Reading a Project Card: Every Field, and What It Actually Tells You

A project card is dense. Most people read two things on it, the rate and the grade, and then decide. Those are the two fields that tell you the least on their own, because they are summaries of everything else on the card.

Here is the whole card, field by field, in the order we think it is worth reading, along with what each field can and cannot tell you.

Start with the term, not the rate

The term is how long your money is committed. It is the first field to read because it is the one you cannot change your mind about later.

Plan on the assumption that a contribution stays with its project until the loan is repaid. This is not a savings account with a notice period; it is a loan with a schedule. If there is a realistic chance you need those funds during the term, the correct decision is to not fund the project, regardless of how good the rate looks.

Term also interacts with risk in a way that is easy to overlook: the longer the horizon, the more time there is for a borrower's situation to change from the one we assessed. A 12-month loan and a 48-month loan at the same grade are not carrying the same amount of uncertainty, and the rate on the longer one is compensating you for some of that difference.

Then the repayment structure

This is the field most people skip and the one that changes your actual experience the most. Two loans with identical rates and terms can behave completely differently depending on how they repay.

Amortising. Principal and interest come back to you in instalments across the term. Your money starts returning immediately, your exposure to that borrower shrinks every month, and you get an early warning system: a missed instalment in month three tells you something long before maturity. The repayments also arrive as cash you have to do something with, which is where cash drag begins.

Interest-only with a bullet repayment. You receive interest during the term and the entire principal at the end. Your exposure stays at full size for the whole period, and you learn whether the loan works only at the moment it matures. That is a genuinely different risk profile, and it is the reason a bullet structure at the same grade is not directly comparable to an amortising one.

Read the schedule before the rate. It tells you when you find out.

The purpose

What the money is for, and what the borrower plans to do with it.

Read it as context, not as a promise. A convincing purpose does not make a loan safe, and an unglamorous purpose, refinancing, working capital, equipment, is not a weakness. Our assessment asks whether the borrower can service the schedule from the cash they actually have, and that question is largely independent of how compelling the story is. Be aware that a good narrative is persuasive out of proportion to its predictive value; that is a property of humans, not of loans.

What is worth extracting from the purpose is the shape of the repayment: does this money produce cash flow during the term, or only at the end? That is what makes a structure fit or not fit.

The grade

Every project carries a grade from AAA to C, assigned through the process described in How a Project Reaches the Platform.

What a grade is: our assessment, at the date of listing, of relative credit risk. It lets you compare projects on a consistent internal scale and filter for the band you want.

What a grade is not:

• Not a probability you can read off directly. AAA does not mean "will not default"; it means "assessed as lower risk than the bands below it".
• Not a live figure. It reflects the borrower as assessed at listing. It does not update as their circumstances change.
• Not comparable to a credit rating agency's scale. Our letters are our own internal scale. They are not an S&P or Moody's rating and should not be read as equivalent to one.
• Not a recommendation. It is a description, not advice to fund.

Used properly, the grade is a sorting tool. Used improperly, it becomes a substitute for reading the rest of the card.

The rate

Currently 10-17% p.a. across the platform, depending on grade, term and structure.

The single most important thing to understand about this number: it is the contractual interest rate of the loan, not your expected return. Your actual return is the rate, minus whatever share of your portfolio does not repay, minus the time your money spends sitting un-allocated earning nothing.

A portfolio of loans at 15% does not return 15%. It returns 15% on the ones that pay, nothing on the ones that do not, and 0% on the balance waiting between allocations. A realistic expectation sits below the headline number, and anyone quoting the headline as their forecast has not modelled the other two terms.

Which leads to the rule worth internalising: a higher rate is a description of risk, not a reward for cleverness. The C-grade projects pay more because more of them are expected to have problems. Choosing them is a legitimate decision. Choosing them while expecting AAA outcomes is not a strategy.

Funding progress

How much of the target is filled, and how much time is left.

Read this as information about the loan's availability, not as a signal of quality. A nearly-funded project is not more creditworthy than an empty one, it is earlier in a queue. Urgency is a feature of the interface, not a property of the borrower. If a project card ever makes you feel you must decide in the next few minutes, that is a good moment to close the tab and come back tomorrow; the discipline costs you one loan and saves you from the class of decisions people regret.

Minimum contribution and what it implies

The minimum contribution per project is €100, which is really a statement about portfolio construction rather than about any one project.

With a €100 top-up you can fund one project. With €1,000 you can fund ten. The difference between those two positions is not scale, it is whether a single default is a bad month or a bad year. In lending, outcomes converge on the average only across enough loans for the average to exist. Two loans have no average; they have two outcomes.

If you take one habit from this article: decide how many projects you want to be spread across before you look at any individual card, and let that decide your contribution size.

Borrower information

What is disclosed about the borrower, type, sector, region, the relevant financial context, and the elements of the structure such as any security or guarantee.

Two notes. First, disclosure is constrained by data protection and by our contractual obligations to borrowers; a card shows what we are permitted to show, which is less than we know. Second, where security forms part of the structure, look at what it actually consists of and whether it could be realised in the circumstances where you would need it, that is, in bad ones. Security that only holds value while everything goes well is not protection.

The fields that are not on the card

Worth saying plainly, because absence is easy to misread as reassurance:

• There is no guarantee field, because there is no guarantee. Repayment is not insured, not guaranteed by CrowdHive, and not covered by esisuisse or any depositor protection scheme.
• The Provision Fund is not a per-project protection. It is a pool with defined rules and a finite size, not insurance, not a compensation scheme, and not something to factor into a specific card as if it were a backstop on that loan.
• There is no track-record field for the borrower on our platform where they are new to it, which most are. Absence of prior problems is not evidence of reliability.

A reading order that works

1. Term, can I commit for this long, with no expectation of getting out early?
2. Structure, amortising or bullet? When do I learn whether this is working?
3. Purpose, does the cash flow shape match the schedule?
4. Grade, where does this sit on the platform's internal scale?
5. Rate, is it consistent with the grade, and what does it imply about assessed risk?
6. Contribution size, does this fit the number of projects I have decided to spread across?
7. Funding progress, last, and only to check availability.

The order is deliberately the reverse of how the eye moves. The largest, boldest number on any listing is the rate, and it is the field that requires the most context to interpret correctly.

The point of all this

We would rather you fund fewer projects with a clear understanding of what you are holding than fund more on the strength of a number. A lender who knows why they own each loan behaves better when one of them goes late, and something in every diversified portfolio eventually goes late.

If you want the mechanics of what happens after you allocate, that is Where Your Money Goes. If you would rather set rules than read cards one by one, Auto-Invest, Explained covers how to encode the criteria above so they apply consistently.

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CrowdHive is a crowdlending platform operated by BellaVista Invest One AG (UID CHE-373.552.596), Zug, Switzerland, affiliated with the SRO VQF and supervised under Article 24 AMLA in respect of its anti-money-laundering obligations. CrowdHive is not a bank, balances are not covered by esisuisse or any depositor protection scheme, and lending involves the risk of partial or total loss of capital. Nothing in this article is investment advice.