Finance

Lending your capital to real estate projects via SBP Nordic is different from investing in funds or shares. Therefore, there are no fees or charges, including for example payment and courtage. We at SBP Nordic do not offer any products or financial services to you as lenders. Our solution is only a tool for companies wishing to market healthy real estate projects to lenders who want – and can – lend out capital in return for good interest on their investments.

If you are interested in financing any of the real estate projects marketed via SBP Nordic, you first need to register and log on and become an accredited investor. As full member you gain access to all information regarding the ongoing projects. When you find something you like its all digital including signing and payment to your own e-wallet. No money reaches the borrower until the security pledges are in place.

The minimum loan amount varies, but it’s usually around 25-50,000 SEK. Each project can receive a maximum of 200 lenders, so depending on the size of the project, the minimum investment amount also varies. All lenders have a proportionate right to any mortgage or collateral that is linked to the loan. As a lender, you have no influence over the company in which you invested. The borrower, on the other hand, is contractually bound to take action under the terms of the debenture.

Characteristics of a loan are different depending on investment. Therefore, it is important that you as an investor carefully read the material provided by the project owner – terms, debentures and general information about the property project. All in order to understand how this particular loan is outlined.

Good to know about investing via SBP Nordic:

● All companies allowed to market their projects have undergone our credit assessment process
● All loans are secured by mortgages in real estate, stocks or parent company warranty
● All borrowing companies are carefully checked by our external partners
● All property projects are reviewed by specialists before they are offered to investors

Our loans

Minimum Investment: 25-50,000 SEK
Size of loans: 2.000.000-300.000.000 SEK
LTV: Loan up to 80% of market value
Collateral: mortgage in property, shares or parent company warranty (controlled by external agent)
Priority: 1st & 2nd charge
Property types: Commercial and housing

General terms

Yield: higher yielding loans are usually for smaller transactions
Term: up to 24 months
Interest payments: possible to repay all at once with repayment of loan
Repayment: at end of term

Use of loan

● Buying
● Restructuring
● Processing
● Construction

Risk of bankruptcy

In the end, basically everything can happen. Even the most serious company with the best intentions can encounter unforeseen events – hence the competitive interest rate when you invest through SBP Nordic. In order to optimize your investment, we conduct a thorough review of the companies that apply to advertise property projects via SBP Nordic. The borrower also have to leave collateral through mortgages and guarantees on behalf of the lenders. In the event of bankruptcy, you as a lender are better protected than the shareholder, but there is never any guarantee that you will receive your entire capital back. Therefore, it may be a good idea to spread your risks in several different projects – don’t put all eggs in one basket.

Market risk

The market will always go up and down. Which generally affects the value of real estate projects and therefore also the security. Remember to always keep this in mind when you consider lending capital. A real estate project that has already been sold out usually has less risk than a project that is about to be sold in the future – because it is impossible to know what the market will look like then.

No deposit guarantee

Capital borrowed through direct agreements with a real estate company is not protected by the deposit guarantee.

Limited loan to value

As low loan to value rate as possible is recommended to reduce risks for you as a lender, which in some cases can lead to a lower interest rate. The most common loan to value for projects advertising via SBP Nordic is 80%.

Newly founded companies

It is not uncommon for real estate project companies to be relatively newly founded. Parent companies often set up a new company for each individual project, among other things since it is easier to sell real estate in corporate form. Because of this, there is often limited history of the company behind the project – and it can sometimes be difficult to assess management skills and experience if the company can’t provide previous reference objects.

Secured loans

We always try to minimize the risk that the real estate company won’t be able to repay the capital to its lenders. Unfortunately, events that are impossible to predict can occur. Therefore, all projects marketed via SBP Nordic are backed with a collateral in the form of for example a mortgage in a property, shares or parent company warranty. If a company would go bankrupt, the collateral determines what you as a lender will get back. But keep in mind that a security does not represent a guarantee that your money will be refunded in full – when investing, your capital is always exposed to risk.

Mortgage lender for lenders

If a real estate company finds it difficult to repay your loan on time, you will get help from the agent, which represents you in relation to the borrower. General terms and conditions of the loan – developed with our lawyers – are established electronically between you and the borrower for your safety.

Cautious Loan to value Ratio

We try to minimize risks by rarely granting loans that exceed 80% of the total real estate value. This means that a depreciation of more than 20% is required before you as an investor is adversely affected. If a borrower comes to us and asks for a extension of a loan, we will order a new independent valuation of the property. This way, we can be sure that the loan still meets our loan-to-value ratio.

Credit assessment of borrowers

SBP Nordic place great emphasis on risk assessment, customer check IDD (integrity due diligence) and creditworthiness. Therefore, we have chosen to allow independent partners to carry out the controls. SBP Nordic does not carry through its own risk- or credit assessment, but instead follows a strict credit assessment process conducted by nationally recognized external partners. We do not publish any projects on SBP Nordic before they have been thoroughly checked.

Fraud and background control

Fraud is a constant threat that we take seriously. We always carry out extensive background checks (KYC – Know Your Customer) on all loan applications we receive – as well as the people behind the companies IDD (integrity due diligence)– to prevent fraud from any of our borrowers. Protecting investors from fraud is in line with our risk assessment. It is impossible to guarantee that fraud will never happen, but we are convinced that we have a robust approach to minimizing the risks. In addition to standard controls, we conduct a check against court records, conducting credit reports on both the companies and the persons behind. To minimize the risks as far as possible.

Easily created portfolios with low minimum investment

The story shows that the safest way to invest is usually to spread the risks among several companies and projects. Our goal is to make it easier for investors to create broad portfolios and spread their real estate investments through SBP Nordic. We are also planning on launching a secondary in the near future. This will further open up opportunities for risk management.

Initial screening

Before a property company is allowed to market their loans via SBP Nordic, certain checks must be made. Basic information about companies seeking funding through us is collected electronically and screened in collaboration with our external partners. This is a thorough inspection of the company and the persons behind. In this early stage we do both KYC (Know Your Customer), IDD (Integrity Due Diligence) and customary credit controls. The companies that are approved after this have the opportunity to submit their loan application.

The loan application – step by step

● The applicant company submits additional information
● There is a thorough background check that includes physical, financial and legal assessments of the project, as well as its expected performance and potential as an investment
● Further assessments of the borrower are carried out, including an interview with key members of the management team and the accountant and or the borrower’s legal advisor
● The physical, financial and legal assessment is carried out by external consultants and partners – it may also include an independent third party valuation
● Our external project analysts often visit and inspect the properties physically
● Our external project analyst provides us with a report of the project that assesses risks, sustainability in calculations, market conditions, etcetera. This report is included in the investment material that goes out to all investors who makes a reservation before signing the loan agreement.

Analysis

All information from the loan application, our external partners reports and interviews with the borrower is assessed and analysed according to a particular model. The most important factors being the external reports.

Publication

Our credit committee ultimately evaluates the credit analysis, proposes changes in loan terms (for example, the interest rate level) or decides to decline the loan application. Subsequently, approved loan applications are published to the SBP Nordic community.