Marketplace lending on StockLyft

“Investment involves risks, including loss of capital, illiquidity, lack of dividends, and dilution, and it should be done only as part of a diversified portfolio. Investments should only be made by investors who understand these risks. Tax treatment depends on individual circumstances and may be subject to change in the future.” Lending: the action of […]

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“Investment involves risks, including loss of capital, illiquidity, lack of dividends, and dilution, and it should be done only as part of a diversified portfolio.

Investments should only be made by investors who understand these risks. Tax treatment depends on individual circumstances and may be subject to change in the future.”

Lending: the action of allowing a person or organization the use of a sum of money under an agreement to pay it back later.

Marketplace Lending or P2P Lending: uses online platforms to connect borrowers with investors(private lenders or institutions) willing to offer loans.

What type of crowdfunding is StockLyft offering?

Crowdfunding on Stocklyft is debt-based— capital is raised in the form of a loan or promissory note to be paid back at some point in the future, with a fixed interest rate. Debt-based crowdfunding offers great advantages with low entry levels, passive income, security, and tax savings. Depending on the deal structure, some debt crowdfunding deals can provide passive income for self-directed IRA investors without incurring Unrelated Business Income Tax (UBIT).

Who does StockLyft support?

StockLyft supports small-dollar loans (agribusiness, primary focus on women-owned SMEs), purchase finance(transportation) & real estate lenders

Crowdfunding: the practice of funding a project or venture by raising capital from a large number of investors through an online platform

Private Placement Memorandum – the legal document that describes the details of the offering such as objectives, terms, risks, etc.

Principal: the amount of capital originally invested in the project.

Interest Rate: the percentage rate, usually quoted annually, at which interest is paid by the borrower to the lending party (investor) while the loan is outstanding.

Interest: the cash paid to the investors by the borrower until loan maturity calculated as: Interest = [interest rate/ payment frequency] X [outstanding principal balance].

Maturity: the date at which the outstanding principal balance must be paid and returned to the investors in full.

Collateral: the property or other asset that the borrower offers as a way for the lender (investor) to secure the loan.

Default: failure to make timely payments of principal or interest.

Amortization: the act of paying the principal balance off overtime between the issuance of the loan and loan maturity.

What are the risks involved?

There are risks involved with any form of investment and debt-based crowdfunding is no exception. Below are three of the top debt-based investment risks to consider.

Default Risk- The risk that a borrower may be unable to make the required payments of principal or interest and may result in the loss of some or all of the principal invested.

Inflation Risk – The chance that cash flow from an investment won’t be worth as much in the future because of changes in purchasing power due to inflation.

Interest Rate Risk- The risk that an investment’s value will change due to a change in the absolute level of interest rates. A potential increase in market interest rates is a risk to the value of fixed-income debt investment.

Moses Amedonu
Moses Amedonu Published on Sep 06, 2021
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