Loan Tranche
Credit tranche - part of a credit project with individual value claim.
A credit tranche represents a part of a loan project and plays a central role in crowdlending. During the launch of the credit project, the investor makes a binding commitment for a specific credit tranche. Each credit tranche represents an independent value claim or receivable from the borrower.
The loan tranches are financed by the crowd, i.e., by many investors, each of whom invests in a part of the loan project. This concept is similar to the lot-size transformation normally performed by banks. In this process, the different amounts on the side of the loan seekers and the investors are brought into equal-sized tranches to ensure efficient financing.
The ability to invest in loan tranches provides investors with a flexible and diversified investment strategy. By spreading their investments across multiple loan tranches, they can spread risk and optimize potential returns. Each investor has the freedom to tailor the size of their investment and the selection of loan tranches to their individual preferences.
For the borrower, financing through loan tranches means a broader base of potential investors. By involving a wide range of investors, borrowers can raise the capital they need for their projects more quickly and easily.
Loan tranches are thus an integral part of the crowdlending ecosystem, increasing the efficiency and diversity of investment opportunities on the Crowd4Cash platform. Investors can actively contribute to the financing of projects and at the same time diversify their investment portfolio, while borrowers receive broad support for their projects.