a situation, where investors' capital is at risk. After approval of the loan request, the loan will be released on the EstateGuru platform, where investors can assess the risk and invest into the loan. When the loan is funded, the pledge will be created and the loan will be paid out to the borrower. In case the loan does not get funded, the contracts will end instantly and all the invested funds will be released to the respective investors' accounts. The borrower also has the option to accept only the amount that was raised. The borrower is obliged to make the repayments according to the agreed repayment schedule. The investors can track all repayments on the portfolio page and withdraw or reinvest all the receivables.
What are the principal terms of the loans?
You are asked to specify the target funding amount and your desired pricing when you apply for funding on the EstateGuru platform. Once we have approved your project and performed all other checks, we will discuss and agree on an appropriate interest rate level with you before you can publish your loan request. All loans are granted with a fixed interest rate. The target funding amount can be anywhere from €20,000 to €3 million. Loans are amortising with a tenor of 6 months to 5 years.
What happens to my established contracts if EstateGuru goes into bankruptcy?
EstateGuru is a facilitator of real investments, we do not offer the management of assets. All investment contracts are signed between the borrower and the investor, EstateGuru simply facilitates this transaction. All client funds are separated from EstateGuru’s operational funds. Should EstateGuru suffer financial difficulties or go bankrupt, client funds are safe and can still be accessed. In such an unlikely event, a contractual entity will be appointed to take over the role of EstateGuru to serve all the investments.
What regulations apply to EstateGuru?
The Estonian Financial Conduct Authority (FCA) has confirmed in 2014 that any laws or regulations that apply to credit institutions or to broker-dealers do not apply to us as EstateGuru is not a finance provider but a facilitator. The FCA expected to release a new marketplace lending specific regulation in 2017.
Does EstateGuru guarantee my loans?
EstateGuru is not a bank, thus we do not fall under the scope of banking laws and regulations. Like with most forms of investing, peer-to-peer lending carries a degree of risk. We reduce this risk to our investors by conducting thorough due diligence and by taking asset security on every loan, in case the borrower is unable to repay their loan. EstateGuru does not guarantee your loans.
If all loans are secured, why don't the borrowers approach banks?
After the credit crunch and the resultant recession, the risk appetite of banks was reduced significantly, which means that banks have tightened their lending criteria. Banks have strict criteria, which is not borrower friendly and thus many loan applications are rejected by banks. EstateGuru is a small and flexible organization which is willing to help companies that are denied financing by banks despite their strong business plan and solid collateral.
What happens when a payment is delayed?
As soon as the borrower is late in repaying an instalment, we will make contact on behalf of our investors to find out the reason behind the delay. In case of a delay, the borrower shall pay a fine specified in the general loan terms clauses 9 and 10. When the borrower faces financial difficulties, we will try to find the best solution for both parties. If the borrower is not able to repay the loan, the borrower will be given the option to take a repayment break. If the borrower is still unable to repay the loan, we will cooperate with the law firm Triniti, who will act towards recovering the debt.
What happens when the borrower wants to extend the loan period?
In case the borrower wants to extend the loan period, EstateGuru will investigate the reasons and assess the situation accordingly. If the loan period is to be be extended, the borrower will be obliged to pay a fee to cover additional documentation expenses.
How do you ensure that the borrower is able to repay the loan?
The aim of inspecting the borrower is to assess the company's ability to pay back the loan. We do a thorough investigation of the borrowers’ background, creditworthiness and current obligations. If applicable, the business plan and financial statements will also be investigated.
Is the interest rate fixed?
Yes, the interest rate paid by the borrower is fixed throughout the loan period. The payment frequency and interest rate can vary depending on the loan type.
How can I apply for a loan?
To apply for a loan you need to register as a borrower, fill in the loan application and provide us with documentation required in the application form. Do not hesitate to contact us if you have a question or concerns at email@example.com.
Which documents are required to apply for a loan?
Requested loan amount, period, interest and repayment schedule Description of the project – how will be the money used; description of the mortgage (location, condition). Appraisal report Business plan Pictures If applicable, information about previous projects and introduction of the borrower. All documents can be uploaded in the loan application form. Additional documents can be sent to firstname.lastname@example.org
Once I apply for a loan, how long will it take to get processed?
We will make contact with potential borrowers soon after an enquiry or application has been made. We will go through the loan application in detail and ask more questions or for additional documentation where necessary. It will take approximately 2-3 days to evaluate the application and write the loan application, assuming all paperwork is in place. After the final examination is made the loan will be opened for investing on the platform. The syndication process can take anything from a few minutes up to 2 weeks. How fast the project is funded depends mostly on the attractiveness of the project.
What are the fees for the borrower?
EstateGuru charges 3-4% of the total loan amount in case of the successful funding process and a 0-2% annual administration fee. In case of a delay in the loan repayment, several penalty fees need to be paid by the borrower.
What happens when the borrower wants to repay the loan earlier?
Borrowers are able to repay the loan earlier. We do not charge any fees for paying loans back earlier. In case of repayment of a loan, the remaining balance of the administration fee must be fully paid simultaneously with the repayment of the loan. More can be read from General Loan terms clause 16.6.
Can the borrower extend the loan period?
Yes, borrowers are able to extend the loan period. Before the loan is extended, EstateGuru will ask the reasons behind the decision. If the reasons are acceptable, the borrower is required to pay 100€ to update the contract.
Can I use land or forest as a security asset for the loan?
Yes, we do offer loans secured by land or forest.