TFGcrowd is a new, quickly growing crowdfunding website that’s been making headlines.
The site offers a new way to invest in real estate and business projects alongside other professional investors.
Think of it this way… have you ever wondered why banks make so much money?
They’re able to take the deposits from their customers and then lend it out to local businesses and real estate firms. As those organizations pay back the loan, the bank earns money from the “spread” on their investment.
Now, you can become the bank.
You can invest in real projects around the world from the comfort of your home.
I wanted to use this article to get into some of the pros and cons of TFGcrowd as well as review their crowdfunding website. By the end of this post, you’ll know whether or not this site is for you and how it can fit into your investment portfolio.
How Does it Work?
The TFGcrowd platform connects entrepreneurs with investors. As an investor, you can log onto the website, browse through the various offerings, and invest (minimum of 100 EUR).
As long as you are over the age of 18 and have a bank account in one of the European Union States or EEZ banks, you can participate in any of the offerings that you see on the website.
Each offering has a designated fundraising goal, or amount that the borrower is seeking. Should the campaign fail to hit its goal, any funds that have been contributed will be returned to investors.
Basically, you can get in on the ground floor of a new investment opportunity like a restaurant, real estate property, or ecommerce business and receive regular principle and interest payments.
As an entrepreneur or a borrower, you can access a group of investors for your next project. All you have to do is go through a vetting process which will examine your financial history, assets, and ability to repay a loan.
This is a lot more streamlined of an application process than going to a bank, and you’ll also be able to pitch your project to a group of investors rather than a single large entity.
The website gives you the ability to secure a loan for a mortgage, business, working capital, and more. This funding can help to leverage your existing assets while also offering a profitable opportunity to investors on the platform.
What Makes TFGcrowd Different?
There are a lot of different peer to peer lending and crowdfunding websites out there. I think that one big difference between this site and others is that they have a BuyBack Guarantee option.
The BuyBack Guarantee option basically means, “if a borrower is late with the repayment of the loan, TFGcrowd will compensate the investors both the invested principal amount and interest, as well as pay the accrued interest after 30 days of delay.”
This helps to take a bit of the risk off the table for investors that are new to TFGcrowd. You won’t have to worry about whether or not the borrower has the ability to pay their loans on time.
Instead, you can sit back and enjoy regular repayments with interest should there be any kind of delay. This means there won’t be any interruption in your investor repayment cashflows.
For example, if you’re investing in a restaurant in England and you’re unsure whether the team will be able to be able to pay back a high-interest loan (17%), you won’t have to worry because of the investor protection program.
In my opinion, this guarantee sets them head and shoulders above other sites out there. I’m not sure how long this guarantee will last, so I’d look into these guys before it’s gone.
Pros of TFGcrowd
There are lots of pros when it comes to this new growing site. I want to take the time to share some of them with you below.
Of course, it’s going to determine what your investment goals are, but I think these are strong and healthy indicators that you should be aware of.
Some of the pros include:
- Minimum investment of 100 EUR. It’s easy to get started.
- BuyBack guarantee option makes investing low-risk.
- Interest rate variety and risk options
What I like about TFGcrowd is that it’s pretty simple to get started and low-risk. If you don’t want to risk a lot of funds, you can just throw 100 EUR or 500 at a project.
Also… if that project doesn’t successfully hit its goal, you get your funds returned. If it is successful, then there’s still the BuyBack guarantee for select projects.
Lastly, because there are varying interest rates, you can easily put together a portfolio of both high interest rate/high risk and low rate/low risk investments. This will be a better approach for getting a good overall ROI.
Cons of TFGcrowd
While there are a lot of benefits to this new site, I do think there are some real drawbacks that I gotta point out.
You should keep these in mind before deciding to invest on TFGcrowd or before getting a loan for an entrepreneurial project.
Here are some of the cons that I see:
- Limited to investors in the European Union States and/or those that have EEZ banks.
- Growing platform investment volume, not yet market leader
- Interest rates vary, and thus your risk and return.
First of all, this website is mainly open to investors in a designated location. You can’t participate yet if you’re living in the United States or other major territories. Hopefully, this changes over time.
Also, since this is a new (though growing platform), your investment choices will be limited and some of the projects you fund may not successfully hit their goal.
Lastly, browsing through the marketplace you can see many different projects with varying returns from 7% to 17%. As a newer investor, you might not be aware that risk typically correlates with return.
The more risky a loan is, the higher the interest rate. The high interest rate is a compensation for the risk an investor takes.
I think TFGcrowd needs to do a bit more education on this, and specifically, how to create a quality portfolio on their platform.
Conclusion – Should You Try TFGcrowd?
It really comes down to your investment goals and if you qualify to become an investor on the site. Also, if you’re trying to raise funds for a project, then you gotta go through a vetting process.
Personally, I think it’s worth it to try it out. Also, I’d take a portfolio approach rather than putting all your eggs in one basket.
I hope you enjoyed this review and that you have a better sense of how the site works. If you have any questions, be sure to reach out to me. You can also join my newsletter down below to get tips and advice on crowdfunding.
