Crowdpear provides a tool that allows investors to assess their capacity for accepting losses. The calculator to check your ability to bear loss can be found in the ‘Overview’ section of each investor’s personal account.

It is important to note that you cannot make investments until you have not filled out the Investor questionnaire and successfully assessed your ability to bear loss using the calculator (if the situation requires, recalculation could be done at any time). When performing the modeling of the capacity for loss, the net value of the Investor is calculated as follows:

Net value of the investor assets = (net annual income) + (total liquid assets) – (annual financial liabilities)

For more information, please refer to the Procedure for assessing the suitability of crowdfunding transactions and modelling of the capacity for loss.

Based on the requirements of the Regulation and other applicable legal acts, as a crowdfunding service provider, we must request information about the investors’ experience, investment goals, financial situation, and a general understanding of the investment related risks. We must evaluate whether the offered crowdfunding services are suitable for investors, and based on the criteria, consider them inexperienced (non-sophisticated) or experienced (sophisticated), and additionally warn them about the risks of investing in the types of investments offered on the platform, when required.

To ensure higher investor protection, Crowdpear considers all investors as inexperienced (non-sophisticated) investors. If you meet the criteria provided in the Procedure for assessing the suitability of crowdfunding transactions and modelling of the capacity for loss to be classified as an experienced (sophisticated) investor, contact our Client Support along with relevant evidence confirming compliance with the established criteria. A summary of the steps and criteria to be considered as an experienced (sophisticated) investor can be found here.

To be considered a sophisticated (experienced) investor, private investors shall meet at least two of the following criteria (Paragraph 3 of the Procedure for assessing the suitability of crowdfunding transactions and modelling of the capacity for loss):

• Your personal gross income shall not be lower than EUR 60,000 per fiscal year or you shall hold a portfolio of financial instruments of at least EUR 100,000 (consisting of cash deposits and financial assets);
• You shall be working (or have been working) in the financial sector for at least one year (in a professional position that requires knowledge of the expected transactions or services), or you shall hold (or should have held) a managerial position in a legal entity for at least 12 months (legal entity that corresponds to at least one of the criteria established in paragraph 3.1.1 of the Procedure for assessing the suitability of crowdfunding transactions and modelling of the capacity for loss);
• In the last 12 months, you shall have executed an average of 10 large transactions per quarter in the capital markets or through crowdfunding service providers.

Companies shall meet at least one of the following criteria:

• Hold at least EUR 100,000 of own resources;
• Net turnover of at least EUR 2,000,000;
• Balance of at least EUR 1,000,000;
• Entities operating in the field of financial markets who received relevant permits (licenses) from supervisory authorities and are supervised by supervisory authorities (please refer to the Procedure for assessing the suitability of crowdfunding transactions and modelling of the capacity for loss for the information on entities considered);
• National or regional authorities, including public authorities managing public debt ar the national or regional level, central banks, international and supranational institutions;
• Institutional investor whose main activity is investment in financial instruments, including entities engaged in securitization and other financing transactions.

You shall send us a filled ‘Annex No 1’ form (available in the Procedure for assessing the suitability of crowdfunding transactions and modelling of the capacity for loss document) along with relevant evidence confirming compliance with the established criteria. Once the documents are reviewed and the sophisticated (experienced) investor status is approved (the status won’t be shown on your account, only internally), the application is valid for 2 years.

It is important to note that sophisticated (experienced) investors do not have a right to withdraw their financing offer within 4 calendar days from the submission of the offer. Non-sophisticated (inexperienced) investors have a right to withdraw their financing offer within 4 calendar days from the investment day (the financing offer can be withdrawn by contacting Crowdpear in writing).

Please note that the procedure for assessing the suitability of crowdfunding transactions (investors’ categorization) is prepared in accordance with the requirements of the Regulation and other applicable legal acts.

Each application and its documentation are evaluated based on internal and risk assessment schemes. Borrower’s reputation is not only assessed based on the real estate and other assets owned that would be used as collateral, but also by checking the creditworthiness, financial liabilities, various registries whether there are or have been any lawsuits/cases/financial crimes, etc. that may have an impact on the financial reliability of the borrower.

Based on the assessment algorithms, any of the following categories may be given to the project owner:

Class 1 (A) (Very good) – low credit risk

Class 2 (B) (Good) – average credit risk

Class 3 (C) (Average) – higher credit risk

Class 4 (D) (Poor) – high credit risk

Class 5 (E) (Very poor) – too high credit risk

A risk level assigned is indicated in the project details and the project owner’s description.

Crowdpear has a right to decline a funding request if a project is considered too risky, compelling, or for any other reason, that may remain disclosed.

For more information please refer to Rules for reliability assessment of the project owners.

Crowdpear ensures that every project is secured by the real estate pledge or other guarantees. However, an investor has to evaluate the fact that capital and income gained from all investments are at risk.

It is important to note that investments on the Crowdpear platform are not covered by the law on insurance of deposits and liabilities to investors in Lithuania and are not subject to the deposit guarantee systems and investor compensation schemes set out in directives of the European Parliament and of the Council.

For more information, please refer to the Description of risks related to investment in Crowdpear platform document.

Every project on the Crowdpear platform is covered by a primary or secondary mortgage on real estate or other guarantees (such as a pledge on other assets, personal surety, or guarantees). The type of guarantee applied may be seen in every project’s details and may differ for each investment.

It is important to note that investments on the Crowdpear platform are not covered by the law on insurance of deposits and liabilities to investors in Lithuania and are not subject to the deposit guarantee systems and investor compensation schemes set out in directives of the European Parliament and of the Council.

For more information, please refer to the Description of risks related to investment in Crowdpear platform document.

Please note that some delays in interest payments may occur due to the specifics of the real estate industry. We may expect delays when the funded property is in the sale process; the borrower is waiting for payments from related parties, the loan is being refinanced, etc. Usually, payment delays of up to one week are considered normal.

If the interest payments under the loan payment schedule are overdue, for every day of the delay, an additional 5% yearly interest would be applied for each investment (the accumulated overdue interest amount would be processed with the last payment). In case of the project owner’s insolvency, interest will no longer accumulate starting from the day the court determines the insolvency (as per criteria established in Section 28, Clause 1, Point 4 of the Law on insolvency of legal entities of the Republic of Lithuania).

Regarding longer delays, investors are notified via a separate message in their Crowdpear account’s news section. If you haven’t received any updates after a reasonable period, feel free to contact Client Support for assistance.

A loan would be considered late if the borrower would not repay the loan after the end of the loan agreement schedule. If the borrower could not return the loan within the timeframe indicated in the agreement, Crowdpear would terminate the contract with the project owner and would initiate a legal recovery process following the normative acts valid in the Republic of Lithuania and in the EU (such project would be displayed as ‘In recovery’ status).

For more information, please refer to the Procedure for management of defaults and Loan agreement. General conditions documents.

In case a borrower is not able to repay the loan, and no solution would be found directly between the borrower and Crowdpear (for example, refinancing of the loan), Crowdpear would terminate the contract with the project owner and would initiate a legal recovery process following the normative acts valid in the Republic of Lithuania and in the EU (such project would be displayed as ‘In recovery’ status).

Note that for each day of overdue interest payment, an additional 5% yearly interest would be applied for each investment (accumulated overdue interest amount would be processed with the last payment). In case of the project owner’s insolvency, interest will no longer accumulate starting from the day the court determines the insolvency (as per criteria established in Section 28, Clause 1, Point 4 of the Law on insolvency of legal entities of the Republic of Lithuania).

For more information, please refer to the document Procedure for management of defaults