Loan between individuals: Yes, but under what conditions?

The loan between individuals is a crowdfunding activity subject to legal requirements.

Indeed, depending on whether you use it as a lender, borrower or market intermediary, there are mandatory rules and obligations to which you must comply with a peer-to-peer loan.

We tell you all about the legal requirements to be respected in the context of a loan between individuals in France.

What are the legal aspects for lenders in a loan between individuals?

For lenders, prudential rules set the threshold for the amounts that can be granted in a loan between individuals. They will also have to comply with tax formalities, depending on the amount of the loan granted.

Regarding the loan threshold, you should note that the ceiling varies significantly depending on whether the loan is paid or not. Indeed, if you invest in a paid loan, that is to say with an interest, you can grant a maximum of 2000 € per project. For an interest-free loan, on the other hand, the ceiling is € 5,000 per loan granted.

As for tax formalities, the regulations provide for declarative obligations to be respected by the lender who is a party to a loan contract. In short, it is about declaring your loans to the tax authorities. This declaration is required when, during the same year, you have granted one or more loans whose unit or combined amount is equal to or greater than € 5,000.

What are the legal aspects for borrowers in a loan between individuals?

For borrowers, the legal framework defines the thresholds of the amounts that can be borrowed as part of a loan between individuals. The same applies to the tax formalities to be observed. But also and above all the obligation to repay the credits received in accordance with the terms of the signed loan agreement.

Regarding the loan limit, note that it varies significantly depending on the status of the crowdlending platform to which you send your loan request. Thus, you can borrow up to 1 million euros if you borrow via a platform with IFP (Crowdfunding Intermediary) status.

On the other hand, if you use a platform having the status of CIP (Participatory Investment Advisor) you can borrow a maximum of 2.5 million euros. As for the tax formalities, they are practically the same as those of a lender. In other words, you must declare the loan received when its amount reaches the threshold of € 5,000.

What are the legal aspects that the platforms must take into account?

Crowdlending platforms must comply with the prudential rules governing their creation, their status and their operation.

Thus, to exist and conduct their activities legally, P2P platforms in France have the choice between 3 mandatory statuses, that of IFP, CIP or PSI. Approvals are issued by the ACPR and the AMF and may be accompanied by an obligation to register in the ORIAS register depending on the status chosen.

For the safety of investors, the regulations also provide a set of obligations for crowdlending platforms. In particular, that of taking out liability insurance in the event of bankruptcy. As well as obligations of transparency and information vis-à-vis lenders on the risks they run.

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