Credit risk of individual crowdfunding projects
Article 3
The description provided to investors of the method to assess the credit risk of individual crowdfunding projects within a portfolio as referred to in Article 6(2), point (a) of Regulation (EU) 2020/1503, shall contain all of the following elements: (a) the criteria and the key financial indicators used to establish the feasibility and sustainability of the business plans of the individual crowdfunding projects; (b) an analysis of the expected cash flows of the crowdfunding projects and an assessment of how certain those expected cash flows are over different time horizons; (c) an analysis of the characteristics, including the degree of competition, of the business sector in which the project owners operate; (d) an assessment of the project owners’ knowledge, experience, reputation and capacity to manage business activities in the project’s specific sector; (e) the procedures regarding the acceptance and recognition of collateral or guarantee and credit risk mitigation measures, where relevant; (f) the type of the repayment schedule for the loan and the frequency of instalments; (g) the procedures to assign each loan associated with a project to an appropriate risk category as defined by the risk management framework; (h) the source and type of data used for the purposes of points (a) to (g).